Crypto makes history in 2022: Five instances of governments embracing digital assets
The year 2022 wasn’t the best one in terms of crypto reputation among regulators and policymakers. However, even amid the market breakdown and repetitive public attacks on the industry, some of the officials found the courage to embrace the innovation. Some of the names are not new, while others showed progress significant enough to include them in this listicle. The United Arab Emirates and El Salvador continued to push their crypto agenda and the United Kingdom showed great effort to lay the regulatory foundation, while Brazil and the Central African Republic legally recognized the cryptocurrencies.
Brazil
2021 might have been a year of mass adoption in Brazil, but it was 2022 when the country finally got 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 payment method within the country. The bill doesn’t make cryptocurrencies legal tender, as in El Salvador, but it still introduces the legal definition of digital currencies and establishes a licensing regime for virtual asset service providers.
The bill came in about time. The number of companies holding cryptocurrency in Brazil has reached new record highs — the country’s taxation authority recorded 12,053 unique organizations declaring crypto on their balance sheets in August 2022.
In May, 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 Brazilian Exchange.
The United Kingdom
Great Britain surely didn’t have 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 — resigned. But when it comes to crypto, the turbulent government never stopped working on regulation. And even if the fruits of this work could be more impressive, the United Kingdom still makes an important case for a national regulatory framework.
The Financial Services and Markets Bill, introduced in July, reasserted the U.K.’s intention to become a global cryptocurrency hub. It broadened regulations of stablecoins and coined a new term — Digital Settlement Assets (DSA). The bill will authorize the Treasury to regulate DSAs, including payments, service providers and insolvency arrangements. The Economic Crime and Corporate Transparency Bill, introduced in May, proposed “creating powers to more quickly and easily seize and recover crypto assets” to mitigate risks for individuals targeted by ransomware attacks.
Related: Indonesia’s crypto industry in 2021: A kaleidoscope
This year, the British Web3 community celebrated an important legal precedent. The High Court of Justice in London, the closest analog to the United States Supreme Court, has ruled that nonfungible tokens (NFT) represent “private property.”
In a time when everyone is poking on unhosted wallets, Treasury scaled back its requirements for gathering data from both the senders and recipients of crypto sent to unhosted wallets unless the transaction poses “an elevated risk of illicit finance.” And, by the end of the year, it made a great present to all the investors by qualifying the transactions of “designated crypto assets” for the Investment Manager Exemption.
El Salvador
The nation of El Salvador, whose main breakthrough occurred in 2021, deserves to be included in this listicle, at least for its persistence. Once revealing the plan to issue “Bitcoin bonds,” the government of Nayib Bukele 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 introduced a bill confirming the government’s plan to raise $1 billion and invest them into the construction of a “Bitcoin city.” However, no news about the success of the bill has occurred since.
Still, the country remains a crucial laboratory for Bitcoin adoption. According to Salvadoran Tourism Minister Morena Valdez, the tourism industry in El Salvador has surged more than 30% since the adoption of the Bitcoin law in September 2021. At the beginning of 2022, a study conducted 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 around the world to tackle 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-populated Central African Republic (CAR) became the first nation on the continent to legalize the use of cryptocurrencies in the financial markets. The cryptocurrency bill, unanimously approved by lawmakers, allowed traders and businesses to make crypto payments and also make way for tax payments in crypto through authorized entities. In July, the local central bank digital currency (CBDC), Sango Coin, was launched to raise nearly $1 billion over the next year. So far, however, only $1.66 million worth of the coin has been sold.
The country had also announced a plan to allow foreign investors to buy citizenship for $60,000 worth of Sango Coins. However, this initiative was blocked as unconstitutional by the CAR’s top court.
Adoption drew pushback from the Bank of Central African States (BEAC), which warned about the “substantial negative impact” that the legislation will have on the monetary union of Central Africa.
United Arab Emirates
The United Arab Emirates took a strategic approach to crypto and moved steadily to create a regulatory environment and attract global investors. Perhaps that’s why the country makes it to the Cointelegraph listicle for the second time in a row.
In March, Dubai established a legal framework for crypto aimed at protecting investors and “designing much-warranted international standards” for industry governance. A newly formed Dubai Virtual Asset Regulatory Authority (VARA) got enforcement powers in the Emirate’s special development and free zones with the exception of the Dubai International Financial Centre. The now-bankrupt crypto exchange FTX was among the first to obtain the same license.
Another emirate, Abu Dhabi, came up with draft recommendations for NFT trading. They marked NFTs as intellectual property rather than “specified investments or financial instruments” and allowed multilateral trading facilities (MTFs) and Virtual Asset Custodians (VAC) to operate NFT marketplaces.
In July, Dubai launched the Dubai Metaverse Strategy, which aimed to turn the Emirate into one of the world’s top 10 metaverse economies. It includes research and development (R&D) collaborations to enhance the metaverse’s economic contributions, utilizing 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 its first city in Metaverse. Dubbed Sharjahverse, it was described as a “photorealistic, physics-accurate” metaverse that encompasses the emirate’s 1,000 square-mile surface area. The virtual city will support the local tourism industry and potentially create new metaverse jobs.
All in all, 2022 wasn’t so bad in terms of friendly regulation. And the next year is going to be even more interesting, with the race to the first comprehensive crypto framework in the U.S. and potential liberalization in Hong Kong and South Korea.