How will cryptocurrency laws change globally in 2025?

By 2025, everything about cryptocurrency regulation and legislation in the United States is likely to change.

Paul Atkins, co-chair of the Token Alliance, has been nominated to replace cryptocurrency adversary Gary Gensler as chairman of the Securities and Exchange Commission (SEC), which will allow cryptocurrencies to be regulated in the United States. It means a big change in approach.

Gensler’s tenure was instrumental in establishing the regulatory base and case law, but was heavily criticized for its reliance on enforcement-oriented regulation.

Across the Atlantic, the European Union has implemented its first Markets for Cryptocurrency Assets (MiCA) regulation to oversee the cryptocurrency industry. Although it has won praise for its ambitions, MiCA’s strict rules are forcing some companies out of the region and adding to debate about the regulatory burden on digital markets. Meanwhile, Asia continues to integrate cryptocurrencies into its legal systems, with significant cases setting local precedents.

To look at the most important legal developments in 2024 and predict what’s next, the Magazine spoke to legal experts Catherine Smirnova and Yuriy Brisov from Digital & Analogue Partners in Europe, Joshua Chu from Web3 Association in Hong Kong and Charlyn Ho from Rikka Group in the US. Yes. .

The discussion has been edited for clarity and brevity.

Magazine: How will U.S. cryptocurrency laws change under the new administration?

Wet Wipes: The Biden administration has put a lot of effort into establishing a legal framework for cryptocurrency assets. I am confident that the proceeds from this preparation will be helpful to the next administration.

Like it or not, the SEC has helped shape the face of cryptocurrency regulation thus far. Common law countries are generally based on case law. Regulations are usually made when there is sufficient precedent, and now is that time.

Today, both Republicans and Democrats agree that cryptocurrency legislative reform is needed in the United States. We are still making cryptocurrency decisions based on the Orange Orchards of California in 1946 or the Howey incident.

to: Gensler’s resignation and Atkins’ nomination to head the SEC will bring a number of changes to the way the cryptocurrency industry is regulated. When I say regulated, I don’t think we’ll have a comprehensive regulatory regime next year. In fact, Trump and Atkins would probably oppose creating new regulations and instead oppose increasing clarity on where the cryptocurrency industry can operate.

Gensler was criticized for taking an overly aggressive approach that departed from the SEC’s congressional authority and did not constitutionally frame and exercise its authority. The change we will see is a reduction in such regulation by enforcement and perhaps a more proactive, business-friendly, cryptocurrency-friendly approach taken by the agencies rather than an adversarial approach.

Magazine: What changes can we expect at the SEC with Atkins taking over as chairman, and how much influence will he have on ongoing legal issues?

to: By all accounts, Atkins’ background is very pro-business. He was previously an SEC commissioner, so there is a history of how he approached this role.

That said, there is a precedent for Gensler to follow. Just because it is called a new (chair) does not mean that all previous legitimate work results have disappeared. Hypothetically, let’s say there is a lawsuit pending and there are a lot of them. If Atkins wants to change the SEC’s position, he can’t just make a declaration. They must go through the legal process to change their claims and gain some degree of legitimacy. If they are the plaintiff, they may be able to drop the case altogether. But the director doesn’t have free rein to completely change everything that’s going on.

Magazine: How are EU companies responding to the implementation of MiCA and other digital regulations?

Smirnova: This year, what I call the Mario Draghi report said that our digital policies are not as good as we had hoped because so many potential unicorns are moving to the United States. From the beginning, we believed that proactive and clear regulation would provide transparency, but companies see this as a regulatory burden.

Of course, MiCA, the world’s first all-encompassing (crypto) regulation, is working to make this market more transparent and clear for all participants. We now have regulations that are more stringent and do not require additional action from national jurisdictions.

Next year we will find out whether there is still a cryptocurrency market in the EU or whether the regulatory burden will cause it to disappear. Additional protections for digital consumers are also expected through the Digital Fairness Act. What we are seeing now is that digital asset markets are becoming more regulated by regulations that were not specifically put in place. We have the Ecommerce Directive, DMA, DSA and GDPR. The proposal (for a digital fairness law) has already been published and open for comment by the European Commission and is expected to come into force next year. The burden of pressure on digital businesses within the EU will be significant.

weight: You need three things: These are two things that will be tested in legislation, executive action, and ultimately the courts. Before we can really say that the regulatory framework in a particular jurisdiction is maturing.

