Regulation
What’s holding back cryptocurrency payments? | PaymentsSource
According to estimates from Deutsche Bank Research, the use of cryptocurrencies as a retail payment instrument is still limited and will only account for 3% of total payments within any country between 2021 and 2023.
However, as a means to improve cross-border transfers, crypto payments use cases are gaining favor, particularly for stablecoins, which tie their value to that of a government-issued currency. However, the lack of regulation discourages banks from adopting crypto technology for this purpose or any other.
Wells Fargo, for example, is evaluating crypto technology for potential transactional, transparency and settlement innovations, but does not accept cryptocurrencies in vaults, custody or other accounts, said Arushi Joshi, head of Wells’ distributed ledger and digital asset center Fargo. of excellence.
“Before we get involved in a meaningful way, we need to see a clear and cohesive regulatory framework that defines cryptocurrencies as financial instruments,” Joshi said.
The United States currently does not have uniform nationwide licensing requirements for cryptocurrency exchanges, which are required to obtain money transfer licenses in any state in which they operate. The United States has no equivalent to the European Union’s electronic money institution licensing regime, which requires non-banks to safeguard funds they hold on behalf of customers. Currently, the state with the most stringent crypto regulations is New York, with the New York Department of Finance’s BitLicense regime.
“Banks are throwing open the door to the benefits cryptocurrencies could bring to the industry,” said Keith Raymond, principal insurance analyst at U.S.-based Celent. Examples include processing payments, providing escrow services, facilitating international cash transactions and providing cryptocurrency loans, he said.
“However, regulatory concerns, volatility and the evolving nature of the cryptocurrency market pose challenges,” he said.
The state of stablecoins
Stablecoins lead the way in adopting cryptocurrencies as payment methods. This is due to their instant settlement on the blockchain and their ability to be combined with smart contracts. They are also designed to avoid volatility by tying their value to that of a government currency.
Some law firms using US cryptocurrency exchange Coinbase choose to get paid in the USDC stablecoin (USD Coin), as they get paid instantly rather than in three days. “Using USDC is cheap and fast; no middlemen and no waiting,” said Paul Grewal, chief legal officer at Coinbase.
Another reason why stablecoins are attractive to B2B payments is that they can be integrated into smart contracts on a blockchain. A smart contract eliminates manual processes and allows payments to be automatically executed if certain terms and conditions are met.
Cross-border remittances using stablecoins are currently the main use case, said James Wester, research director for digital assets and cryptocurrencies at US-based Javelin Strategy and Research. They offer a lower-cost, faster and more transparent alternative to existing methods like Swift for cross-border transactions, and that’s driving adoption, he said.
However, counterparty risk with stablecoins is higher than with traditional bank transfers, and cryptocurrency companies need to think about how to reduce counterparty risk, said Dima Kats, CEO of UK-based payments company Clear Junction.
Cryptographic regulations
The main disadvantage of stablecoins is that their one-to-one peg to the US dollar is not sufficiently regulated and several stablecoin failures have occurred, including that of TerraUSD, resulting in investors losing the value of their holdings. Typically, stablecoins are backed by municipal or government bonds rather than cash in bank accounts.
A stablecoin bill, the Clarity for Payments Stablecoin Act, is making its way through the House of Representatives. Separately, the Lummis-Gillibrand Payment Stablecoin Act was introduced as a bill in the Senate to protect consumers by requiring stablecoin issuers to maintain one-to-one reserves and banning unbacked algorithmic stablecoins.
Both bills aim to bring stablecoins into the same regulatory frameworks that govern traditional financial institutions.
“Ultimately, we expect members of Congress to consolidate around a single proposal that can move forward,” said Ji Kim, chief legal and policy officer of the Washington, D.C.-based Crypto Council for Innovation, a global alliance for the cryptocurrency industry.
Until legislation is adopted to regulate stablecoin issuers, concerns about the underlying assets of stablecoins will likely hold back significant adoption of stablecoins.
“Congress must pass stablecoin regulation to provide the necessary risk mitigation controls,” said Robin Cook, U.S. legislative policy counsel at Coinbase. “Regulation is necessary to ensure that a stablecoin issuer with a one-to-one dollar-backed currency can demonstrate that it has real liquid assets backing its stablecoins.”
