Regulations
Financial technologies, or FinTechs as they are more commonly known, have brought with them both an increased interest in the role of cryptocurrencies in our daily lives and an increased interest in legal regulations on this subject. Cryptocurrencies and all other regulations, as well as the legal and economic regulations made by the state in the market, are different types of regulations depending on the purpose and the market in which they are applied. Examples include the regulation of natural monopolies and government regulation of financial markets.
In this case, regulations are divided into three types: “economic regulation”, “social regulation” and “administrative regulation”, depending on the market, method and purpose. These are financial regulations. In recent years, various views have emerged on financial regulations with the regulations on cryptocurrencies and the widespread use of cryptocurrencies in the US, China and European countries.
Financial regulation is defined as the rules and restrictions imposed by the regulatory authority on the decisions and behavior of financial institutions in order to maximize its social objective function. Unlike other regulations in the economic sector, financial regulation consists of efforts to monitor, discipline or coordinate the behavior of financial institutions in order to protect the safety, integrity and transparency of institutions operating in financial markets.
Cryptocurrency Regulations
It is important for the development of the ecosystem that countries understand, internalize and approach cryptocurrency technology in an inclusive manner. Regulatory bodies have a lot of weight in the global system and can have direct control over people’s investment preferences.
Spot Bitcoin exchange-traded funds, which were approved and started trading in January 2024, have exceeded expectations ranging from $5 billion to $15 billion, indicating a growing demand for cryptocurrencies. Due to the uncontrolled transaction possibilities in this field, many countries have started to prepare new laws to supervise and regulate cryptocurrencies. In the report, which includes 2025 projections, it was predicted that spot Bitcoin mutual funds will act like gold ETFs, and demand will grow stronger and stronger over the years. Regulations have started to be introduced by different governments.
Impact on the US and Europe
The US and Europe took the first place in the number of investors as investors turned to cryptocurrencies due to increased interest in financial markets and high inflation.
The United States, which has a certain power over both the cryptocurrency and financial markets, is the country that hosts the most cryptocurrency mining and decentralized finance (DeFi) companies in the world. As a matter of fact, the United States, which is seen as “the most crypto-ready country in the world” by Crypto Head, is also the most followed country in terms of regulation. More important than the functions of regulations are their methods and how they are implemented. “Independent Regulatory Agencies (IROs) or Independent Administrative Authorities”, which are established to implement the regulatory policies of the state, first emerged in the US. While the US government views cryptocurrencies as promoting innovation and providing financial innovation, others are concerned that cryptocurrencies may lead to financial instability and increased fraudulent activity.
The SEC (Securities and Exchange Commission), CFTC (Commodity Futures Trading Commission), FinCEN (Financial Crimes Enforcement Network) are primarily involved in cryptocurrency regulation in the US. These institutions aim to protect investors, ensure financial stability and prevent crimes by regulating cryptocurrency transactions.
The cold attitude of Asian countries, especially China, towards cryptocurrencies has increased the weight of the US and Europe on the sector. In addition to regulatory bodies such as the SEC, the US Federal Reserve’s FED decisions continue to affect the course of cryptocurrencies. While the pressure on cryptocurrencies by regulatory bodies from time to time puts the sector under pressure, the high adoption rate of the public on cryptocurrencies points to optimistic expectations in the long term and the moderate approach of the state.
While the Netherlands, France and Slovenia, which are among the European Union countries that license many cryptocurrency exchanges, are known for their positive approach to cryptocurrencies, the EU prefers to take steps on the regulation and regulatory framework for the cryptocurrency market. There is a desire to control the sector to address concerns about cryptocurrencies, which are allegedly used for money laundering and terrorism financing.
For this reason, the EU, which has a relatively harsh and strict attitude, adopts an approach that stands in the middle against cryptocurrencies and focuses more on legal regulations.
Russia’s Regulatory Stance
Russia began using cryptocurrencies for international payments on an experimental basis on September 1, but regulation of cryptocurrencies in Russia is a matter of constant contention between government officials, the Central Bank and other regulatory bodies
Russian President Vladimir Putin has proposed that cryptocurrencies be recognized as a national currency. But Central Bank officials and other government officials are taking a tougher stance against cryptocurrencies. Trading in bitcoin in Russian rubles accelerated sharply on Thursday, when the invasion began.
Daily volumes rose 259 percent to 1.3 billion rubles ($13.1 million), up 259 percent from the previous day, but regulations on cryptocurrencies in Russia are still unclear.
China’s Stance on Regulations
The country has imposed regulations and bans many times over concerns that cryptocurrencies could harm financial stability.
Notably, in 2017, the Central Bank of China banned cryptocurrency trading and ICOs. This move was aimed at shutting down cryptocurrency exchanges in the country and preventing investors from selling their cryptocurrencies.
China’s attitude towards cryptocurrencies is associated with the country’s desire to maintain centralized financial regulation and control. The country considers that cryptocurrencies can harm financial stability and therefore strictly regulates these assets. Therefore, the trading and use of cryptocurrencies in China is subject to severe restrictions.
Iran’s on Regulations
In 2018, after Iran banned crypto assets, El Salvador recently steps to legally recognize Bitcoinbecame the first country to take. Today, a meeting on cryptocurrencies and crypto mining was held in Tehran, the capital of Iran, where the Central Bank of Iran’s reports and supply and demand for cryptocurrencies were discussed.
Iranian President Hassan Rouhani stated at the board that “In order to legalize cryptocurrency activities, shouldas soon as possible by the relevant ministries to protect the savings and assets of the people in this field.”
President Hassan Rouhani said that a strategy should be developed regarding the activities of cryptocurrencies and that all necessary conditions should the of cryptocurrencies in Iran’s macro economy
The most important point obtained from the meeting; The Central Bank of Iran’s reports, including the reports of the country’s interests, support cryptocurrency activities. Iran is one of the countries that look warm to cryptocurrencies. The primary reason for this; It is seen as the embargo suffered by other countries. In addition, the low value of the Riyal, the Iranian currency, is another factor.
Iran is among the top bitcoin mining countries in the world.
Conclusion
The fast and dynamic nature of financial technologies, coupled with the sudden changes in the value of crypto assets in recent years, makes the developments in legal regulations in this area almost as intriguing as the developments in these technologies.
The fact that each country takes a different approach to the regulation of financial technologies allows different approaches to be experienced on a wide plane, ranging from a watch-and-see strategy to direct involvement in the process. In the same vein, the future of crypto-assets is expected to be subject to legal regulations and to be used as virtual money in today’s conditions. Therefore, the method of regulation, the timing and the tools used, as well as the content of the regulation , require detailed scrutiny.