Using GDPR as context, many people were shaken when it came out. It was only after the crackdowns and fines started pouring in that clarity about what to do came.

Magazine: Are there any cryptocurrency cases tested in Hong Kong courts?

weight: In Hong Kong, we have seen legislative cases being tested in courts this year. So we’ve had several landmark decisions in Hong Kong, including the first case against JPEX. We’ll likely see more of that scam unfold in the coming year.

We have also seen lawsuits against decentralized autonomous organizations (DAOs). So we’re seeing how private parties and regulators are catching up in terms of dealing with these new companies.

Magazine: How can Hong Kong realize its cryptocurrency hub ambitions with just a few licensed exchanges?

weight: Is it really necessary to have so many exchanges floating around? In the more traditional sense of a stock exchange, there is one stock exchange. Why do we suddenly need 3 exchanges trading the same 10 tokens except in an arbitrage environment?

It’s great to be the hub, and it’s great to have options. However, deployments will be rolled out similar to virtual banks. The last thing you want to do is create too many competing exchanges and get nowhere. As a result, regulatory oversight has become very thin.

Hong Kong is one of the places with a more stringent regulatory regime. You can’t have options or derivatives either. So people wonder why buy it if it’s right there and you own it. There are many issues to solve.

Magazine: What are some legal developments that cryptocurrency industry participants typically overlook?

Smirnova: First, many technology companies have left the EU since the Digital Markets Act and Digital Services Act came into effect.

Second, EU AI law will be adopted, affecting all jurisdictions. It is expected to have the same effect as GDPR. If you provide AI-related services in the EU, this law applies to your business. It doesn’t matter where you belong.

Digital companies now have to worry about competition, transparency, privacy, AI and consumer welfare.

to: I was very interested in developing AI agents and AI tokens. I think that’s a huge step forward for 2024. We’ll likely see more of this in the future, especially with Coinbase’s AI agent trading. To me, that’s a little crazy. I think it’s pretty new and legally very gray in terms of liability.

There probably won’t be much legislation. However, there may be a court case revealing the apportionment of liability. The reason I say I don’t expect much legislation is because the cryptocurrency industry has not had a comprehensive legislative framework in the United States for many years. There is no MiCA equivalent here. That’s why the SEC has implemented it this way now. They are essentially operating and interpreting laws that have not had cryptocurrencies in mind for years. So I think it’s a bit of a stretch to think that we’re going to have AI cryptocurrency legislation.

One of the other big things that is happening is that the chevron obedience rule is being overturned. The Supreme Court essentially overturned this long-standing doctrine that essentially permitted or required deference to the agency’s interpretation of its rules.

This is important because it means that in the specific case of cryptocurrency, courts do not have to follow the agency’s interpretation. Gensler’s interpretation, or that of his committee, was clearly very limiting in terms of the cryptocurrency industry’s ability to operate. It would be logical that the cryptocurrency industry would be able to operate more freely if courts no longer had to follow that interpretation.

Wet Wipes: The big development I’m looking forward to next year is the understanding of cryptocurrency assets. There are two types of property at common law. We call them the chosen by possessions and the chosen by actions, which are basically tangible and intangible things. Owning an iPhone, an apartment, or a car. Things that act are like securities, departments, intellectual property.

For example, with NFTs, they are literally intangible, but they have been treated as a type of tangible asset. Therefore they cannot be secure. But now the SEC has launched an investigation into OpenSea. They argue that NFTs could even become securities.

There is legislation in the UK that provides for a third category of assets that are neither chosen possessions nor chosen actions: digital objects or digital assets. I think legislation will also emerge through precedents in the US and UK. This particular digital asset forms a new type of asset in the legal realm. This will be a huge trend moving forward in the coming years.

subscribe

The most interesting read on blockchain. Delivered once a week.

Yoon Yohan

Yohan Yoon is a multimedia journalist covering blockchain since 2017. He contributed as an editor to Forkast, a cryptocurrency media outlet, and covered Asian technology stories as an assistant reporter for Bloomberg BNA and Forbes. He spends his free time cooking and experimenting with new recipes.