Governments around the world have increased their scrutiny of cryptocurrencies in the past year following a series of crises, and many of them have strengthened consumer protections in the volatile sector.
In 2023, 17 jurisdictions, including Hong Kong, the European Union, South Korea, Singapore and the United States, will tighten cryptocurrency regulations, according to a report released Monday by blockchain analysis firm TRM Labs.
Those strengthening protection accounted for 80 percent of the 21 jurisdictions studied by the firm, with the latter accounting for 70 percent of global cryptocurrency exposure, TRM Labs said.
In 2022, the collapse of several major cryptocurrency platforms, including the TerraUSD stablecoin and the FTX exchange, caused a market crash that wiped out trillions of dollars in value.
Hong Kong to boost retail access to spot cryptocurrency exchange-traded funds
Hong Kong to boost retail access to spot cryptocurrency exchange-traded funds
While 2023 began with the crypto ecosystem โrecovering from the FTX collapse,โ the following year โsaw an extraordinary surge in regulation around the world,โ the report says.
Among the notable measures, the European Union's Cryptoasset Markets Regulation came into effect in June last year, and Hong Kong's new licensing regime for centralized cryptoasset exchanges came into effect, the firm noted.
Singapore, which the report described as โan early adopter of cryptocurrency regulation,โ in November last year issued a set of rules aimed at curbing retail speculation in cryptocurrencies and finalized its rules for stablecoins.
Meanwhile, South Korea and Australia also increased scrutiny of the cryptocurrency sector last year, according to the report.
In the United States, the Securities and Exchange Commission intensified its enforcement actions against cryptocurrency companies in 2023, and the House Financial Services Committee also introduced bills last July aimed at creating a federal regulatory framework for the cryptocurrency market, with specific attention to stablecoins.
Nearly half of jurisdictions that tightened crypto regulations in 2023 increased consumer protection measures, according to TRM Labs.
He also noted that international organizations, including the G20, the Financial Action Task Force, the Financial Stability Board, the International Monetary Fund, and the International Organization of Securities Commissions, have established global frameworks and policy recommendations to regulate cryptocurrencies.
Hong Kong, which in October 2022 announced a major initiative to support the virtual asset sector with the goal of becoming a global hub for such companies, has implemented a mandatory licensing regime for centralized crypto exchanges that allows them accept retail investors.
So far, eleven companies have submitted applications for licensing in the city, including OKX, one of the largest exchanges by trading volume.
