Last summer, an unknown named Hailey Welch became a social media sensation. A provocative sex tip she gave during a street interview quickly made her the “Hawk Tuah girl”. Whether you’ve heard of her or not, what’s important to know is that she leveraged her newfound fame in all the familiar ways of this decade: starting a podcast, founding a animal rights organization and, of course, creating its own cryptocurrency. FALCON.
On December 4, HAWK debuted on the Solana platform at a price of $0.005492. It soared 900% to a market cap of half a billion dollars before collapsing almost immediately. Today, the coin’s market capitalization stands at $2.6 million. Some have claimed that it is a classic pump and dump system. Welch denies any involvement, but that’s almost beside the point. The takeaway remains the same: the crypto market is still rife with mining opportunities.
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Halie Welch
(Photo: Phillip Faraone/Getty Images)
According to the FBI, $5.6 billion was lost to crypto scams in the United States alone last year. Much of this comes from the perception of cryptocurrency as an easy path to wealth, which makes users prime targets for fraudsters. The ripple effects of these scams extend beyond individuals; lack of regulation contributed to the systemic collapse of crypto exchanges and trading platforms in 2022. This instability, a year later, affected banks with deep ties to the crypto industry, leading to their own collapses.
The risks in the cryptocurrency market are numerous: from their use in illegal activities such as money laundering and terrorist financing, to tax evasion, market manipulation and extreme volatility.
To balance the innovation potential of the market with the need for consumer protection and financial stability, there is an urgent need for a comprehensive regulatory framework. However, the nature of such a framework remains highly controversial.
According to a study published in June, the global regulatory landscape is particularly fragmented:
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58 countries have taken a favorable stance on crypto regulation.
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4 countries recognize cryptocurrencies as a legal entity.
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14 countries have implemented outright bans on crypto markets, while 9 countries have enacted partial bans.
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46 countries have restrictive regulations aimed at reducing risks.
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71 countries have not taken regulatory action – 37 of them have expressed concerns but remain inactive (including Israel), while the remaining 34 are deliberately following a free market approach.
Bitcoin prices and general market enthusiasm often rise in response to US political developments. Despite crypto’s aspiration to exist outside of national economic systems, it is deeply influenced by the world’s largest economy.
Even if small economies, like El Salvador, can adopt Bitcoin as legal tender, their impact on the global market is negligible. The United States has not established a dedicated framework for crypto, but rather applies existing laws to the market. This approach frustrates industry players, who have long advocated for the Commodity Futures Trading Commission (CFTC) to oversee crypto markets rather than the Securities and Exchange Commission (SEC), which they view as too aggressive.
The 21st Century Financial Technology and Innovation bill, which passed the House of Representatives but faced opposition from President Joe Biden, aims to shift crypto oversight to the CFTC . However, the CFTC’s significantly smaller size and limited resources raise concerns about its ability to regulate effectively.
In May 2023, the European Union introduced MiCA (Markets in Crypto-Assets), the first comprehensive global regulation for the crypto market. MiCA integrates cryptocurrencies into existing financial frameworks while solving unique issues, such as distinguishing between currencies designed for value transfer, asset-backed tokens, and security-like tokens.
Pending final approval, MiCA sets clear rules for the supervision of digital assets. It requires any company issuing or trading cryptocurrencies to obtain a license and requires the identification of senders and recipients for all transactions, regardless of their amount. Additional regulations are planned for wallets holding more than €1,000, requiring full identity verification similar to banking protocols.
China and India are home to the strictest crypto regulations in the world.
In China, which was a mining and trading hub for the previous decade, all crypto activities are now banned. Cryptocurrency exchanges and mining companies are banned from operating in the country.
India attempted similar bans, but these were overturned by the Supreme Court on technical grounds. Currently, the Indian government is working on detailed legislation banning all digital asset transactions, but delays have left the market in uncertainty.
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The UK has long sought to position itself as a crypto hub. Rishi Sunak, as Chancellor of the Exchequer and later Prime Minister, championed initiatives such as the launch of a digital pound and the issuance of government NFTs. However, none of these efforts have come to fruition so far.
Local regulators are actively developing clear frameworks. The Financial Conduct Authority (FCA) oversees the market, while the Crypto Asset Taskforce (CATF) focuses on advancing regulation. The UK aims to integrate crypto into existing financial systems with adjustments tailored to its unique challenges.
South Korea and Japan maintain relatively progressive stances towards crypto, focusing on consumer protection as well as market access.
Japan’s cautious but steady approach stems from its experience with the Mt. Gox scandal in 2014, which led to the collapse of what was then the world’s largest cryptocurrency exchange. Japan introduced crypto regulations in 2016 and updated them in 2018. It declared the development of Web3 as a national priority in 2021, making Japan a global leader in crypto regulation.
South Korea implemented the Virtual Asset User Protection Act (VASP) this summer, requiring due diligence from crypto exchanges and prioritizing user protection. However, public enthusiasm remains muted, as evidenced by the record $34 billion in volume recorded during last month’s political crisis, which briefly depressed Bitcoin prices globally.
