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As the coronavirus crisis escalates, many enterprises are closing their shutters indefinitely which could very well lead them to bankruptcy. In this scenario, when the world is being forced to switch to a paperless economy, there are a few industries that seem to be taking the current turmoil in stride. Fintech companies obviously view the Covid-19 pandemic as their time to shine, owing to the huge development potential that has opened up and their ability to organize remote work with minimal losses. Now contactless interaction is considered one of the major means of curtailing the rapid spread of the virus and helping the wheels of global trade get moving again somehow during quarantine.

Thus, blockchain-based solutions, including digital banking and cryptocurrency payment systems, are becoming a focus of public attention. Unlike the equity markets, crypto is better at managing the repercussions of a “Black Thursday” type of drawdown, which has caused authorities around the world to start realizing that Bitcoin and other currencies like it could come in handy. Especially when the global recession is predicted to continue at least until late 2021 and activity in the traditional economy is expected to decline by almost 2% already this year.

The road to digitalization has been supported by the World Economic Forum (WEF) highlighting the importance of blockchain technology in the fight against supply chain disruption. As the supply processes are floundering due to their dependence on paper-based operations, the WEF is convinced that only governments with “strong digital infrastructure and digital regulations including e-signatures and e-transactions laws” are likely to successfully cope with the tough challenges presented by Covid-19. That is why there has been some good news related to crypto regulations coming in from all parts of the planet. Let’s review the novel regulatory reforms appearing in different countries to see how virtual assets are assisting us in the adjustment to our harsh new reality.



The first country to take the hit, China initiated an immediate disinfection of physical banknotes replacing them with new cash estimated at 600 billion yuan. The coronavirus-related concerns about contact payments have accelerated the development of the People’s Bank of China’s (PBoC) few-years-old project to issue its own digital currency.

On April 4, the representatives of the bank claimed that they would pursue their commitment to establishing infrastructure for the virtual currency, notwithstanding the Covid-19 economic problems. Despite the fact that this was nearly the third time when Digital Currency Electronic Payment (DCEP) was mentioned during the annual National Currency Gold Silver and Security Work Conferences as an attempt to join trends within both local and global crypto spaces as well as to have stricter control over online financing, now the PBoC’s stance on the launch of digital yuan is even firmer than before.

On March 24, the development of the national currency’s basic functions was completed and the bank has moved on to working out the relevant laws related to DCEP implementation. Now the digital yuan is already being trialed in four select, technically advanced Chinese cities – Chengdu, Shenzhen, Suzhou and Xiongan – via a pilot version of a special wallet app. Additionally, on April 15 one of the biggest state-owned commercial banks, the Agricultural Bank of China, was also revealed to have rolled out a beta-version of an application for the central bank’s digital currency.


Earlier in 2018 the world of crypto was disheartened due to the Reserve Bank of India’s (RBI) decision to ban any business activities that local banks can do with crypto-related companies, which immediately resulted in a steep drop in cryptocurrency prices. However, on March 10, 2020 India’s Supreme Court eliminated this initiative, citing the right of Indian citizens to practice any profession of their choosing and the disproportionality of the prohibition to the threat posed by cryptocurrencies.

The lift of the ban has encouraged Indian crypto enterprises to reopen while the government is striving to figure out how to be in line with anti-money laundering and combating the financing of terrorism (AML/CFT) measures. Nischal Shetty, founder and CEO of the largest Indian cryptocurrency exchange WazirX, which was acquired by Binance, believes that the Supreme Court gave a significant impetus to mass adoption of virtual assets. Within a month after the ban was reversed, WazirX has witnessed an impressive 470% growth in its daily trading volume. With pretty convenient banking channels currently open, people are more inclined to enter crypto as they don’t need to use peer-to-peer networks to circumvent the RBI’s restrictions anymore. In addition, in the middle of the Covid-19 pandemic the market volatility is leading to an influx of new players from India looking for easy profits.


In the time of Covid-19, the regulation of virtual assets and exchanges is changing in Japan. According to a recent press release from the government, there is new cryptocurrency legislation amending both the 2019 Payment Services Act (PSA) and the Financial Instruments and Exchange Act (FIEA) and coming into force on May 1 with the direct participation of the Financial Services Agency (FSA) serving as Japan’s major financial regulator.

In short, the updated laws aim to safeguard the interests of crypto investors, who choose to operate with their funds through third parties, including exchanges, custodians and the FSA itself. Actually, the ongoing modernization of the crypto ecosystem in Japan is mostly linked with poor security measures that have resulted in massive hacks on local exchanges. In order to halt this trend, the forthcoming regulatory framework will obligate cryptocurrency exchange platforms to segregate user deposits from their cash flows utilizing the services of a commonly recognized crypto custodian. What else is noteworthy is that exchanges using hot wallets will have to store equal amounts of customer assets in several safe locations so they can always refund the lost balance should anything untoward happen.

