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Summary-Crypto-and-DA-Regulation-GSMI-2.0.pdf
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Title: Global Regulatory Shifts in the Crypto Landscape: Striking a Balance
Description: Explore the diverse global landscape of regulatory changes shaping the crypto industry, from the implementation of the FATF Travel Rule to concerns over consumer protection and market integrity. This document delves into evolving compliance requirements, jurisdictional approaches to innovation, and the impact on market players amidst the dynamic intersection of regulation and technological innovation.
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2026-03-02 11:51
Last Processed: 2026-03-02 11:52
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SECTION III
DIGITAL & CRYPTO ASSETS
REGULATIONS
Since GSMI 1.0, we have seen an extraordinary growth of activity and innovation across the
digital asset ecosystem, including in spot and derivatives ...
The increase in regulatory and policy attention has not necessarily been followed by concrete
actions. Many public consultations have been issued in 2021, including from the FATF,? the UK HM
Treasury ...
On September 24, 2021, China issued a blanket ban on cryptocurrency trading,’ declaring
all forms of digital asset transactions and financing as illegal activities that are strictly prohibited due
to ...
Secretary of the Treasury Janet Yellen stated that cryptocurrencies were
being used “mainly for illicit financing.’"®
THE TRAVEL RULE
The FATF published updated guidance for virtual assets (VAs) and...
On May 25th, 2021, the CEO of AU.S.TRAC announced that talks are
underway to decide if the agency should implement the FATF Travel Rule
Australia 2018 MER: for crypto asset exchanges. In August 2021, ...
context:
Various countries and regions are implementing or considering the implementation of the FATF Travel Rule for crypto assets.
fact:
In May 2021, talks began regarding the implementation of the FATF Travel Rule for crypto asset exchanges by AU.S.TRAC.
These
COMPLIANT regulations implement the Travel Rule and introduce new terms such
as ‘virtual asset service provider’, ‘virtual asset transfer’ and ‘virtual asset
account’. The rule applies to transa...
The Monetary Authority of Singapore (MAS) covers the Travel Rule in
. 2019 MER: paragraph 13 of Notice PSNO2. This requires VASPs to prove ownership
Singapore COMPLIANT of non-custodial wallets. The m...
CASPs are required
to comply with FATF’s AML/CFT measures like FATF’s Recommendation 16
on the Travel Rule. The Crypto Travel Rule went into effect on January 1, 2020.*? It requires
VASPs to implement...
fact:
Brazil's compliance status with the FATF Travel Rule requirements remains unclear.
fact:
Canada largely complies with the FATF Travel Rule guidance since June 1, 2021, specifying identification requirements for virtual currency transactions exceeding certain amounts.
fact:
China, previously partially compliant with FATF Travel Rule requirements, has now banned all cryptocurrency transactions.
fact:
El Salvador's compliance status with the FATF Travel Rule requirements is unclear.
fact:
European Union mandated the Crypto Travel Rule on June 20, 2021, aligning with FATF recommendations.
fact:
France mandated information disclosure for transfers of funds and certain crypto assets in line with the FATF Travel Rule.
fact:
Germany mandated the Crypto Travel Rule in May 2021, with plans for full implementation by the end of 2023, setting a minimum threshold of EUR 1,000.
fact:
Gibraltar implemented the Travel Rule through the 2021 Transfer of Virtual Assets Regulations, introducing new terminology and guidelines for virtual asset service providers.
fact:
The Central Bank of Bahrain introduced new legislation in February 2019, covering various aspects such as licensing, governance, AML/CFT, but the compliance with FATF requirements for VASPs remains uncertain.
fact:
Canadian Money Services Businesses (MSBs) must identify clients for virtual currency transactions over $10,000 CAD, triggering KYC verification; transactions over $1,000 CAD also require KYC checks.
fact:
The European Commission proposed regulations aligning with the FATF Travel Rule for information sharing on fund transfers and certain crypto assets.
fact:
Gibraltar updated regulations in 2021 to include the Transfer of Virtual Assets Regulations, detailing the implementation of the Travel Rule and introducing specific terminology.
On July 22, 2021, HM Treasury released Amendments to the Money
Laundering, Terrorist Financing and Transfer of Funds (Information on
. the Payer) Regulations 2017 Statutory Instrument 2022, which incl...
fact:
HM Treasury released Amendments to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 Statutory Instrument 2022, including a chapter on transfers of crypto assets, which will update the Money Laundering Regulations in the United Kingdom and propose full Travel Rule data transfer requirements for VASP-to-VASP transfers over £1,000.
fact:
Germany released a draft bill mandating the Crypto Securities Transfer Regulation (KryptoTransferV) to enforce the Travel Rule, with full implementation planned by the end of 2023.
fact:
The European Commission published a proposal in June 2021 requiring adherence to the FATF Travel Rule for transfers of funds and designated crypto assets in the European Union. Additionally, HM Treasury released Amendments to the Money Laundering Regulations in the United Kingdom, proposing full Travel Rule data transfer requirements for VASP-to-VASP transfers over £1,000.
