Blockchain 1804 - EUS VS EU Regulations PDF

SKEMA CFM - TD3 What is the state of the regulation in Europe and in the USA? B L O C K C H A I N Justine CHUCKS Abdallah COMPAORE Jihane ELAOUACHI Olivier PAN Kamalini SOUPRAYENMESTRY Imane ZAHIDI I N T H E F I N A N C I A L E C O S Y S T E M TABLE OF CONTENT 01 Introduction 04 Regulations in EU 02...

SKEMA CFM - TD3 What is the state of the regulation in Europe and in the USA? B L O C K C H A I N Justine CHUCKS Abdallah COMPAORE Jihane ELAOUACHI Olivier PAN Kamalini SOUPRAYENMESTRY Imane ZAHIDI I N T H E F I N A N C I A L E C O S Y S T E M TABLE OF CONTENT 01 Introduction 04 Regulations in EU 02 Importance of regulations in Blockchain ecosystem and their Implications 05 Regulations Comparaison: EU vs US 03 Regulations in US 06 Conclusion 01 Blockchain and regulation Blockchain, often hailed as revolutionary, embodies much more than a mere decentralized data storage technology. It epitomizes a model of trust and transparency, devoid of third-party intermediaries, which could redefine economic and social norms worldwide. However, this disruptive technology also raises significant regulatory concerns, both in Europe and the United States. 02 The importance of being regulated 1) Consumer and investor protection 2) Financial stability Fraud Volatility Market manipulation 3) Prevention of money laundering and terrorist financing Require systemic risk Strengthen investor confidence 4) Promoting responsible innovation Responsible Respectful of the law and ethics Anonymous Compliance Surveillance 5) Privacy and data protection Data protection 02 Involvement to regulate Developing legal and regulatory frameworks Monitoring and enforcement Risk identification and management Promoting compliance and transparenc International coordination 03 US REGULATIONS Federal Regulations and Oversight of Blockchain and Cryptocurrencies 3 primary federal agencies : Securities and Exchange Commission (SEC ) -> regulates securities markets, ensures investor protection, oversees transactions, and classifies cryptocurrencies in relation to securities Commodity Futures Trading Commission (CFTC) -> oversees U.S. commodity and derivatives markets, classifying cryptocurrencies as commodities and regulating related futures and derivatives. Financial Crimes Enforcement Network (FinCEN) -> protects the financial system from illicit activities, enforcing AML and KYC regulations within the cryptocurrency space SEC’s Approach to ICOs and Cryptocurrencies The SEC utilizes the Howey Test to classify cryptocurrencies, heavily impacting ICOs and token sales with strict registration and compliance mandates to protect investors and prevent fraud 03 US REGULATIONS The Role of CFTC and FinCEN in Cryptocurrency Regulation CFTC and Cryptocurrency as Commodities: The CFTC regulates cryptocurrencies as commodities, overseeing their derivatives and futures trading This regulatory approach standardizes market practices and ensures transparency and fairness AML and KYC Regulations by FinCEN : FinCEN mandates strict AML and KYC procedures to combat financial crimes in the cryptocurrency market These regulations are crucial for preventing money laundering and terrorism financing, safeguarding the integrity of financial markets 0303 US REGULATIONS State-Level Regulations and Variability Across States Introduction to State-Level Regulation In the U.S., blockchain and cryptocurrency regulations can vary significantly from state to state. This creates a "patchwork" regulatory environment where each state can have its own rules and guidelines, leading to complexity in compliance and operations. Notable State Regulations: New York's BitLicense Example: New York's BitLicense, introduced in 2015, is one of the most stringent cryptocurrency regulatory frameworks. Requirements: Includes comprehensive compliance rules for cryptocurrency businesses, including anti-money laundering (AML), cyber security, and capital standards. Impact: While providing consumer protection and financial stability, it has been criticized for stifling innovation and causing some businesses to exit the New York market. 03 US REGULATIONS Innovation and Challenges in State-Level Regulations Blockchain Innovation Hubs Certain states, like Wyoming, have established themselves as blockchain-friendly zones by adopting regulatory frameworks that encourage innovation in the blockchain space. Wyoming has passed numerous laws that recognize the legal status of digital assets, permit the use of blockchain for official records, and create a welcoming climate for blockchain startups. Challenges of Regulatory Variance Companies operating in the blockchain domain face significant challenges due to the variability of state laws. Navigating these differences requires careful legal scrutiny and can affect strategic decisions, from location to product offerings. 04 EU REGULATIONS Regulatory Sandboxes Establishes a pan-European framework for regulatory dialogues to increase legal certainty for innovative blockchain technology solutions. MiCA (Markets in Crypto-Assets Regulation) Setting a regulatory framework that covers crypto-assets, crypto-assets issuers and cryptoasset service providers foster use of innovative technologies. ⇒ AML (Anti-Money Laundering) Directive Ensures financial transparency on exchanges in crypto-assets + Provides the EU with a solid framework that complies with the most demanding international standards on the exchange of crypto-assets. GDPR Implications Applicable when a blockchain contains personal data + ensuring blockchain implementations comply with GDPR requirements. 05 EU VS US Regulatory Approach and Focus The US tackles digital assets with a patchwork of regulatory enforcement, while the EU prepares for a cohesive, crossmember regulatory standard with MiCA in 2024. Legislative Progress US blockchain legislation in 2024 remains sporadic, reliant on regulatory enforcement and state laws, while the EU's unified MiCA provides clear, continent-wide regulatory consistency. Consumer Protection and Innovation The US's digital assets strategy cautiously balances innovation with stakeholder protection and financial integrity, hinting at a CBDC future, while the EU's MiCA underpins consumer safeguarding with a uniform regulatory field promoting crossborder business expansion. Conclusion The US follows a flexible yet fragmented state and federal approach. The EU's MiCA offers a uniform framework, clarity for business, and innovation-friendly policies. Industry stakeholders must stay nimble and informed as regulations evolve. SKEMA CFM - TD3 Thank You B L O C K C H A I N I N T H E F I N A N C I A L E C O S Y S T E M