Banks will consider adopting stablecoins as stablecoin bills progress through Congress, said Simon Jones, chief commercial officer at UK-based crypto payments firm Baanx Group.
How consumers use cryptocurrencies
The primary use of cryptocurrencies for the 10-20% of Americans who have owned them is investing, and investors need to cash out. According to Martha Bennett, vice president and principal analyst at US-based Forrester Research, most cryptocurrency payments are made by people who want to realize the gains made by holding cryptocurrencies.
However, the entire point-of-sale payment experience was designed with cards in mind, not only for payments but also to address fraud and refunds. So it’s a challenge for cryptocurrencies to match this experience and allow consumers to access their money quickly and seamlessly, Javelin’s Wester said.
Various payment system participants have been working on how to allow consumers to use cryptocurrency for retail payments. Most are hybrid methods that use an exchange to exchange cryptocurrencies for government-issued currency for payment.
Mastercard does not process cryptocurrency payments directly, but has launched card programs with 60 crypto wallet providers, according to Raj Dhamodharan, executive vice president of blockchain and digital assets at Mastercard. When cards linked to consumers’ crypto wallets are used for purchases, the cryptocurrency is converted by the cryptocurrency exchange into dollars and the merchant gets paid that way, he said. “We haven’t seen demand from merchants to be paid in cryptocurrencies,” he said.
Last month, San Francisco-based Stripe said it would allow its merchants to accept payments with USDC stablecoin starting this summer.
“Stablecoin payments are automatically settled in fiat for Stripe users, meaning they have a consistent and seamless experience across their card, banking and cryptocurrency transactions,” said John Egan, head of cryptocurrency at Stripe.
Companies like San Jose-based PayPal are merging stablecoins with existing payment experiences, said Marion Laboure, senior strategist at Deutsche Bank Research. Last month, PayPal said its cross-border money transfer service Xoom now supports the company’s PYUSD stablecoin. PayPal’s initial purpose in offering its stablecoin was for P2P payments.
Consumers can also make cryptocurrency payments directly from crypto wallets held by companies like US-based BitPay or Coinbase at a small number of online and in-store merchants.
However, while cryptocurrency spending increased 20% from January 1, 2024 to March 31, 2024, due to the bitcoin bull run, direct cryptocurrency payments are still minuscule, according to the BitPay Spending Report 2024. “Cryptocurrency payments rarely exceeded 3% of overall payments within any country between 2021 and 2023,” said Deutsche Bank Research’s Laboure. “Overall, the use case for cryptocurrency as a means of payment has not yet been fully realized.”
Regulation
Cryptocurrency Regulation in Slovenia 2024
Slovenia, a small but highly developed European country with a population of 2.1 million, boasts a rich industrial history that has contributed significantly to its robust economy. As the most economically developed Slavic nation, Slovenia has grown steadily since adopting the euro in 2007. Its openness to innovation has been a key factor in its success in the industrial sector, making it a favorite destination for cryptocurrency enthusiasts. Many believe that Slovenia is poised to become a powerful fintech hub in Europe. But does its current cryptocurrency regulatory framework support such aspirations?
Let’s explore Slovenia’s cryptocurrency regulations and see if they can push the country to the forefront of the cryptocurrency scene. My expectations are positive. What are yours? Before we answer, let’s dig deeper.
1. Cryptocurrency Regulation in Slovenia: An Overview
Slovenia is known for its pro-innovation stance, providing a supportive environment for emerging technologies such as blockchain and cryptocurrencies. Under the Payment Services and Systems Act, cryptocurrencies are classified as virtual assets rather than financial or monetary instruments.
Regulation of the cryptocurrency sector in Slovenia is decentralized. Different authorities manage different aspects of the ecosystem. For example, the Bank of Slovenia and the Securities Market Agency supervise cryptocurrency transactions to ensure compliance with financial laws, including anti-money laundering (AML) and counter-terrorist financing regulations. The Slovenian Act on the Prevention of Money Laundering and Terrorist Financing (ZPPDFT-2) incorporates the EU’s Fifth Anti-Money Laundering Directive (5MLD) and aligns with the latest FATF recommendations. All virtual currency service providers must register with the Office of the Republic of Slovenia.
