2022 has not been so favorable for the crypto industry, as the years have seen more lows than highs, due to the massive collapse of LUNA and the spectacular crash of FTX. Different governments around the world have adopted and interacted with cryptocurrency in different ways. Here, we take a look at how India and some countries, such as Brazil, UK, El Salvador, Central African Republic, and UAE handled the crypto industry in 2022.
Finance Minister Nirmala Sitharaman announced a 30% tax on all income derived from any crypto-related business and transaction in the Union Budget 2022. She said that “any income derived from the transfer of any virtual digital asset will be taxed at the rate of 30%. This was implemented on April 1, 2022. This move was widely criticized by crypto enthusiasts. Last year in November, Binance CEO Chenpeng Zhao said such an exorbitant crypto tax would end by “killing the industry” in India.
In 2022, Brazil has its own regulatory framework. Jair Bolsonaro, the country’s former president, has signed a bill legalizing the use of crypto as an alternative payment method. However, it is not legal tender. The bill defines digital currencies in legal terms. It also establishes a necessary licensing regime for virtual asset service providers.
According to media reports, this particular bill was introduced at the right time as more and more organizations and individuals own a large number of cryptocurrencies. In fact, it set a new record. For example, the Brazilian tax authority revealed that around 12,053 organizations reported crypto details on their balance sheets in August 2022.
The country has gone even further after the Brazilian Stock Exchange announced that it wants to launch its first official product in its national crypto industry and related trade.
The UK has also indicated its interest in working towards regulating crypto in the industry. Britain has pushed for a national regulatory framework. The country even introduced the Financial Services and Markets Bill in July 2022, which aimed to achieve the goal of emerging as a global cryptocurrency hub. The bill brought several changes in terms of stablecoin regulations and coined new terms such as Digital Settlement Assets (DSA).
The Financial Services and Market Bill was introduced to ensure the statutory authority of the Treasury to regulate DAS. The list of regulations included payments, service providers and insolvency agreements.
Another development in the UK’s work towards industry regulation was the introduction of the Economic Crime and Corporate Transparency Bill in May 2022. It recommended a set of rules which meant “creating powers to more quickly and easily seize and recover crypto assets”. This was to mitigate risk for people who often find themselves the target of ransomware attacks.
Members of the Web3 community have also welcomed an important decision by the High Court of Justice in London on non-fungible tokens (NFTs). The court observed that NFT is “private property”.
Towards the end of 2022, the UK notified its investors that trades in their “designated crypto assets” qualified for the investment manager exemption.
El Salvador made cryptocurrency legal tender in 2021 and continued to focus more on the domestic industry until 2022. After talking about plans to issue “Bitcoin bonds”, Nayib’s government Bukele tried to implement it persistently. According to media reports, it was repeatedly delayed in March and September last year.
Something interesting happened in November last year when El Salvador’s economy minister, Maria Luisa Hayem Brevé, introduced a bill regarding the government’s plan to raise about $1 billion to invest in the development of a “Bitcoin city”. Although its evolution remains unknown to this day.
Bukele is known for his love for Bitcoins. And it even translated into good business for them, as the tourism sector grew by more than 30% after the Bitcoin law was developed and implemented in September 2021, media reported. According to the study by the National Bureau of Economic Research, Bitcoin has been accepted by more than 20% of businesses as a form of payment.
El Salvador hosted a total of 44 central bankers from several countries in developing regions around the world. The purpose of this move was to ensure the financial inclusion of Bitcoin and to participate in a conference that lasted three days. Delegates from the central banks of Ghana, Burundi, Jordan, Maldives, Pakistan, Costa Rica and others attended the summit.
Central African Republic
The Central African Republic, a country of 5 million people, has legalized the use of cryptocurrencies in the financial market for the first time on the continent. The bill that made this possible was unanimously supported by lawmakers across the country. It allows merchants and businesses to participate in crypto payments. Several provisions regarding crypto tax payments through authorized platforms have also been included.
In July last year, they also launched the local central bank (CBDC) digital currency, Sango Coin, with the aim of raising around $1 billion. However, roughly $1.66 million of the piece has been sold.
The government has also announced plans to allow investors from other countries around the world to acquire citizenship by paying $60,000 in Sango Coins. This particular initiative was suspended by the Central African Republic court as it observed that selling citizenship through crypto investments is found to be unconstitutional.
United Arab Emirates
The UAE has promoted a regulatory environment to ensure it becomes an attractive destination for global crypto investors. In March 2022, the United Arab Emirates implemented a virtual asset regulator and framed crypto laws. The move was made in an effort to protect investors by “devising well-justified international standards” for the country’s crypto industry, Cointelegraph reported.
The government has empowered the Dubai Virtual Asset Regulatory Authority (VARA) to exercise authority over special development zones and free zones in the Emirates. However, the Dubai International Financial Center is an exception to these newly formed rules.
Meanwhile, Abu Dhabi has also rolled out draft recommendations for non-fungible token (NFT) trading. They placed NFTs in the category of intellectual property rather than “specified investments of financial instruments”. Authorities said multilateral trading facilities (MFTs) and virtual asset custodians (VACs) would oversee NFT markets.
Not only that, the Emirate of Dubai has announced the Dubai Metaverse Strategy to achieve the goal of converting the city into one of the top 10 metaverse economies across the globe. The strategy is expected to create more than 40,000 virtual jobs by 2030. The plan also includes research and development (R&D) collaborations to increase economic contributions from the metaverse, using incubators to invite foreign companies and projects. On top of all that, this move should ensure metaverse education support for developers, consumers, and content creators.
Apart from all these government actions on crypto, the country also inaugurated its first city, Sharjahverse, in the metaverse. According to authorities, the artificial intelligence ecosystem has been described as a photorealistic and physically accurate metaverse, which spans an area of approximately 1,000 square miles. The project, supported by the Sharjah Trade and Tourism Development Authority, aims to create new jobs and strengthen the tourism industry.
Amidst all of these notable events, crypto exchange FTX filed for bankruptcy towards the end of 2022. Its former CEO, Sam Bankman-Fried, continues to face court in the United States. Currently, he is out on bail after agreeing to house arrest.
Disclaimer: Crypto products and NFTs are unregulated and can be very risky. There may be no regulatory recourse for any loss arising from such transactions. Cryptocurrency is not legal tender and is subject to market risk. Readers are advised to seek expert advice and carefully read the offering document(s) and important related material on the subject before making any type of investment. Cryptocurrency market forecasts are speculative and any investment made will be at the sole cost and risk of the readers.