The Changing Landscape of Cryptocurrency Regulations in 2023: The EU, UK, and US Step up Their Policy Frameworks

Following the “crypto winter” of 2022 – in which it seemed that the whole idea of digital currencies would soon become a part of history – currency owners and exchanges are together regrouping and preparing for new growth under what will hopefully be improved conditions.

What will make this period less turbulent, though? Are regulators really making distinct changes to their systems that will prevent the kinds of problems that came about last year from repeating themselves? And how effectively will various national systems work together if their respective regulatory mechanisms differ from one another?


This article will look at new regulations proposed by the European Union, the UK, and the US that lawmakers hope will provide a more solid basis for regulation and allow transactions to take place more securely. Finally, we will look at early efforts to create national digital currencies in pioneering countries.

The European Union

The first comprehensive legal foundation that was laid for crypto regulation was made by the European Union in April of this year. The EU’s system will be known as “MiCA” (Markets in Crypto Assets) and it will include a set of rules designed to govern the issuing and trading of digital currencies.

The MiCA framework covers the following areas:

  • The issuance of assets, including stablecoins and e-money tokens
  • The provision of services in these assets. This includes the following:
    • Custody services
    • Operating trading platforms
    • Exchanging services between crypto-assets and flat currency
    • Executing orders on behalf of clients
    • Providing placement services, reception and transmission of orders
  • Prevention of abuse in the market of these assets. This will involve governing the disclosure of inside information, making prohibitions against insider trading and market manipulation.

While the EU policy cannot create or alter the Union’s national policies themselves, it will require national governments to regulate the issuing and trading of crypto assets. Participating firms will receive a “passport” listing their assets.

In addition, the EU policy addresses the issue of energy consumption, which has been a frequent subject of criticism by environmental groups. Providers will have to be candid about their energy consumption.

MiCA received unanimous approval from EU members, and there are high hopes that it will become a solid standard for other governments and related bodies to follow. Proponents claim that its adoption heralds the end of the “Wild West ” of what has been crypto’s history so far.

The rules will not fully come into effect until the end of 2024. There are some concerns about it, one of the main ones being that transactions going beyond the EU borders will not be subject to the regulations. Also, some people believe that NFTs and other aspects of DeFi are not sufficiently covered in the framework.

The United Kingdom


In the UK, it is the Financial Conduct Authority that is primarily in charge of regulating crypto-related activity. This includes the regulation of asset providers, and the creation of laws related to money laundering and finance terrorism. The FCA also maintains guidelines for compliance with the register of crypto asset providers.

There has been particular concern in the country about potential isolation following Brexit. Therefore, the UK government is hoping to collaborate with its counterparts in the EU as closely as possible to create legislation that is commensurate with that of MiCA.

A framework was proposed this year called the Financial Services Markets Act. The regulations listed in the act will cover the areas of money laundering, terrorist financing, and transfer of funds. These primary regulations have been in place since 2017, but they have been amended several times since then.

The UK plan has a slightly different basis from that of the EU, however. Whereas the EU’s plan starts with the assets themselves, the UK plan start out with the activity surrounding the assets first

The UK plan covers the following areas for firms hoping to operate in the country:

  • The requirement of FSMA authorization for operation. This includes service plans, organizational descriptions, risk management outlines, cybersecurity, and outsourcing arrangements. Service plans should include the following components:
  • admission to a trading platform,
  • making a public offer,
  • executing payment transactions or remittances,
  • arranging deals,
  • operating a platform,
  • custody, and mining transactions, or
  • operating a node on blockchain.
  • Location requirements
  • Prudential requirements. Operating firms must ensure that they have sufficient financial resources to conduct their operations without issue.
  • Sufficient governance arrangements
  • Operational resiliency. The FCA will require firms to indicate sufficient resiliency before beginning operations.
  • Allowance for resolution and insolvency with the FSMA.

The UK plan also provides the foundation for a crypto market abuse regime and contains provisions to guard against money laundering. Also, in September of this year, an additional provision will be put in place that is known as the Travel Rule. The Travel Rule is governed by the Financial Action Task Force, and it states that VASPs must share originator and beneficiary data with each other in the process of crypto transactions that are greater than $1000. In addition, there are Personally Identifiable Information (PII) aspects that need to be included, which will serve to strengthen the legitimacy of transactions.

Some British MPs are skeptical about the proposal. Those who oppose it believe that the framework could create a “halo effect” in which consumers will falsely believe in crypto’s complete security. In reality, they contend, the situation is much more complicated than that.

Nonetheless, the measures have gotten enough support that they are due to go into effect in October of this year.