2. Cryptocurrency regulation in Slovenia: what’s new?
This year, there have been several noteworthy developments in the cryptocurrency sector in Slovenia:
July 25, 2024: Slovenia has issued a €30 million on-chain sovereign digital bond, the first of its kind in the EU, with a yield of 3.65%, maturing on 25 November 2024.
May 14, 2024: NiceHash has announced the first Slovenian Bitcoin-focused conference, NiceHashX, scheduled for November 8-9 in Maribor.
3. Explanation of the legal framework for cryptocurrency taxation in Slovenia
Slovenia’s cryptocurrency tax framework provides clear guidelines for both individuals and businesses. According to the Slovenian Tax Administration, tax treatment depends on the status of the trader and the nature of the transaction.
- Individuals: Income earned from cryptocurrencies through employment or ongoing business activities is subject to personal income tax. However, capital gains from trading or market fluctuations are exempt from taxation.
- Society: Capital gains from cryptocurrency activities are subject to a corporate income tax of 19%. Value added tax (VAT) generally applies at a rate of 22%, although cryptocurrency transactions considered as means of payment are exempt from VAT. Companies are not allowed to limit payment methods to cryptocurrencies only. Tokens issued during ICOs must comply with standard accounting rules and the Corporate Tax Act.
4. Cryptocurrency Mining in Slovenia: What You Should Know
Cryptocurrency mining is not restricted in Slovenia, but the income from mining is considered business income and is therefore taxable. This includes rewards from validating transactions and any additional income from mining operations. Both natural persons and legal entities must comply with Slovenian tax regulations.
5. Timeline of the evolution of cryptocurrency regulations in Slovenia
Here is a timeline highlighting the evolution of cryptocurrency regulations in Slovenia:
- 2013:The Slovenian Tax Administration has issued guidelines according to which income from cryptocurrency transactions should be taxed.
- 2017:The Slovenian Tax Administration has provided more detailed guidelines on cryptocurrency taxation, based on factors such as the trader’s status and the type of transaction.
- 2023The EU has adopted the Markets in Cryptocurrencies Regulation (MiCA), which establishes a uniform regulatory framework for cryptocurrencies, their issuers and service providers across the EU.
Final note
Slovenia’s approach to the cryptocurrency industry is commendable, reflecting its optimistic view of the future of cryptocurrency. The country’s balanced regulatory framework supports cryptocurrency innovation while protecting user rights and preventing illegal activities. Recent developments demonstrate Slovenia’s commitment to continuously improving its regulatory environment. Slovenia’s cryptocurrency regulatory framework sets a positive example for other nations navigating the evolving cryptocurrency landscape.
Read also: Cryptocurrency Regulation in Hong Kong 2024
Regulation
A Blank Slate for Cryptocurrencies: Kamala Harris’ Regulatory Opportunity
Photo by The Dhage of Shubham ON Disinfect
As the cryptocurrency landscape continues to evolve, the need for clear regulation has never been greater.
Vice President Kamala Harris is now leading the charge on digital asset regulation in the United States, presenting a unique opportunity for a clean slate. This fresh start can foster innovation and protect consumers. It can also pave the way for widespread adoption across industries, including real estate agencies, healthcare providers, and online gambling platforms like these online casinos in the uk. According to experts at SafestCasinoSites, these platforms have advantages such as bonus offers, a wide selection of games, and various payment methods. Ultimately, all this increased adoption could push the cryptocurrency market forward.
With that in mind, let’s take a look at the current state of cryptocurrency regulation in the United States, which is a complex and confusing landscape. Multiple agencies, including the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Financial Crimes Enforcement Network (FinCEN), have overlapping jurisdictions, creating a fragmented regulatory environment. This lack of clarity has hindered innovation, as companies are reluctant to invest in the United States, fearing regulatory repercussions. A cohesive and clear regulatory framework is urgently needed to unlock the full potential of cryptocurrencies in the United States.
While the US struggles to find its footing, other countries, such as Singapore and the UK, are actively embracing the cryptocurrency industry with clear and supportive regulatory frameworks. This has led to a brain drain, with companies opting to set up in more hospitable environments.
Vice President Kamala Harris has a unique opportunity to change this narrative and clean up the future. cryptocurrency regulation. By taking a comprehensive and inclusive approach, it can help create a framework that balances consumer protection with innovation and growth. The time has come for clear and effective regulation of cryptocurrencies in the United States.
