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The Global Race to Regulate Cryptocurrency Accelerates

Publications / Apr 27, 2022

Countries around the world are shifting gears in the race to lead the world of cryptocurrency and NFT regulation.

In the UK, the British government announced its plans to launch a government NFT, as part of its broader plan to become a “world leader” in cryptocurrency. This plan includes, among other things, an expansion of existing regulation on electronic payments to make it applicable to stablecoin, the development of innovative regulation on cryptocurrency trading and investments, and an examination of the legal status of Decentralized Autonomous Organizations (DAOs).

The Emirate of Dubai, which also aspires to be a leader in the cryptocurrency world, enacted an innovative law regulating the trade of virtual assets. The law requires traders of any virtual asset to obtain a designated license from the Virtual Assets Regulatory Authority (VARA), which was established under the same law. The VARA will supervise all cryptocurrency-related services and transactions, including virtual assets platforms, virtual asset management services, digital wallets, and services relating to NFT trade.

The EU parliament proposed an amendment to the Transfer of Funds Regulations which combat money laundering and terror financing. The amendment introduces provisions regulating the use of unhosted wallets, which are private digital wallets not covered by the Financial Action Task Force. The proposed amendments will all transactions involving unhosted wallets, regardless of their sum, subject to a “know your client” procedure. It is unclear how such a procedure will unfold, as the identities of the parties to the transactions are usually unknown. The proposed amendments will also require the cryptocurrency stock exchange to report to the authorities any unhosted wallet transaction of over 1,000 Euros, even if the transaction does not raise any issues.