HomeCryptoFive cases of governments embracing digital assets
Five cases of governments embracing digital assets
January 1, 2023
The year 2022 has not been the best in terms of crypto reputation among regulators and policy makers. However, even amid the market crisis and repeated public attacks on the sector, some officials have found the courage to embrace innovation. Some of the names aren’t new, while others have shown significant enough progress to include on this list. The UAE and El Salvador have continued to push forward their crypto agenda and the UK has shown great effort to lay the regulatory foundation, while Brazil and the Central African Republic have legally recognized cryptocurrencies.
2021 may have been a year of mass adoption in Brazil, but it was 2022 when the country finally got its own regulatory framework. Before leaving office, Jair Bolsonaro, the former president of Brazil, signed a bill legalizing the use of cryptocurrencies as a payment method within the country. The bill does not make cryptocurrencies legal tender, as in El Salvador, but still introduces the legal definition of digital currencies and establishes a licensing regime for virtual asset service providers.
The bill arrived on time. The number of companies holding cryptocurrencies in Brazil has set new records: The country’s tax authority recorded 12,053 unique organizations declaring cryptocurrencies on their balance sheets in August 2022.
In May, the Brazilian stock exchange confirmed its intention to launch the first official product targeting the cryptocurrency market: Bitcoin (BTC) futures trading. Unlike in the US, institutional and retail investors are currently trading 11 exchange-traded funds (ETFs) with exposure to cryptocurrencies on the Brazilian stock exchange.
Britain has certainly not had an easy year. In 2022, Queen Elizabeth II passed away after serving the nation for 70 years. Two prime ministers, Boris Johnson and Liz Truss, have resigned. But when it comes to cryptocurrencies, the turbulent government has never stopped working on regulation. And while the fruits of this work may be more impressive, the UK still makes an important case for a national regulatory framework.
The Financial Services and Markets Bill, introduced in July, reaffirmed the UK’s intention to become a global cryptocurrency hub. He expanded stablecoin regulations and coined a new term: Digital Settlement Assets (DSA). The bill will authorize the Treasury to regulate DSAs, including payments, service providers and insolvency settlements. The Economic Crime and Corporate Transparency Bill, introduced in May, proposed to “create powers to more quickly and easily seize and recover cryptographic assets” to mitigate the risks to individuals targeted by ransomware attacks.
Related: The cryptocurrency industry in Indonesia in 2021: a kaleidoscope
The UK’s Web3 community celebrated an important legal precedent this year. The High Court of Justice in London, the closest analogue to the US Supreme Court, has ruled that non-fungible tokens (NFTs) represent “private property”.
At a time when everyone is looking for unhosted wallets, the Treasury has scaled back its requirements for collecting data from both senders and recipients of cryptocurrencies sent to unhosted wallets, unless the transaction poses “high funding risk.” illicit”. And, by the end of the year, it has given a great gift to all investors by qualifying transactions of “designated crypto assets” for the investment manager exemption.
The nation of El Salvador, whose major breakthrough occurred in 2021, deserves inclusion on this list, at least for its persistence. After revealing the plan to issue “Bitcoin bonds,” Nayib Bukele’s government has been trying to execute it ever since. The first delay came in March, then repeated in September. In November, Economy Minister Maria Luisa Hayem Brevé presented a bill confirming the government’s plan to raise $1 billion and invest it in building a “Bitcoin city”. However, there has been no news of the success of the bill since then.
However, the country remains a crucial laboratory for the adoption of Bitcoin. According to Salvadoran Tourism Minister Morena Valdez, the tourism industry in El Salvador has increased by more than 30% since the adoption of the Bitcoin law in September 2021. As of early 2022, a study by the National Bureau of Economic Research ( NBER) showed that 20% of businesses have started accepting BTC as a payment method.
In May, El Salvador welcomed 44 central bankers from developing countries from around the world to address financial inclusion and discuss Bitcoin at a three-day conference. The event was visited by central bank delegates from Ghana to Burundi, Jordan to the Maldives and Pakistan to Costa Rica.
The Central African Republic
In April, the 5 million-strong Central African Republic (CAR) became the first nation on the continent to legalize the use of cryptocurrencies in financial markets. The cryptocurrency bill, passed unanimously by lawmakers, allowed merchants and businesses to make cryptocurrency payments and also make way for cryptocurrency tax payments through licensed entities. In July, the local central bank (CBDC) digital currency, Sango Coin, was launched to raise nearly $1 billion over the next year. So far, however, only $1.66 million of the coin has been sold.
The country had also announced a plan to allow foreign investors to purchase $60,000 worth of citizenship in Sango Coins. However, this initiative was blocked as unconstitutional by the Supreme Court of the Central African Republic.
The adoption drew opposition from the Bank of Central African States (BEAC), which warned of the “substantial negative impact” the legislation will have on the Central African monetary union.
United Arab Emirates
The UAE has taken a strategic approach to cryptocurrencies and has consistently moved to create a regulatory environment and attract global investors. Maybe that’s why the country makes Cointelegraph’s list for the second time in a row.
In March, Dubai established a legal framework for cryptocurrencies aimed at protecting investors and “designing very secure international standards” for sector governance. A new Dubai Virtual Asset Regulatory Authority (VARA) has been granted executive powers in the special development and free zones of the Emirate, with the exception of the Dubai International Financial Centre. The now bankrupt cryptocurrency exchange FTX was among the first to obtain the same license.
Another emirate, Abu Dhabi, has presented draft recommendations for NFT trading. They marked NFTs as intellectual property rather than “investments or specific financial instruments” and allowed Multilateral Trading Facilities (MTFs) and Virtual Asset Custodians (VACs) to operate the NFT markets.
In July, Dubai launched the Dubai Metaverse Strategy, which aimed to transform the Emirate into one of the top 10 metaverse economies in the world. It includes research and development (R&D) collaborations to enhance the metaverse’s economic contributions, using accelerators and incubators to attract companies and projects from abroad, and providing support in metaverse education for developers, content creators and users.
The country has even opened its first city in the Metaverse. Dubbed the Sharjahverse, it has been described as a “photorealistic, physically accurate” metaverse encompassing the emirate’s 1,000-square-mile area. The virtual city will support the local tourism industry and potentially create new jobs in the metaverse.
All in all, 2022 hasn’t been all that bad in terms of friendly settlement. And next year will be even more exciting, with the race for the first full crypto framework in the US and potential liberalization in Hong Kong and South Korea.