What Effect Does Regulation Have on Corporate Digital Asset investments?

Digital asset regulation is complex primarily because financial laws pre-date the technology. In many cases, it’s unclear how to regulate digital assets because they aren’t always homogenous with existing legal items. 

Cryptocurrency regulation is largely in its infancy because regulators haven’t yet figured out how to legally classify decentralized virtual currencies. Most won’t classify cryptocurrency or consider it legal tender if it isn’t issued by the government or the nation’s central bank, but this means cryptocurrency will be largely unregulated unless a specific cryptocurrency act or framework is put in place.

Regulation of digital assets in the US

In November 2021, cryptocurrencies were mentioned for the first time in US legislation when a small set of crypto provisions were added to the Infrastructure Investment and Jobs Act. Multiple federal regulators are battling for authority over digital asset regulation. 

We get into this in more detail in a blog spotlighting the US regulatory landscape, but to cover the basics, the main fight for supremacy over digital assets in the US is between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). However, this past June saw a recent bipartisan proposal introduced that would bring the majority of digital assets within the control of the CFTC, offering terminological clarity and ending the war between the two on the issue of digital asset regulation once and for all. We’ll have to see how it unfolds! 

The global regulatory landscape for digital assets

Globally, digital asset and cryptocurrency regulation remains highly fragmented and continuously in flux. In September 2021, El Salvador made headlines for becoming the first country to make bitcoin legal tender at the same time as China declared cryptocurrency illegal altogether in a bid to eliminate competition for the digital yuan. 

The changing landscape of digital asset regulation is partly due to market changes, technological innovation, and emerging threats–but it’s also because there’s no jurisdictional body to oversee a truly international effort. Most world banking regulators agree on policies under the Basel Committee on Banking Supervision, but digital assets have no equivalent. 

It’s unclear whether a financial board is the best forum for globally managing digital assets; it might not be broad enough as digital assets are inherently decentralized and extend into fields beyond finance. 

Although the Infrastructure and Investment Jobs Act is the first federal law to mention cryptocurrencies/digital assets by name, there have been related regulations in the US for many years.

Several US regulatory agencies have claimed that cryptocurrencies are similar to other assets and can be regulated without Congress needing to pass a law. 

While all these things are going on, you can be sure that digital assets have already made their way into our present life and are securing their place in the future. That is why companies like Stadio Global are right to invest in managing digital assets. As the laws on regulation keep shifting, Stadio enjoys the liberties currently accessible in the business.

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