An Overview of the Global Virtual Currency Regulatory Landscape in 2023
Contrary to claims of a “complete ban on virtual currencies,” global regulation of virtual currencies in 2023 was not characterized by a blanket ban, but rather marked a pivotal year for accelerating the development and refinement of regulatory frameworks. Most countries and regions aimed to regulate this emerging market through clear rules, rather than stifling it entirely.However, mainland China stands as a notable exception, having continued and strengthened its policy of a comprehensive ban on cryptocurrency-related activities.
Mainland China: Continued Strengthening of the Comprehensive Ban Policy
Since September 2021, ten government departments in Mainland China—including the People's Bank of China (PBOC)—have explicitly classified virtual currency-related business activities as illegal financial activities and imposed a comprehensive ban on related services.In 2023 and thereafter, eight government agencies—including the People's Bank of China (PBOC)—jointly issued another notice reiterating that virtual currencies do not have legal tender status and strictly prohibiting all related business activities, including the exchange of fiat currency for virtual currency and the exchange of one virtual currency for another.Notably, the new regulations also, for the first time, included the “tokenization of real-world assets (RWAs)” under strict oversight and prohibited any domestic or foreign entity or individual from issuing RMB-pegged stablecoins overseas. Chinese government departments believe this move is intended to maintain financial stability and monetary sovereignty and to prevent related illegal and criminal activities.
EU: The MiCA Regulation—A Step Toward Comprehensive Regulation
On June 9, 2023, the European Union officially published the landmark “Markets in Crypto-Assets Regulation” (MiCA). This regulation represents the world’s first comprehensive regulatory framework for crypto-assets and is expected to take full effect and become applicable by the end of 2024 or early 2025.MiCA aims to establish a full-cycle regulatory framework covering crypto-asset issuers and service providers by categorizing and regulating utility tokens, asset-referenced tokens, and e-money tokens. It also mandates transparency in transaction information to strike a balance between supporting financial innovation, maintaining financial stability, and protecting consumer rights.
Hong Kong: Transition to a Licensing-Based Regulatory Framework
Effective June 1, 2023, Hong Kong implemented the “Guidelines on Virtual Asset Trading Platforms” and the “Guidelines on Anti-Money Laundering,” introducing a licensing system for virtual asset service providers. This initiative allows licensed platforms to offer trading services for Bitcoin and Ether to retail investors under strict regulatory oversight.This shift in Hong Kong is seen as a positive signal that the city is embracing the development of Web3 and virtual assets while ensuring risks remain under control.
Singapore and Japan: Pioneers in Stablecoin Regulation
Singapore and Japan are at the forefront of stablecoin regulation. On August 15, 2023, the Monetary Authority of Singapore (MAS) released its final stablecoin regulatory framework, making Singapore one of the first jurisdictions globally to incorporate stablecoins into its local regulatory system.Prior to this, Japan had passed the “Amendment to the Payment Services Act” on June 3, 2023, making it the first country in the world to enact legislation specifically addressing stablecoins and providing a legal basis for their issuance and circulation.
United States: Tighter Regulation but No Comprehensive Ban
In 2023, influenced by a series of market events such as the FTX collapse, the United States adopted a stricter regulatory stance toward cryptocurrencies.The U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) continued to regulate through policy statements and existing authorities, while actively exploring legislation to clarify the classification of digital assets and regulatory responsibilities. Despite the challenging regulatory environment, the U.S. has not adopted a stance of a blanket ban but is instead committed to regulating the market through existing laws and potential new legislation.
Summary of Global Regulatory Trends
Overall, the central theme of global cryptocurrency regulation in 2023 was the pursuit of clarity, compliance, and investor protection. Countries and regions generally recognize the potential risks and opportunities associated with crypto assets and are striving to strike a balance between innovation and stability.International financial organizations such as the Financial Stability Board (FSB) and the International Organization of Securities Commissions (IOSCO) have also called for the accelerated development of more comprehensive and consistent international regulatory policies and frameworks to address the risks that crypto assets may pose to financial stability.
