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The spread of cryptocurrencies around the world

As the financial world is moving towards digitalization, the use of cryptocurrencies is spreading. There are over 300 crypto-exchange-platforms in the world and crypto-currencies are being accepted by more and more firms at the present moment.

The US market, totally unregulated and with State divergences, is both booming and in need of harmonization. The crypto-currency market has seen its fastest growth in Asia in 2020, with more and more Asian countries opening the door for crypto-currencies. The regulatory stance is keeping pace with the market evolution. Cryptocurrencies are not only accepted but encouraged world-wide, with a view to facilitating the use of cryptocurrencies, ensuring the most adequate level of customer and investor protection and tackling the use for illegal purposes. The future is now.

Thirty-one states have pending legislation in the 2021 legislative session. Arizona created a blockchain and cryptocurrency study committee. Arkansas clarified control of virtual currency under the Uniform Commercial Code and amended the Uniform Money Services Act to include virtual currency. Hawaii adopted a resolution requesting the department of commerce and consumer affairs to reconsider its 2016 ruling on asset reserve requirements for virtual currency companies and cryptocurrency companies to conduct business in Hawaii and to align the state’s asset reserve requirements for these companies with the asset reserve requirements in other states.

Indiana repealed the unclaimed property act and replaced it with the revised unclaimed property act that includes virtual currency. Kentucky created the new section of KRS 139 which defines various terms relating to commercial mining of cryptocurrency using blockchain technology. Louisiana adopted a resolution commending Bitcoin for its success in becoming the first decentralized trillion dollar asset and encourages the state and local governments to consider ways that could help them benefit from the increased use of this new technology.

North Dakota required, during the 2021-22 interim, the legislative management shall consider studying the feasibility and desirability of regulating special purpose depository institutions and regulating other entities engaged in virtual currency business activities. The legislative management shall report its findings and recommendations, together with any legislation required to implement the recommendations, to the 68th legislative assembly. Wyoming created a cryptocurrency staking program and advisory council; provides for matching funds related to carbon capture, utilization and storage projects and provided for the formation and management of decentralized autonomous organizations.

On the 24th of September 2020, the European Commission unveiled an official proposal for a Regulation of the European Parliament and the Council on “Markets in Crypto-Assets” (MICA). Above proposal benefited from extensive studies and consultation with market participants and has been based, other than the already mentioned FSB, OSCO and ESMA advise, on work carried out by the “EU Blockchain Observatory and Forum” as well as a quantity of reports, surveys, position papers and other relevant documents drawn up by private and public stakeholders.

Almost in parallel with the MICA proposal, a second and complementary EU initiative of the outmost importance has been launched: by its October 2020 ” Report on a digital euro”, the European Central Bank {ECB) also took stock of the evolution of the crypto-asset world and paved the way for the issuance of a central bank digital currency (CBDC). Although the introduction of a ” digit al euro” needs further examination and is not meant to predetermine or change the course of the ” private ” crypto-assets regime, the ECB also participates in the same conceptual evolution. Just like the advent of MICA, the ” arrival of a central-bank issued digital currency is a matter of when, not if and will undoubtedly further boost acceptance, use and penetration of crypto-assets in the financial world.

As said in the Report, the ECB has “a legal duty to ensure that payments systems work smoothly and to support the general economic policies of the Union”. Moreover, the Report makes explicit references to the “digital euro” offering the best available technology to meet the “market’s need for programmability”. The digital euro will be designed to accompany and facilitate digital transactions, digital contracts, digital money and in general a digital economy, thus naturally enforcing the use of crypto-assets. The effort is both didactic and path-breaking.

The ECB is not the sole central bank or the precursor of such initiatives. The Central Bank of China has expanded a trial run of a “crypto-yuan” and uses it as a method of payment for certain public employees. Thai central bank has recently (5 October 2020) issued a large amount of government bonds on IBM blockchain. The Centra l Bank of Sweden is working towards full digitalization. The Banque de France was ready, before covid-19 arrived, to test securitized lines for digital payments. The Bank of International Settlements has calculated that 80% of world central banks are engaged on research for digital currencies and use of crypto-assets.

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