Effective regulation of digital assets is essential to fostering a safe and innovative environment. Key principles guiding this regulation include clarity, innovation, global cooperation, consumer protection, and flexibility. Clear definitions and guidelines eliminate ambiguity, while encouraging experimentation and development to ensure progress. Collaboration with international partners establishes consistent standards, preventing regulatory arbitrage. Strong safeguards protect consumers from fraud and market abuse, and adaptability allows for evolution in response to emerging trends and technologies, striking a balance between innovation and protection.
The benefits of effective cryptocurrency regulation are many and far-reaching. By establishing clear guidelines, governments can attract investors and traditional users, spurring growth and adoption. This, in turn, can position countries like the United States as global leaders in financial technology and innovation. Strong protections will also increase consumer confidence in digital assets and related products, boosting economic activity.
A thriving cryptocurrency industry can significantly contribute to GDP and job creation, which has a positive impact on the overall economy. Furthermore, effective regulation has paved the way for the growth of many companies such as tech startups, online casinos, and pharmaceutical companies, proving that clear guidelines can unlock new opportunities without stifling innovation. This is a great example of how regulation can alleviate fears of regressive policies, even if Kamala Harris does not repeal the current progressive approach. By adopting effective regulation, governments can create fertile ground for the cryptocurrency industry to thrive, driving progress and prosperity.
Regulation
Think You Own Your Crypto? New UK Law Would Ensure It – DL News
- The UK Law Commission has developed a bill that will address a situation of legal uncertainty.
- The commission’s goal is to ensure that cryptocurrencies are legally treated as personal property.
UK law is not entirely clear whether cryptocurrencies can be considered personal property.
This is according to the UK Law Commission, which argues that while most investors assume that when they buy cryptocurrencies, they are “acquiring property rights in the same way as buying, say, a watch or a laptop.”
“As the law currently stands, this is not necessarily the case,” the respected legal body said in a new report on Tuesday.
The report was accompanied by a solution: a new bill to consolidate the legal status of digital assets as personal property.
This could be huge for the estimated 4.7 million Britons valued hold cryptocurrencies.
“This will allow the courts to determine a range of issues,” the report says.
If passed, the law would help clarify how cryptocurrencies are treated in cases of bankruptcy, estate planning or theft.
Flexible law
The commission is an independent body responsible for reviewing UK law. It began investigating whether English and Welsh property laws apply to digital assets in 2020.
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At the time, then-Chancellor of the Exchequer Rishi Sunak expressed ambitions to transform the UK into a cryptocurrency hub as Britons invested more.
In 2023, the commission decided that, in most cases, the legislation of England and Wales is sufficiently flexible to regulate cryptocurrencies.
This means that any asset, from Bitcoin to non-fungible tokens and some types of digital contracts, can be considered personal property, without Parliament having to write extensive new laws.
There was one small area of uncertainty, however: it was unclear whether cryptocurrencies fell within the two categories of personal property recognised under UK law.
These two categories are made up of tangible assets (cars, laptops, bags) and intangible assets (contracts, stocks, and debt).
The bill that will now go to Parliament to be converted into law aims to remedy this situation.
Without that clarification, courts may try to lump cryptocurrencies together with intangible assets, said Adam Sanitt, head of litigation, knowledge, innovation and corporate support EMEA at law firm Norton Rose Fulbright. DL News in March.
This is problematic because intangible assets are creations of the legal system, while cryptocurrencies are not.
“How the law treats digital assets, what rights you have over them, how you own them, how you transfer them to other people—that treatment is different, because digital assets don’t exist by virtue of the legal system, but independently of it,” Sanitt said.
The money in your bank account, for example, is a legal creation. The government could pass a law to cancel it.
However, if the UK passed a law banning Bitcoin, Bitcoin would not cease to exist.
Sanitt said: “That’s why digital assets are so important: neither the government nor the legal system can take them away from you.”
Contact the author at joanna@dlnews.com.
Regulation
The Solution the Cryptocurrency Industry Needs
The cryptocurrency industry has performed remarkably well since its inception, but now faces a critical hurdle that requires careful consideration and regulatory expertise to overcome. Despite the industry’s rapid growth and rate of global adoption, the gap between the industry and global regulation is only widening as new innovations break through into the public domain.
