The year 2022 is not the best in terms of crypto’s reputation among regulators and policy makers. However, even in the midst of market collapse and repeated public attacks on the industry, some officials found the courage to embrace the innovation. Some names are not new, while others represent significant enough progress to be included in this list. The United Arab Emirates and El Salvador continue to push the crypto agenda and the UK shows great efforts to create a regulatory foundation, while Brazil and the Central African Republic legally recognize the cryptocurrencies.
Brazil
2021 may be the year of mass adoption in Brazil, but 2022 is when the country finally gets its own regulatory framework. Before leaving his office, Jair Bolsonaro, the former president of Brazil, signed a bill legalizing the use of crypto as a means of payment in the country. The bill does not make cryptocurrencies legal, as in El Salvador, but still introduces a legal definition of digital currency and establishes a licensing regime for virtual asset service providers.
Bill came in about time. The number of companies holding cryptocurrencies in Brazil has reached a record high – the country’s tax authorities listed 12,053 unique organizations that declared crypto on their balance sheets in August 2022.
In May, the Brazilian Stock Exchange confirmed its intention to launch the first official product aimed at the cryptocurrency market – Bitcoin (BTC) futures trading. In contrast to the United States, currently, institutional and retail investors trade 11 exchange-traded funds (ETFs) with exposure to cryptocurrencies on the Brazilian Exchange.
England
Great Britain certainly did not have an easy year. In 2022, Queen Elizabeth II died after serving the country for 70 years. Two Prime Ministers – Boris Johnson and Liz Truss – resigned. But when it comes to crypto, tumultuous governments never stop working on regulation. And although 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 center. It expands stablecoin regulations and creates a new term – Digital Settlement Asset (DSA). The Bill will empower the Treasury to manage DSAs, including payments, service provision and insolvency arrangements. The Economic Crimes and Corporate Transparency Bill, which was introduced in May, proposes to “create powers to make it faster and easier to seize and recover crypto assets” to reduce the risk to individuals targeted by ransomware attacks.
related: Indonesia’s crypto industry in 2021: Kaleidoscope
This year, the UK Web3 community is celebrating an important legal precedent. The High Court in London, the closest analogue to the United States Supreme Court, has ruled that nonfungible tokens (NFT) represent “private property.”
At a time when everyone is counting on unhosted wallets, the Treasury is easing requirements to collect data from senders and receivers of crypto sent to unhosted wallets, unless the transaction poses “illegal financial risk.” And, at the end of the year, it offers a great gift to all investors with qualifying “designated crypto asset” transactions for the Investment Manager Exemption.
Savior
The nation of El Salvador, whose main breakthrough happened in 2021, deserves to be included in this list, not least because of its continuity. After announcing plans to issue “Bitcoin bonds,” Nayib Bukele’s government has tried to implement it. The first delay came in March, then it was repeated in September. In November, economy minister Maria Luisa Hayem Brevé introduced a bill confirming the government’s plan to raise $1 billion and invest in the construction of a “Bitcoin city.” However, there has been no news of the bill’s success since then.
However, the country remains an important laboratory for Bitcoin adoption. According to the Salvadoran Minister of Tourism Morena Valdez, the tourism industry in El Salvador has surged more than 30% since the adoption of the Bitcoin law in September 2021. In early 2022, a study conducted by the National Bureau of Economic Research (NBER) shows that 20% of businesses have started receiving BTC is the payment method.
In May, El Salvador welcomed 44 central banks from developing countries around the world to address financial inclusion and discuss Bitcoin in a three-day conference. The event was opened by central bank delegations from Ghana to Burundi, Jordan to the Maldives and Pakistan to Costa Rica.
Central African Republic
In April, the Central African Republic (CAR) of 5 million inhabitants became the first country on the continent to legalize the use of cryptocurrencies in the financial market. The cryptocurrency bill, with an agreement approved by parliamentarians, allows traders and businesses to make crypto payments and also make tax payments in crypto through authorized entities. In July, a local central bank digital currency (CBDC), Sango Coin, launched to raise nearly $1 billion in the next year. So far, only $1.66 million has been sold.
The country also announced plans to allow foreign investors to purchase citizenship for $60,000 from Sango Coin. However, this initiative was blocked as unconstitutional by the CAR’s top court.
The adoption drew a backlash from the Central African State Bank (BEAC), which warned of the “substantial negative impact” the law would have on the Central African monetary union.
United Arab Emirates
The United Arab Emirates takes a strategic approach to crypto and continues to create a regulatory environment and attract global investors. Perhaps the country entered the Cointelegraph listicle for the second time in a row.
In March, Dubai created a legal framework for crypto aimed at protecting investors and “designing highly secured international standards” for industry governance. The newly formed Dubai Virtual Asset Regulatory Authority (VARA) gains enforcement powers in the Emirate’s special developments and free zones except the Dubai International Financial Centre. The currently bankrupt crypto exchange FTX was one of the first to obtain a similar license.
Another emirate, Abu Dhabi, made draft recommendations for NFT trading. They mark NFTs as intellectual property rather than “specific investments or financial instruments” and allow multilateral trading facilities (MTFs) and Virtual Asset Custodians (VACs) to operate the NFT market.
In July, Dubai launched the Dubai Metaverse Strategy, which aims to transform the Emirate into one of the top 10 metaverse economies in the world. This includes research and development (R&D) collaboration to increase the economic contribution of the metaverse, using accelerators and incubators to attract companies and projects from abroad, and providing support in metaverse education aimed at developers, content creators and users.
The country even opened the first city in the Metaverse. Dubbed the Sharjahverse, it is described as a “photorealistic, physics-accurate” metaverse that covers the emirate’s 1,000 square mile surface area. The virtual city will support the local tourism industry and potentially create new metaverse projects.
All in all, 2022 isn’t too bad in terms of friendly regulations. And next year will be even more interesting, with the race to the first comprehensive crypto framework in the US and potential liberalization in Hong Kong and South Korea.