Hugo Coelho (principal researcher), Alexander Apostolides, Keith Bear, Nick Clark, Natalia Cordeiro de Lima Fleichman, Kalliopi Letsiou, Aarvi Singh and Bryan Zhang.
The ‘2nd Global Cryptoasset Regulatory Landscape Study – Emerging Practices and Early Lessons Learned’ surveys the fragmented global landscape of cryptoasset regulation.
Building on the comparative analysis of 19 representative jurisdictions, the study describes and compares emerging regulatory practices, sets out possible reasons for their convergence and divergence, and draws early lessons from their implementation.
The Cambridge Centre for Alternative Finance (CCAF) conducted a first study of cryptoasset regulation in 2019.
The new study comes as regulators across the world are stepping up their efforts to regulate the sector, in response to market developments and the adoption of extensive recommendations by global standard-setting bodies.
The study identifies early lessons for regulators, particularly in Emerging Markets and Developing Economies (EMDEs), as they develop cryptoasset regulatory frameworks. These include the importance of clear classification frameworks for cryptoassets, the gradual lifting of restrictions to maintain macroeconomic stability, leveraging existing anti-money laundering (AML) rules to build comprehensive regulatory frameworks and the need for enhanced mechanisms of cooperation and information sharing.
The research was conducted by the CCAF, with the support of the UK Foreign, Commonwealth & Development Office and the Swiss State Secretariat for Economic Affairs.
Highlights
The main findings of the study include:
1
The term ‘crypto currency’ has fallen out of favour
The terms ‘cryptoasset’ and ‘virtual asset’ are the most widely used across jurisdictions, suggesting that regulators increasingly see cryptoassets to be more like (speculative) investments, than a means of payment.
2
Regulation is coming, but slowly
Fewer than half of the jurisdictions surveyed have introduced comprehensive regulations for cryptoassets, with Emerging Markets and Developing Economies (EMDEs) lagging behind their Advanced Economy (AE) counterparts.
3
Bans are uncommon but justified by currency and financial stability concerns
Cryptoasset activities are banned or restricted in part in a minority of jurisdictions, particularly in EMDEs. Bans are in most cases driven by concerns over currency substitution and capital outflows.
4
Stablecoin regulation is a priority in large, advanced economies
AEs, in particular large economies with international reserve currencies, are leading the way in the regulation of stablecoins. As a minimum, regulations are aimed at ensuring stablecoins maintain a stable value and are redeemable. Reserves are one area of divergence.
5
Separating activities is a remedy for conflicts of interest
Addressing conflicts of interest in cryptoasset service providers has moved to the top of the agenda after the collapse of FTX. In addition to disclosures and other mitigating measures, some jurisdictions explicitly ban trading platforms from trading on their own account and / or listing own issued tokens.
6
Staking, tokenisation, DeFi are future targets of regulation
Regulatory frameworks for staking and tokenisation of financial instruments are in their infancy. Sandboxes are sometimes used. There is no agreement on how to regulate (true) DeFi, which remains out of scope of regulation in most jurisdictions.