Reforming the existing “virtual currency” legal terminology is one more aspect of the changes taking place in Japan. As soon as the new laws come into effect, Bitcoin, together with all altcoins, will be defined as a “crypto-asset.”

Japanese authorities have focused on creating proper transaction systems as well as turning initial coin offerings and security token offerings into e-recorded transferable rights that meet the requirements of guidelines in place for today’s financial instruments. This altogether with the FSA’s seeking to supervise the cryptocurrency derivatives market and to limit margin trading leverage to 2-4x of user deposits is intended to boost Japan’s crypto industry to unprecedented highs.

South Korea

Yes, now South Korea is a country where the ownership and trading of cryptocurrencies are officially legal. Korean crypto regulations passed in the beginning of March by South Korea’s national assembly in response to the spread of Covid-19 infection are considered to be among the most comprehensive in the world. The latest amendments to the local financial services laws enable Korean regulators to monitor the situation within the industry and mostly around exchanges to prevent money laundering which was always a sticking point of crypto adoption in the country.

At this stage all virtual asset service providers or VASPs must apply for a special International Security Management Systems (ISMS) certificate by complying with AML measures such as Financial Action Task Force’s (FATF) R.16 travel rule compelling all participants of any wire transfers, be it domestic or cross-border, to exchange identifying data. This requires creating a real-name bank account with an authorized Korean bank and registering it with Korea’s Financial Intelligence Unit (FIU).

The updated legislation in South Korea, which has been a hotbed of digital asset enthusiasm over the past few years, shows an increasing acceptance of blockchain technology in the financial services realm. It will certainly make the rules of the game clear for both crypto investors and exchanges. The Act is also expected to help spot any fraudulent behavior and provide holders of virtual assets with proper protection on the government level.


One more country to improve its existing crypto legislation in the field of AML/CFT policy is the United Arab Emirates. Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGB) made the necessary adjustments in late February to adhere to the new FATF Standard. The up-to-date regulations introduced by the FSRA also refer to familiarizing with blockchain-based businesses by simplifying main crypto categories by turning “crypto-assets” into FATF’s recognized “virtual assets” and “Operating a Crypto Asset Business” into “Regulated Activities.” With such a cautious — but apparent — acceptance of distributed ledger technology that dates back to 2018, the UAE has every chance to revolutionize its financial system.

The ADGB is making efforts to implement legit crypto trading by July 2020. Taking a short step back in 2019, the FSRA provided some in-principle licenses for potential crypto exchanges and custodians joining the regulatory sandbox within ADGM. Meanwhile, the Abu Dhabi Islamic Bank is already conducting numerous cross-border transactions by integrating with DLT-marketplace, TradeAssets. Both processes aim to use trade finance distribution transactions on a regular basis which will provide fertile ground for enhancing various businesses worldwide.



The end of winter was a productive time for French crypto regulators, too. You may have heard about the issue between the French virtual asset exchange Paymium and the English investment company BitSpread. In 2014 Paymium loaned 1,000 BTC to BitSpread but after the hard fork of the Bitcoin network the latter gained possession of 1,000 worth of the new digital asset Bitcoin Cash (BCH). This resulted in a dispute on whether the borrower should return to the lender the amount of BCH created by the fork.

On February 26 the Commercial Court of Nanterre held that in this case the lending of Bitcoin is no different from a consumer loan, which implies the transfer of ownership of the initial 1,000 BTC to BitSpread during the term of the loan, just like it would in traditional stock dividends.

In other words, the court accepted Bitcoin as a fungible asset, which means it can be easily interchanged but never individualized, and says it should be treated directly as a currency. This decision is a real milestone for facilitating crypto operations, including lending and repurchase agreement transactions, as well as trading activities, as French interest continues to grow in the digital assets market and traders are flocking to the most liquid crypto exchanges like HitBTC, Bitfinex and Binance.


The FATF’s R.16 travel rule is gaining momentum among European nations as well. Germany’s Federal Financial Supervisory Authority (Bundesanstalt fur Finanzdienstleistungsaufsicht or BaFin), jumping on the global AML/CFT measures bandwagon in early March, now regards cryptocurrency as a “digital representation of value” and crypto custodian businesses as performing an activity that provides the safe storage of virtual assets or private keys that are used to transfer these funds in the context of a financial service.

So, basically, the valid and new detailed guidance views cryptocurrencies and crypto service providers as legal financial instruments and service institutions within the current regulatory framework in Germany. Although crypto has nothing to do with a central bank and, consequently, is not as government-backed as fiat money, it can still represent an investment or payment method and be freely transferred, stored or traded.

