During 2022, there were many innovations in digital asset regulation around the world. In this article we will consider some of these notable events.
MiCA restricts European crypto companies with its tight limitation and peg to the euro
The European Union has proposed a regulatory framework called MiCA aimed at regulating crypto assets in the market. However, MiCA’s hard cap and the peg to the euro have become a point of contention. The hard cap limits the number of crypto assets that companies can issue, while the euro peg requires that the value of assets be pegged to the local currency. Critics argue that these restrictions could hinder innovation and the competitiveness of European crypto companies, and discourage them from developing new products. On the other hand, supporters argue that regulation is essential to protect consumers and maintain stability in the rapidly evolving crypto industry.
Canada and the United States
The popularity of cryptocurrency mining has increased dramatically as digital currencies like Bitcoin and Ethereum have attracted worldwide attention and gained great value. However, this energy-intensive process requires enormous amounts of electricity to power computer equipment and solve complex mathematical algorithms that ensure authenticity and transaction security. Unfortunately, most of this energy comes from fossil fuels, mainly coal and natural gas, raising concerns about the environmental impact of cryptocurrency mining. In response, the US and Canada imposed a moratorium on new mining operations to control carbon dioxide emissions and other environmental threats associated with the industry.
The moratorium demonstrates that policymakers recognise the need to balance the benefits of digital currencies with the need to address climate change and other environmental issues. In the US, some states have imposed temporary bans or restrictions on mining. In 2018, New York regulators imposed the moratorium on new mining ventures, stating that many proposed projects would violate air quality standards and intensify climate change. Similarly, Kentucky’s Energy and Environmental Protection Cabinet suspended approval of new mining projects in 2021, citing concerns about the industry’s impact on local communities and the environment.
Cryptocurrencies become a payment method in Brazil
Brazil received intriguing news in late autumn. Members of parliament ratified a regulatory framework that proposes the inclusion of digital assets as an acceptable option for paying for goods and services within the country. It should be noted that, as in El Salvador, digital assets are not yet recognised as a legal currency. Nevertheless, this action demonstrates the emergence of a solid legal and regulatory framework.
While this move may not have the same impact as the introduction of cryptocurrency regulation in Europe and the US, it is still a favourable step for digital assets in Latin America.