Cryptocurrency Market Regulation In 2018
2019 is just around the corner, and analysts have already called it the year of the cryptocurrency market regulation. The reason is the decisions made by crypto regulators around the globe. In 2017-2018, the crypto market was eloquently called the Wild West. It emphasized the abundance of manipulative tactics and the dirty game that undermined the cost of main cryptocurrencies. And we all know where that has led the world by the end of 2018.
Crypto enthusiasts have divided into two parties. Some of them believe that bitcoin reached its real value in December 2018, while others are confident in its rapid growth. One thing is for certain: authorities systematically close legislation gaps and adapt conditions for the young and rapidly evolving cryptocurrency market. Let's have a look at the steps taken by governments throughout this year to regulate the crypto industry.
Top five regulative decisions in 2018
G20 and cryptocurrency market regulation
The G-20 summit started in Buenos Aires on November 30. According to the final declaration signed on December 1, leaders of the world’s most influential countries have decided to take over the cryptocurrency market regulation. The foundation for this was outlined already in summer: G-20 members agreed to develop anti-money-laundering standards applicable to the crypto industry.
According to the December declaration, AML-policies will be developed and implemented to combat the financing of terrorism. The document also contains plans to create a cryptocurrency taxation system. Leaders will have to submit their proposals during the summit in 2020.
SEC and ICO Regulation
In 2018, the regulation of the ICO market in the USA became stricter than ever. SEC closed more than a dozen of ICOs by the end of the fiscal year on September 30. A quarter of them could raise up to $68 million. Also, the Commission imposed fines and sanctions totaling nearly $4 billion.
It's expected that in the future the ICO regulation will be under the same strict control. For some startupers, it is the need to comply with laws and obligations. For others, it is the reason not to launch ICO campaigns in the United States.
FSA and self-regulation of crypto trading
When talking about changes in the cryptocurrency market regulation in 2018, we can't fail to mention Japan. On October 24, the Japanese Financial Services Agency transferred its powers to control crypto trading to JVCEA — Japan's Virtual Currency Exchange Association. Only the exchanges that are members of the Association and comply with the law can trade in the country.
This FSA decision was caused by the inability to control the industry by itself because of the rapid pace of the crypto market development. It's assumed that competing exchanges will do it better. Thus, the Japanese authorities hope to avoid large-scale thefts of clients' funds from exchanges, as it happened with Coincheck in January 2018.
SEC and Bitcoin ETF
On July 6, the financial companies VanEck and SolidX filed an application with the Securities and Exchange Commission to add bitcoin Exchange Traded Funds (ETF) to the CBOE exchange. The Commission had 180 days to consider the request, but postponed it on December 6. The final decision will be announced on February 27, 2019.
As SEC Chairman Jay Clayton noted, bitcoin ETFs trading will not bring benefits to the market while manipulative tactics are in progress. However, he mentioned that this was his personal point of view, which had nothing to do with the official SEC's policy.
DFS and Coinbase Custody
The fact that the Coinbase Custody Trust will become the first custodian cryptocurrency depository was known in the summer of 2018. On October 23, the company received the license from the Department of Financial Services of New York (DFS) to provide custody services.
The Coinbase Custody Trust is the first, but not the only one. For example, the BitGo Trust Company also obtained the license in South Dakota. The creation of custodial depositories is the first step for institutional investors to enter the market. The second is bitcoin ETF trading, but it's too soon to talk about it.