The United States


In the US, there is a body called the Financial Stability Oversight Council (FSOC), which keeps track of the entire US financial system. It is responsible for monitoring any potential problems with the financial sector posed by large banks or other types of financial holding companies. Even before the FTX collapse late last year, the FSOC was becoming increasingly concerned about the unregulated nature of crypto.

In 2022, President Biden laid out initial plans for the improved regulation of crypto. He created an executive order that included a number of points in it related to the issuance, trading, and surrounding framework of digital currency.

The points listed in the Biden order are the following:

  • Consumer and investor protection. This will involve the Department of the Treasury and other related agencies developing policy recommendations surrounding the digital asset sector and its markets. These agencies will be tasked with developing protective measures for consumers, investors, and businesses. The order also encourages regulators to provide oversight and prevent systemic risks that might come about related to digital assets.
  • The promotion of financial stability. The order instructs the FSOC to identify and manage any financial risks associated with digital assets that might pose a danger to the larger economy, and to create policy recommendations where regulations are lacking in this area.
  • Checks on illicit finance. The order calls for all of the government agencies that have a stake in the digital asset market to work together in an effort to prevent illicit finance. It calls on these agencies to work with comparable agencies overseas to develop an international framework to prevent risks.
  • Us leadership in the global financial system. The order directs the US Department of Commerce to work with agencies throughout the US government in establishing a framework that will promote US leadership in digital asset-related technologies.
  • The promotion of equitable access to financial inclusion. The Secretary of the Treasury will work with other relevant agencies to produce a report on the future of payment systems, which will provide predictions for economic and financial growth.
  • Responsible innovation. The government will take specific measures to support the technological innovations necessary for new digital asset systems to be formed.

The Biden order laid out this framework just before the crypto market collapse. Soon afterwards, the White House issued a statement stressing the need for its provisions to be implemented as soon as possible.

How quickly, and to what extent implementation will take place is not clear. Many Republicans in the government are opposed to the legislation, claiming that it will cripple growth. There is likely to be a lot more debate before the framework is completed.

National digital currencies


The final piece of the Biden Framework provides points that encourage the creation of a single national digital currency. Currently, there are a number of different US-pegged stablecoins and other digital currencies in the country that have some degree of reserve backing. The system that provides this backing is known as fractional-reserve banking. Among stablecoins, the largest is Tether, and it is in fact the largest stablecoin in the world. Nonetheless, many people believe that it does not have sufficient reserves to fully back it.

There is also a lot of debate in the US about whether a single national digital currency is viable. As with the regulatory suggestions, the digital dollar has become a subject of major debate, particularly among the political left and right.

However, the US isn’t the first to move in this direction. There are many other countries in various stages of digital currency implementation, and we will list several of them here.



Nigeria already has its own version, known as the eNaira, which it has been using since 2021. There were initially high hopes for the digital currency due to severe cash shortages, with many people hoping that having a digitized currency could compensate for the lack of cash. However, the eNaira has proven problematic for Nigeria, despite the fact that the country faces shortages of physical cash. The country has been plagued by lack of necessary infrastructure and poor Internet connections. It appears that much more needs to be done to create a proper foundation for the currency’s functioning.



China first piloted the e-CNY, or the digital yuan, in 2020 and started using it on a larger scale in 2022. Although it is not yet an official state-backed digital currency, China is preparing to take this step. At this point, an estimated 261 people in China are using the digital currency. Public sector workers in whole cities are now receiving their salaries through this digital currency.


Despite these numbers, many believe that hopes for the e-CNY’s quickly dominating Chinese finance. Data indicate that as of December of last year, the e-CNY represented only 0.13% of the cash in circulation. And although certain public sector offices are interested in using the digital currency for salary payments, there is much more reluctance in the private sector.

Other countries


Other ideas are just starting to take form. Some involve the use of a single currency for small countries within a single region who frequently do business with one another. For example, several Caribbean countries also created a common currency (known as “DCASH”) to make transactions among them easier.

Other countries are nearing or just beginning the implementation of pilot projects, including Russia and India. In total, it is estimated that over 100 countries are either actively experimenting with some form of digital currency or in the research stage of exploring the option.


Regulations and currencies will develop with time


The efforts of national and multinational governments to establish more effective crypto regulations are admirable. As these policies are all quite new it is yet to be seen how well they will work in their respective countries. There are additional complications, of course, not the least of which is the fact that these currencies operate internationally. Other participating countries that have not adopted regulatory frameworks could still encounter a variety of problems in their usage.

Time will tell what aspects of the policies are truly effective, and which ones need to be revised further. There will surely be more issues ahead, but the fact that governments are starting to take concrete action in this area is laudable.

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