Regulatory frameworks in development
across the E.U., Hong Kong, and Singapore
are expected to include requirements for
specialized third party-provided surveillance
systems. The E.U.’s proposed MiCA ...
context:
Regulatory frameworks in development across the E.U., Hong Kong, and Singapore are expected to include requirements for specialized third party-provided surveillance systems.
context:
The increase in activity across crypto markets has seen many regulators express concerns over consumer risks associated with digital assets. Regulators from various countries issued warnings against consumer risks of trading digital assets, with China specifically citing consumer protection as a reason for banning all virtual currency-related business activity.
fact:
Leading exchange Huobi announced discontinuation of service for mainland users in response to regulatory changes impacting the industry.
fact:
Tether broke its peg against RMB following regulatory announcements, indicating heavy outflows from the market.
fact:
DeFi vulnerabilities, illustrated by exploits in Poly Network ($611 million U.S.D) and Compound ($147 million U.S.D), have raised concerns about consumer protection and various risks, including smart contract vulnerabilities and scams.
fact:
Regulators, including the FATF, are addressing risks in the crypto space, particularly focusing on risks associated with P2P platforms.
Regulators, including the FATF,
have expressed concerns in addressing these
risks across P2P platforms. INNOVATION: BARRIERS
VS ENCOURAGEMENT
The focus of this section is two-fold: Firstly, the
bid f...
context:
Regulators, including the FATF, have expressed concerns in addressing risks across P2P platforms. INNOVATION: BARRIERS VS ENCOURAGEMENT The focus of this section is two-fold: Firstly, the bid for protection of consumers and market integrity may create barriers to innovation in the industry. Secondly, it is worth noting the jurisdictions that have had innovative approaches towards the regulation itself.
The government
then extended its regulatory sandbox to include blockchain and crypto
companies. The E.U. launched
products and servi
the introduction o
Organizations and
intelligence, and In
The ...
context:
Various countries and regions have established regulatory sandboxes to foster innovation in the blockchain, crypto, and fintech industries. These sandboxes provide a controlled environment for companies to experiment with new technologies and business models before full implementation.
The ADGM
industry.’””
digital sandbox provides a marketplace for open collaboration between
Fls, FinTech firms, and res
innovative digital financl products and services that can benefit the
ulators...
India has announced plans to
ax cryptocurrency,®° while South Korea may
further delay its law to tax cryptocurrency.*! ml
(e)
ost jurisdictions treat cryptoassets as non-
currencies for tax purposes...
fact:
India has announced plans to ax cryptocurrency, while South Korea may further delay its law to tax cryptocurrency.
fact:
Most jurisdictions treat cryptoassets as non-currencies for tax purposes, which means that transfers of cryptoassets can result in tax liability in many jurisdictions. With bitcoin reaching an all-time high price in 2021, tax authorities are trying to ensure that they can collect any taxes that are due and are increasingly focused on information reporting by exchanges and other VASPs.
fact:
In the U.S., the Internal Revenue Service (IRS) has the authority to collect information from brokers regarding transactions they effectuate on behalf of customers. Although the IRS has been working on regulations to extend broker reporting to crypto asset exchanges, the U.S. Congress has passed a law to expand the definition of broker to 'any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.' Industry participants are concerned that the language could be applied to participants in the ecosystem that are not acting as traditional brokers and do not have insight into the underlying transactions, such as miners, stakers, providers of hardware/software wallets, or developers of digital assets or protocols.
fact:
Similarly, the E.U. has been working on its eighth update of the Directive on Administrative Cooperation (DAC8), which would expand the collection and exchange of information to include transactions involving crypto assets. The OECD is working on proposals for reporting and exchange of information with respect to crypto assets. It is unclear how these developing information reporting regimes will apply to decentralized protocols.
For example, Rain is the first
cryptocurrency exchange in Bahrain to graduate
from the regulator's sandbox and apply for
a license and be compliant with Sharia law. The Shariah Compliance Certificate ...
context:
The topic of Sharia compliant products and services in the context of cryptocurrencies is growing and warrants further development into 2022. For example, Rain is the first cryptocurrency exchange in Bahrain to graduate from the regulator's sandbox and apply for a license and be compliant with Sharia law. The Shariah Compliance Certificate is issued by the Shariah Compliance Body, licensed by the Central Bank of Bahrain to be a Shariah consulting company, and authorized to issue Shariah compliance certificates.
It is critical that stakeholders,
regulators, and legislators maintain an
understanding of new developments, and
thus GSMI 3.0 will likely address some of the
aforementioned areas of focus.