Although efforts are being made on both sides, regulators’ lack of familiarity with cryptocurrencies and the industry’s lack of regulatory expertise are hindering innovation in the sector. To address this issue, traditional financial institutions (TradFi) such as MultiBank Group have started venturing into the cryptocurrency sector.
The regulatory gap
Over the past decade, the cryptocurrency industry has grown dramatically as tech entrepreneurs and forward-thinking thinkers have founded a plethora of crypto platforms and protocols to push the boundaries of the space. The problem faced by these newcomers, who are often unfamiliar with the hurdles posed by financial regulators, can quickly overwhelm and stall operations.
On the other hand, regulators more attuned to TradFi systems may be equally stifled by the complexities of decentralization and blockchain technology. The unfamiliarity experienced by both innovators and regulators creates a stark regulatory divide between both sides, leading to misunderstandings and potential conflicts.
To overcome this lack of communication, a bridge must be built to bridge the gap, ensuring future stability for the cryptocurrency industry and clearer legislation from regulators.
Efforts to bridge the gap between industry
The gap between the cryptocurrency industry and regulators is slowly narrowing as efforts to regulate cryptocurrencies and Web3 space activities are gaining momentum. Specific regulatory actions are taking place in many countries, aimed at providing greater oversight of cryptocurrency transactions, cryptocurrency exchanges, and initial coin offerings (ICOs).
Despite being a positive step in the right direction, these new regulations can differ significantly between jurisdictions around the world. This fragmentation results in a regulatory environment filled with obstacles, bottlenecks, and varying requirements and prohibitions. As cryptocurrency companies and TradFi institutions attempt to navigate the minefield, the regulatory maze becomes increasingly convoluted.
TradFi institutions like MultiBank Group are working to solve this problem, as one of the largest financial derivatives institutions in the world with over 12 licenses across all continents. Founded in 2005, the Group has an impeccable and trustworthy reputation globally, extensive expertise in financial regulation and has now ventured into the cryptocurrency space via MultiBank.io.
MultiBank.io: TradFi Excellence in the Crypto Space
Expanding into the cryptocurrency space via MultiBank.io has enabled MultiBank Group to provide regulatory clarity and trust to the digital asset industry. With a substantial daily trading volume of $12.1 billion, the timely decision to enter the cryptocurrency space has the potential to set regulatory precedents and standards for years to come.
By helping to develop sensible and well-considered regulations, MultiBank.io’s established reputation allows the company to communicate effectively and clearly with regulators. Unlike others in the industry without regulatory expertise, MultiBank.io facilitates the Group’s commitment to rigorous regulatory standards, the scope of oversight and establishes the necessary transparency.
The company’s approach ensures that regulatory licenses are pre-acquired, compliance is met globally without jurisdictional barriers, and transactions remain secure at all times. By helping to create robust regulations that are both clear and innovation-friendly, MultiBank Group looks forward to standardizing the entire cryptocurrency industry for other potential innovators.
One of the biggest challenges in establishing a clearly constructed bridge between regulators and the cryptocurrency industry is effective communication. By leveraging its institutional background TradFi and acting as an intermediary with regulators, MultiBank Group is able to translate the needs of the industry to those who shape it.
This quality of mediation is essential to ensure that regulation helps develop essential technological advances rather than hinders their establishment and growth. Through the lens of TradFi when looking at the complexity of the cryptocurrency industry, MultiBank Group is able to deconstruct unfamiliar crypto arguments for regulation and create a safer and more secure space.
Where TradFi and Crypto Meet
Regulations are crucial for traders, investors, and everyday users of crypto platforms and their safety when participating in crypto markets. While strict regulations are necessary for stable market integrity, innovation should still be considered, something MultiBank Group considers a priority.
Where TradFi and cryptocurrencies converge, the Group is there to provide a balanced approach to ensure promotion for both the cryptocurrency industry and regulators seeking to protect both retail and institutional investors. This balance is critical to maintaining a thriving space where cryptocurrency innovation can thrive without compromising the security of user funds or data.
As more TradFi institutions like MultiBank Group enter the cryptocurrency space with ever-expanding expertise in regulatory understanding, the future of the industry is increasingly encouraged. The financial freedoms of the cryptocurrency space coupled with regulatory oversight for financial security will be the guiding lights for the future success of the entire cryptocurrency industry.
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