Regulation of cryptocurrencies in the era of the coronavirus pandemic: From the US to Russia


In many countries of the world, which account for 80% of the world's population, there has been a significant slowdown in economic...

In many countries of the world, which account for 80% of the world's population, there has been a significant slowdown in economic processes due to the introduction of measures to curb the spread of coronavirus infection (COVID-19). As noted by analysts at the World Economic Forum (WEF) in a recent report on the implementation of blockchain technology in supply chains, the current systems are "disassembled".
Experts  are confident that in order for the global economy to begin to develop again, it is necessary not only to implement distributed ledger technology, but also to clearly regulate the digital payments sphere and a strong digital financial infrastructure. What Happens to the Legal Environment for Cryptocurrencies in the COVID-19 Era?


Fundamental changes are taking place in global finance. As  said  the American economist Gary Cohn, who served as chief advisor to the US president's economy Donald Trump in the years 2017-2018, "to oronavirus accelerates the disappearance of cash " and lead to a sharp transition to digital currencies and wallets.
On March 31, the head of Twitter and the crypto company Square Jack Dorsey announced the  new reality  Speaking about the system of providing financial assistance to the US population, he criticized it. So, according to the entrepreneur, the introduction of new measures is too slow:
“People need help now. Technology exists precisely to distribute money immediately, even among citizens without bank accounts. "
He noted that Square, as well as other participants in the cryptosphere are ready to help in this, and the US government just needs to give the green light to this. As a result, on April 13,  it became  known that the US authorities allowed Square to take part in another federal program to help the economy: through the CashApp crypto application, businesses in the US will be able to receive interest-free loans. Moreover, if the funds received go to a list of expenses previously established by the American government (for example, for paying salaries to employees in self-isolation), then they can not be returned.
Thus, in the United States, the circulation of cryptocurrencies is not prohibited, but it is not integrated into the classical world of finance either. This is indicated by the refusal of the US Securities and Exchange Commission (SEC) to approve numerous applications for the launch of the Bitcoin ETF. Interestingly, even SEC Commissioner Hester Pierce  admits that the whole point is a bias towards the crypto industry.
Another point is noteworthy - at the end of March, a bill was submitted to the US Congress for consideration, including, among other measures, the launch of a digital dollar in response to the coronavirus pandemic. However, the intense political confrontation between Trump and representatives of the Democratic Party led to the fact that, as a result, the issue of digitalization of the American national currency came to naught. Nevertheless, on April 16,  another bill was submitted for consideration  , which again refers to the digital dollar and digital wallets as instruments for distributing financial assistance to US citizens during COVID-19. Thus, today in the US Congress there  are a total of 32 bills that are focused on regulating blockchain technology and the crypto market. However, it is too early to talk about the adoption of these laws.
The reason for this is the fact that the launch of the US Federal Reserve's digital dollar will mean that the system of American commercial banks will not be needed, and intermediate structures in the financial sector may be completely unclaimed. This would mean that it would be a mistake right now to allocate funds to support them instead of channeling them into the crypto sphere. It is to such conclusions  that the  authorities come , for example, in Switzerland. At the same time, as the  economist Fabio Panetta from the Board of the European Central Bank emphasized  , as well as  Hester Pierce noted on April 28  , the launch of CBDC will not be able to lead to the disappearance of the demand for bitcoin and other digital assets.
Now in the United States, the development of the cryptosphere is permissible, but it is obvious that barriers will be created for the industry. It is like the "yellow light" of a traffic light, which can switch either towards "green" or "red". And the latter is less and less likely in the world. Even China provides a window of opportunity for cryptocurrency trading through Hong Kong.


In early April, the State Duma once again  postponed the  second and third readings of the law on digital financial assets. Regulatory practice is based on individual decisions that do not have the force of precedent, however, the cryptosphere is developing thanks to the application of analogs of the law and the emerging business custom in this direction.


Despite the fact that on March 10, the country's Supreme Court overturned the order of the Reserve Bank banning the work of credit institutions with cryptocurrency business, the government intends to support the “falling banner” of bans and reintroduce restrictions on such business.


After the departure of Prime Minister Joseph Muscat from his post on January 13, the country's financial authorities have moved from green to yellow light regarding the regulation of the cryptocurrency market. The installations adopted after his resignation by the new Cabinet introduced increased requirements for the crypto business. So, according to the  latest data , about 70% of crypto startups have not received approval from the regulator and are considered unregistered companies.


In accordance with the latest changes, the Financial Transactions Analysis and Reporting Center of Canada (FINTRAC) has  decided to  apply stricter requirements to cryptocurrency companies than to other participants in the financial market.

Great Britain

As in the US, there is an understanding in the UK that cryptocurrencies are a new reality. But there is a difference that was identified even before COVID-19. On November 18, 2019, Jeffrey Vos, Chief Justice of the UK High Court and head of a group of government lawyers working on legal issues related to new financial technologies,  announced that from now on, cryptocurrencies will be regulated under the existing commercial law of England and Wales. So it was determined that the holder of cryptocurrencies is the owner of the property, and therefore no special laws are required to regulate the crypto industry.
This attitude continues to this day. That is why Telegram Group Inc. is considering for itself the option of developing the TON project in the British jurisdiction. This cannot be prevented by the decision of the court in New York, which at the suit of the SEC stated that Gram is a security.
The British approach boils down to the fact that regulators consider cryptocurrencies to be another financial instrument that is regulated (but not prohibited) in the same way as other assets. That is, any clarifications and even additional legal norms are formed in order to stimulate the development of the cryptosphere. At the same time, the national currency is declared as the only legal instrument for making transactions when buying and selling goods and services.

South Korea

On March 5, the South Korean government  legalized  cryptocurrency trading. The National Assembly of the country adopted a law on introducing into the Reporting Act and conducting certain types of financial transactions, including with cryptocurrencies.


Amendments to a number of legal acts adopted on April 3  , which will take effect from May 1, will lead to the country's crypto exchanges in the near future to conduct their activities according to the same rules as other participants in the financial market. In particular, crypto trading platforms are now required to separate customer accounts from any other financial activity of crypto exchanges, and cryptocurrencies are now defined through the refined term "crypto assets".


At the end of last year, this country provided an opportunity for banks to accept cryptocurrencies for storage, as well as sell them. The regulator BaFin defined the crypto assets themselves   as a “digital representation of value,” but emphasized the euro's status as the only payment instrument.


On March 5, a court in Nanterre, a suburb of Paris,  ruled that lending in bitcoins is no different from issuing loans in euros, thereby equating the two concepts.


A loud bang of the door from the organizers of the TON project in the United States can make an indelible impression on the political elite of this country, as well as the desire of the American corporation Facebook to develop the Libra project in Switzerland.
Technological lag, loss of billions of investments and thousands of jobs, as well as ineffective budget spending in the modern world - all this comes before the eyes of an increasing number of politicians in the world who have turned on the "yellow light" for the cryptosphere.
The traffic light for crypto regulation has already become two-color. When it begins to consist only of green, it will turn out that there will be new leading countries in the field of economic digitalization in the world. And the rest of the states, stuck on the "yellow", will be doomed to decades of technological backwardness, which inevitably entails an economic collapse.

Cryptocurrency Magazine - Crypto Market Updates: Regulation of cryptocurrencies in the era of the coronavirus pandemic: From the US to Russia
Regulation of cryptocurrencies in the era of the coronavirus pandemic: From the US to Russia
Cryptocurrency Magazine - Crypto Market Updates
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