2020 has been a stellar year for the crypto economy, with more enterprises and institutions than ever before implementing the technology. Big announcements, such as PayPal’s decision to enable its users to buy and sell Bitcoin (BTC), have understandably dominated the headlines. However, pivotal regulatory developments across the globe have largely flown under the radar and arguably present even greater significance for crypto in the long term.
The importance of clear regulatory frameworks cannot be overstated, with patchy and insufficient legislation offering a major barrier to enterprises looking to digital assets and distributed ledger technology. It is clear now that a number of jurisdictions in the European Union and Southeast Asia are leading the regulatory race, with clear taxonomies for digital assets in place — while the United States continues to play catch up.
A key European-wide development in 2020 has been the EU’s proposal for a common framework legislating for crypto assets across the 27 member states. The regulation on Markets in Crypto Assets, or MiCA, aims to provide legal certainty around the definitions of a number of types of digital assets and associated services, with a pilot regime for DLT market infrastructures due to take place soon.
A number of European states are even further ahead, with Germany proving to be one of the most progressive states in the European Union. As of January 2020, the custody of crypto assets has been integrated into the German Banking Act as a regulated financial service that requires a dedicated license by Germany’s Federal Financial Supervisory Authority. As a result, many financial institutions are in advanced stages of their roadmap on a digital asset offering, and more than 40 institutions have expressed interest in…