Regulation of the Crypto Market in 2024: How Countries Use Bitcoin

In 2024, many countries began to reassess their stance on Bitcoin and its regulation. Possible reasons include complications in international transfers using national currencies like the dollar and euro, as well as the approval of spot Bitcoin exchange-traded funds (ETFs) for Bitcoin and Ethereum in the U.S. For some countries, Bitcoin could become a tool for economic development.

The approval of Bitcoin ETFs in the U.S. this year has been a form of recognition of Bitcoin as an asset class alongside traditional financial instruments like stocks and bonds. Concurrently, the rhetoric from political figures regarding the blockchain market has shifted, making it a significant topic ahead of the November presidential elections in the U.S.

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U.S. presidential candidates Kamala Harris and Donald Trump have both expressed positive positions regarding the development of the digital asset market, with Bitcoin companies investing tens of millions of dollars in the election campaign.

This is likely related not only to the growth of the industry itself but also to the number of people owning Bitcoin worldwide. In the U.S., according to Grayscale, by the end of 2023, one in five Americans owned Bitcoin.

"The reality is that now one in five adults owns Bitcoin — a group of 52 million Americans. This is not only a large absolute number but also a group that will define future cultural, political, and economic trends," analysts stated.

Former President Donald Trump, a Republican candidate, expressed his intention to make the U.S. the largest Bitcoin hub in the world, emphasizing the importance of being first over China: "If we don't do this, China will. If we don't do this, we won't be the largest."

Restrictions in China

Despite the fact that since 2022 trading Bitcoin has been allowed in Hong Kong for both companies and retail traders, and the local regulator approved a Bitcoin ETF even earlier than the U.S., restrictions for Bitcoin still exist on the mainland.

Since 2017, the Chinese government has begun to limit speculative operations with Bitcoin, leading to the closure of several major Bitcoin exchanges. Additionally, since 2021, authorities have also restricted industrial mining in the country.

However, the global acceptance of Bitcoin may prompt Beijing to ease regulatory pressure on the mainland. Zhu Guangyao, a former deputy finance minister of China, called for further exploration of the Bitcoin space and related changes in international policy.

"We also need to study the latest international events and policy changes, particularly the influence of U.S. bipartisan politics, as this is a crucial aspect for the development of the entire digital economy," Zhu was quoted by The Block.

Other countries have their own reasons, not always related to geopolitics, for reassessing their stance on the Bitcoin market.

Argentina and Japan

Argentina's state Bitcoin policy has changed with the arrival of new President Javier Milei at the end of 2023, who openly supports Bitcoin, viewing it as a key tool in combating the inefficiencies and corruption of centralized financial systems.

Following this vision, since late 2023, several Bitcoin-friendly initiatives have already been adopted in the country. One such initiative is the ability to use Bitcoin as currency in contract agreements, as well as the decision not to impose a new 15% tax on previously undeclared Bitcoin.

For part of the Argentine population, Bitcoin has become a means of protection against inflation, which, according to TradingEconomics, exceeded 230% in August. According to Forbes, residents use Bitcoin exchanges exclusively to buy stablecoins like USDT, rather than for speculation. Of the 130 million users of the 55 largest Bitcoin exchanges in the world, 2.5 million are from Argentina. The five most popular platforms in the country are Binance, eToro, BingX, HTX, and Bitget.

In Japan, where Bitcoin has been a legal payment method since 2017, there are plans to reconsider the regulatory approach to the industry. According to Bloomberg, the country’s Financial Services Agency is considering reclassifying Bitcoin as a financial instrument, which would pave the way for better taxation in the country.

Experience from Russia

In addition to using Bitcoin in public statements regarding geopolitical leadership and as a tool for domestic economic development, there are other experiences to note.

In Russia, for example, Bitcoin has become popular for conducting international payments and other financial operations. The popularity of this payment method for international settlements among organizations was confirmed by Vladimir Chistyukhin, the first deputy chairman of the Bank of Russia: "Today, participants in foreign economic activity use digital financial assets like Bitcoin for international settlements. There are many such participants: both professional market participants and corporations."

According to Chistyukhin, Russia should develop any means of payment, even unpopular ones, or face "ruin" for its export-oriented economy.

In mid-September, Russia formed a focus group for experimental cross-border settlements in Bitcoin. The group includes several banks and importers — members of the Russian Chamber of Commerce and Industry (TPP) and the Association of Developers and Manufacturers of Electronics (ARPE). This became possible after the adoption of a law earlier in the fall allowing the use of Bitcoin within an experimental legal regime (ELR).