Cryptocurrencies Regulations Guide

Cryptocurrencies Regulations Guide

Cryptocurrencies have become a major asset class valued at more than $1.6 trillion. Bitcoin, the oldest blockchain project globally, has a market value of more than $700 billion. This made it more valuable than all companies in the world except Apple, Microsoft, Saudi Aramco, Amazon, Alphabet, and Facebook. 

Yet, one area that has evaded the industry is regulations. In this article, we will look at what cryptocurrency regulations are and their current state.

What are cryptocurrencies?

The idea behind cryptocurrencies is a relatively simple one. Bitcoin, the oldest crypto in the world, was started by Satoshi Nakamoto as an unregulated currency. 

Unlike fiat currencies like the US dollar, Bitcoin is not created by a central bank or a government. Instead, it is a decentralized currency that is created by mining. This mining is done using computers that solve complex mathematical calculations. This process has proven to be safe since the underlying technology has never been hacked.

Thousands of blockchain projects have been launched in the past decade. At the time of writing, CoinMarketCap tracks more than 10,000 projects.

There are three main types of cryptocurrencies. There are blockchain currencies that aim to be a medium of exchange like the US dollar. These ones include Bitcoin, Litecoin, Monero, and Dash.

Second, there are tokens like ETH, BNB, and VET. These are native tokens for their underlying blockchain projects. For example, Ether is the native token used in Ethereum’s blockchain, while VET is the token used in the VeChain platform.

Third, there are stablecoins that are backed by fiat currencies or other assets. Their goal is to expose owners to the blockchain industry while at the same time avoiding the volatility that is commonly seen. Some of the most common stablecoins in the industry are USD Coin, Binance USD, Tether, and Dai.

Other assets are regulated

Most financial assets in the market are regulated with the goal of protecting investors. Congress mostly makes these regulations while others are left to regulatory agencies like the Federal Trade Commission, Commodities Futures Trading Commission (CFTC), and the Securities and Exchange Commission (SEC). As a result, there are certain disclosures that must be made to protect investors.

Let us look at stocks. First, before a company goes public, it is required by law to issue some disclosures about several things like the management, holders of the stock, services it provides, recent income statement, and risks involved. These documents are supposed to be submitted to the SEC and are then published. 

Second, the companies are required to deliver their financial statements every three months. This helps to ensure that investors are aware of the company’s performance.

There are other areas of the stock regulatory ecosystem. For example, all firms need to be audited by a qualified firm, and that they need to disclose when insiders buy or sell shares. In other words, equities are highly regulated.

Similarly, the forex market has tough regulations. Some of the top regulators in the industry are the Financial Conduct Authority (FCA), European Securities Markets Authority (ESMA), and the Cyprus Securities and Exchange Commission (CySec).

Crypto regulations

For more than a decade, cryptocurrencies have evaded the regulatory ecosystem. This is partly because of how difficult it is to regulate them. For example, how do you ban Bitcoin, which is mined by thousands of computers spread around the world?

Still, some regulations have come out that regulate currencies indirectly. In the United States, exchanges like Coinbase, Gemini, and Binance are required by law to operate under tough regulations. 

For example, these firms are mandated to do Know Your Customer (KYC) and Anti-Money Laundering (AML) laws. This means that they need to know more about their customers. However, many criminals have circumvented these laws by using unregulated foreign wallets. Also, these companies must only allow professional investors to access their advanced tools. 

Other countries like China have also put in place some laws. For example, some regions have banned Bitcoin mining because of the substantial amount of energy that is used in mining. The country has also banned Initial Coin Offerings (ICO), which is a funding mechanism that many blockchain projects use. The Peoples’ Bank of China (PBOC) has also banned financial institutions from processing crypto projects.

Other countries that have added strict regulations on cryptocurrencies are India, Turkey, and Brazil.

The Decentralized Finance (DeFi) industry

Another area that will see strict regulations is in the DeFi industry. This is an industry that is attempting to disrupt the global financial industry. 

For example, DeFi lending companies are disrupting the banking sector by allowing people to lend and borrow ERC tokens that they can then exchange for cash. Some of these platforms are also offering investment opportunities that allow people to earn interest. 

Other DeFi exchanges like Uniswap and SushiSwap are offering exchange services that are decentralized. As such, instead of using Binance, which is centralized, you can use Uniswap, which is a decentralized platform.

As such, many experts believe that this is an area that requires substantial regulations. For example, in the US, companies like LendingClub and Prosper that offer peer-to-peer lending are highly regulated. On the other hand, Aave and Maker offer the same service in a decentralized format and are not regulated.


There is an intense debate going on about crypto regulations. On the one hand, there are people who believe that the industry should operate without regulations. These point to the fact that tough regulations will hinder innovation in the sector. They also point to the fact that the industry will self-regulate. 

Indeed, some of these things are happening. The Blockchain & Crypto Mining Association has said that its members will reduce the number of fossil fuels used in the mining process. 

On the other hand, some individuals believe that regulations are necessary to safeguard retail investors. They also believe that strict regulations will help reduce the number of crypto scams that are in existence today.

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