Today any company intending to offer crypto-related services must apply for a BaFin financial license by December 2020. It proves that both VASPs and digital assets are being placed under Germany’s banking and financial regulatory framework which is cultivating a new path for traditional financial institutions that can start looking in the direction of blockchain technologies in order to fine-tune their services.

North America


The Financial Transactions and Reports Analysis Center of Canada (or FINTRAC, in short) which is an official local financial intelligence unit responsible for AML and CFT (known as ATF or anti-terrorist funding in Canada) policies, also set its 2020/2021 cryptocurrency regulations in accordance with the FATF Recommendation 16 requirement.

However, at the same time, FINTRAC also used a risk-based approach (RBA) guide to money service businesses (MSBs) from 2009 when drawing up its new regulations. For both Canadian and foreign crypto enterprises operating with virtual currencies it follows that they will eventually have to register as MSBs and meet much stricter control from FINTRAC and FATF. In response to the FATF’s note mentioning Canada’s crypto industry being one of the country’s soft spots when it comes to AML/CTF violations, FINTRAC underlined that strengthening the existing AML/ATF regime for companies dealing with cryptocurrencies is “a major priority in the near term.”

Canadian regulators are also mandating that crypto-related businesses record and report much of their clients’ personal data including the type and amount of each virtual currency, their sending and receiving addresses, their source of the transferred funds and all entities involved in transactions valued at more than 1,000 Canadian dollars. All transfers of digital assets worth above 10,000 CAD end up on FINTRAC’s watch list.


American crypto enthusiasts can mark March 9 with a red circle in their calendars as the start of the clarification process for digital assets in the US The latest version of the Crypto-Currency Act of 2020 which has gone through many iterations since December 2019, was proposed to Congress amended with new terminology helping lawmakers define various asset types, the technology behind them and responsible regulators. Relying on the updated reforms, digital assets in the US are legally divided into three categories: crypto-commodities such as Bitcoin, crypto-currencies constituting digital analogues of fiat money like different kinds of stablecoins and crypto-securities.

Amid the Covid-19 crisis the concept of a digital dollar was being floated as a means of providing local taxpayers with stimulus payments to handle the virus’s impact on the country’s economy. The list of services that lawmakers saw a digital dollar capable of facilitating via a special FedAccount includes “debit cards, online account access, automatic bill-pay, mobile banking and automatic teller machines maintained in conjunction with the United States Postal Services at its physical locations.” It is curious that the initiative received legislative attention right after the development team behind Facebook’s Libra revealed its intention to launch a series of fiat-backed stablecoins instead of just one multi-currency-pegged token.



This poor South African country has suffered greatly from political chaos and mind-blowing hyperinflation over the last two decades. Prior to the upcoming reforms initiated by president Emmerson Mnangagwa, some welcome light was recently shed on the relaunch of the Zimbabwean national currency, the Zimbabwean dollar, which was abandoned in 2008 in favor of the US dollar (USD) and South African rand (ZAR).

At the same time the local authorities are looking for a way out by working out a regulatory sandbox for digital assets that will allow crypto-related companies to do business with banking institutions. This aims to figure out whether individual domestic crypto enterprises have enough resources to operate separately or if it is necessary for bigger financial partners to control them, especially if they belong to micro-financing businesses that are commonly practiced in Africa.

The Zimbabwean government fully understands the importance of proper crypto legislation, as the majority of young Africans use their electronic devices as alternatives to bank accounts owing to insufficient financial infrastructure, high risks of crimes connected to the black market and geographical concerns. In conditions like these, virtual assets have a rather huge potential to affect the African economy in a positive way, even during the Covid-19 pandemic.

How crypto regulations will transform in 2020

As we can see, most crypto regulatory reforms – from Abu Dhabi’s simplified virtual assets policy to Zimbabwe’s regulatory framework for crypto businesses aimed to help micro-financing – are taking on a more catalytic character, saying “yes” to the mass adoption of digital assets. Thanks to the coronavirus acting as a “Black Swan” type of event, governments all over the world are realizing the true power of DLT technology, with all of its spectacular capabilities.

China’s increasing speed in issuing its national digital currency, paired with the similar initiative from the US authorities, is a testament to the importance that this technology will have moving forward.

The takeaway is that now blockchain technology and cryptocurrencies are loaded with numerous opportunities, and countries that are working to pass sustainable crypto regulations see cryptocurrencies as a means of minimizing their losses caused by the Covid-19 turmoil.


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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

Featured Image: Shutterstock/Immersion Imagery

(Excerpt) Read more Here | 2020-04-25 17:49:17


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