While the United States is dealing with thorny regulatory issues over cryptocurriencies, some jurisdictions abroad have more clarity, though global consensus is far-off.
Group of 20 meetings in the spring about blockchain regulation did not yield much except a recognition that crypto assets are not merely currencies and a July deadline for the organization’s first step toward regulation. The International Monetary Fund recently highlighted the utility of crypto assets, while also cautioning that, depending on how large they grow, they could someday pose risks to financial stability.
Some jurisdictions are further ahead than others, though the tacks they are taking vary widely. John Collins, an affiliate with the Berkman Klein Center at Harvard University and former head of policy for Coinbase, said one of the strictest, and most opaque, is China, which has banned crypto exchanges and so-called initial coin offerings. More welcoming are Switzerland, Singapore and Britain.
Switzerland is home to the “Crypto Valley” near Zug, where a number of crypto start-ups — including Xapo and Shapeshift and teams behind initial coin offerings, such as Ethereum and Tezos — are based. Regulators there have deemed that storing a customer’s crypto assets does not qualify as taking deposits, so such companies do not require banking licenses, freeing start-ups from the requirements to obtain one.
Additionally, the Swiss financial market regulator Finma released principles-based guidelines that would be applied case by case as opposed to prescriptive rules. It also designated a category called utility token, which are not considered securities. Some Chinese companies are moving to Switzerland, which is a hot spot for I.C.O.s; Geneva has even created a guide for token issuers.
“Switzerland is already developing into a leading hub, and I think that will be even more the case in the future,” Olga Feldmeier, chief executive of Zug-based SmartValor, said.
Britain and Singapore have also been lauded by crypto start-ups for their regulatory environment, which enables companies to experiment under relaxed regulation and licensing requirements.
But these progressive approaches are not the norm.
“There has been a hesitancy on the part of these regulators to regulate because they don’t want to grant these businesses a seal of approval,” Mr. Collins said. “The fear on the part of the industry at this point shouldn’t be that there’s a crackdown, but that they’ll be ignored because no one is going to take them seriously. And if no one takes them seriously, and they still can’t get bank accounts, that’s a problem.”
