Tribune. In the early days of blockchain technology, cryptocurrencies operated in a gray area of the economy. Financial institutions then embarked on this sector, catching the eye of regulators.
Governments have since taken action to tackle cybercrime and protect cryptocurrency users, but the job is far from done. It is essential that investors, businesses and industry institutions understand both how governments regulate cryptocurrency and how industry leaders can advance cryptocurrency regulation.
Regulators need to analyze the cryptocurrency market based on the legal frameworks that predated blockchain. They also have fundamental questions to ask themselves in order to integrate cryptocurrencies into existing asset classes: are cryptocurrencies goods? Legal tender? An investment project? If so, what kind ? And how is it taxed?
No legal tender
On the French legal level, cryptocurrency is not considered as a currency, because it does not depend on any institution and does not benefit from any legal tender in a country. The evaluation of its value is therefore difficult and it cannot constitute a reserve value since the cryptocurrency cannot be spared.
There are dozens of equally valid definitions depending on the country. But the objectives of the different regulations remain similar: to ensure transparency vis-à-vis the public and the regulator, guarantee market integrity by protecting systems against cybercrime and market abuse and protect investors against significant risks.
The regulations mostly imposed on cryptocurrency companies are based on the standards and recommendations of the Financial Action Task Force (FATF). The main objective of this global body is to develop comprehensive controls on “Fight against money laundering and the financing of terrorism” (standards LCB-FT), to publish them in the form of official recommendations and to ensure that the member jurisdictions respect their obligations regarding the implementation and application of these standards. More than two hundred countries and jurisdictions have also committed to implementing these standards.
Ban in China
The FATF has drawn up a “gray list” grouping together the jurisdictions to be subject to increased surveillance. This list is important to regulators, investigators and compliance professionals, as countries on the gray list are subject to increased due diligence from countries that comply with FATF standards.
You have 49.45% of this article to read. The rest is for subscribers only.