Can Bitcoin continue to be the king of cryptocurrencies? Position of EUROPE, in front of the cryptocurrencies? Effect of the war on the regulation of cryptocurrency?
A lot has happened in the cryptocurrency industry since Bitcoin was the only cryptocurrency in the world. They have grown rapidly in number and there are now thousands of them, many with significant market capitalization and large investment volumes. Nonetheless, Bitcoin continues to lead the industry, if only because of its sheer size. As the industry progresses and diversifies, there is a chance that Bitcoin will lose its place as the largest cryptocurrency. However, that possibility seems unlikely in the near future and Bitcoin could hold its position as the world’s leading cryptocurrency for many years to come. The prices of cryptocurrencies can fluctuate widely and therefore investing in them may not be suitable for all investors. No EU regulatory framework oversees investment in cryptocurrencies.
Past performance is not an indicator of future results. Your capital is at risk. What, if it is evidence that there is currently no legal or tax regulation on crypto assets, and it is, without a doubt, an ideal time to act with legal and economic security.
However, the regulation of the cryptocurrency market is something that has been on the minds of many governments and central banks around the world for a long time. However, this idea is gaining momentum since the Russian invasion of Ukraine began and Vladimir Putin’s regime was subjected to harsh economic sanctions. On March 2, the president of the Federal Reserve (FED), Jerome Powell, and some members of the United States House of Representatives spoke in favor of Congress approving measures aimed at regulating cryptocurrencies given the possibility that They can be used so that Russia evades the international sanctions to which it has been subjected and that close the country’s access to both financing channels and its reserves deposited in banks of other countries.
In a hearing before the House Financial Services Committee on Monetary Policy and the State of the Economy, the Fed chairman said the situation with Russia “highlights the need for congressional action on digital finance, including cryptocurrencies» and added emphatically that “You need a framework, ways to prevent these unbacked cryptocurrencies from serving as a vehicle for terrorist financing and just criminal behavior in general, tax evasion and the like.”
For their part, a group of senators from the Banking Committee of the United States Upper House expressed to Treasury Secretary Janet Yellen their concern that Russia and other countries could use cryptocurrencies to “hide cross-border transactions with nefarious purposes’, including the weakening of sanctions. Finally, the president of the United States, Joe Biden, signed an executive order on March 9 in which he establishes the government’s strategy for the regulation of bitcoin. In itself, the decree orders the country’s federal agencies to evaluate the risks and opportunities that cryptocurrencies represent for the national security of the United States and their impact on the nation’s economy.
In Europe there are also regulatory winds for cryptocurrencies that, although they are not new, are now blowing with more force. Already last January, the president of the European Central Bank, Christine Lagarde, called for a global regulation of bitcoin because it is a “highly speculative asset. Lagarde pointed out the importance of bitcoin being subject to some type of regulation and that it unites all governments to avoid fiscal fissures. “The regulation has to be agreed and applied globally because if there is an escape route, they are going to use it. Multilateral action is absolutely necessary, even if it is initiated by the G7, then goes to the G20 and ends up expanding… but it is something that needs to be addressed”, pointed out the president of the ECB.
Just a few days ago, Lagarde assured that there are signs that some Russian citizens try to circumvent the sanctions imposed by the Ukraine war with cryptocurrencies. The Russians could be converting their rubles into cryptocurrencies and stablecoins, Bloomberg reports. During her participation in the Innovation Summit of the Bank for International Settlements, Lagarde assured that the volumes of rubles that are converted into stablecoins and cryptocurrencies are at the highest level seen since, perhaps, 2021. Crypto assets, he said, are undoubtedly being used to circumvent sanctions against Russia.
Lagarde also assured that cryptocurrency exchanges are at risk of becoming “accomplices” in the evasion of sanctions imposed on Russia. Lagarde’s statements anticipate more severe measures for cryptocurrency companies to ensure that their platforms are not being used by sanctioned persons or entities.
The European Union is already working on the development of a single regulation to regulate the cryptocurrency market. In this sense, a few days ago the European Parliament gave birth to the proposed MICA Regulation (for its acronym in English Markets in Crypto Assets).
On September 24, 2020, the European Commission presented the Digital Finance Package (DFP), with which it intends to promote the European financial sector towards technological solutions that can place it at the forefront of financial markets. The DFP is a package of measures articulated as a mixed document, in turn made up of two political documents called strategies and four legislative proposals. One of these four legislative proposals is the proposal for a European Regulation relating to cryptoactive markets and amending Directive (EU) 2019/1937, that is, MiCA.
The purpose of the MiCA proposal is to establish a regime for the issuance of those crypto assets that are not currently covered by the current legislation on financial services. Likewise, MiCA will regulate service providers on crypto assets and those that carry out transactions on behalf of a third party.
As stated in the proposed Regulation, the initiative has four general objectives. The first is to provide certainty and legal clarity in order to promote the secure development of crypto assets and the use of decentralized registry technology (DRT). in financial services. Second, the initiative is expected to support innovation and fair competition by creating an enabling framework for the issuance of crypto assets and the provision of related services. The third objective is to ensure a high level of investor and consumer protection and market integrity, and the fourth is to eliminate risks to financial stability and monetary policy that could result from increased use of crypto assets and the TRD.
According to the proposal, this regulation will apply to crypto-asset issuers and crypto-asset service providers that are not considered financial instruments, deposits or structured deposits. Without prejudice to possible modifications or new updates of the Proposal that is currently on the table in the European Union, this rule aims to regulate, among others, issues related to cryptoactives, including stable cryptocurrencies and the use of Blockchain networks.
Among these issues is the legal definition of crypto assets, stable cryptocurrencies or crypto asset service providers; establish uniform transparency and information requirements in relation to the issuance, operation, organization and governance of crypto-asset service providers; consumer protection regulations; o establish a regulatory framework regarding the authorization and operating conditions of crypto-asset service providers. There is not yet a closed date for the approval of this rule, but it seems clear that the intention is that it be approved as soon as possible in order to be able to more effectively control the movements of cryptocurrencies to prevent, for example, that Russia can use cryptoactives to skip sanctions.
For all these reasons, from our office, with a pioneering initiative in the investment of virtual currency, we recommend that you be totally and absolutely advised, legally and fiscally, about the Investments to be made, taking into account that the future is virtual finance.
We are at your disposal to advise you on your safe and profitable investment.