Cryptocurrency Regulation Around the World
The cryptocurrency market is still growing vastly, with investors and companies both being attracted to it. As a result, governments across the world have responded with various cryptocurrency regulations.
Some countries such as China and Pakistan have come up with very restrictive laws governing the currencies. At the same time, other countries like Singapore are working on nurturing the industry and lessening issues such as money laundering and tax evasion.
In this article, we give you a sneak peek into cryptocurrency regulation around the world. Let’s delve in and explore!
Japan has one of the most progressive regulatory frameworks for digital assets. Bitcoin is considered legal currency and a law passed in 2017 recognises cryptocurrencies as legal property. To comply with self-regulation passed in 2018, all cryptocurrency traders in Japan are required to register with the Financial Services Agency.
With one of the most restrictive legal guidelines on cryptocurrencies, digital currencies are not acceptable legal tender in China. China banned Bitcoin in 2013, as well as crypto exchanges and ICOs in 2017. An umbrella ban on all cryptocurrencies was further effected in 2018. The government has also banned her citizens from accessing both local and international cryptocurrency platforms. Perhaps ironically, China mines more bitcoin than anywhere else!
This is one of the Asian countries whose cryptocurrency legal framework is low-tax and business-friendly. In 2018, the Central Bank of Singapore finalised on the country’s payment services framework, which affects cryptocurrencies too. Singapore’s digital infrastructure is also helping fintech and crypto firms flourish and attract investors.
• South Korea
South Korea’s Financial Intelligence Unit (FIU) recently launched its plan to regulate digital currencies by getting them under an umbrella administration. The East Asian country regulates its cryptocurrency industry with a real-name system. This requires people depositing and withdrawing cryptocurrencies to have verified real-name accounts with the bank facilitating coin exchanges.
The Indian government has a hostile stance toward digital currencies. The Reserve Bank of India, which in the country’s central banking authority, issued a restrictive directive in 2018. All private banks were barred from carrying out cryptocurrency transactions.
Digital currencies are not banned in the UK, but also not regarded as legal tender. No value-added tax applies to the purchase of digital coins in the UK. Instead, a surcharge applies on goods and services acquired in exchange for crypto assets such as Bitcoin.
CryptoUK is a self-regulating trading association trying to improve the UK’s cryptocurrency industry standards. It is doing this through the implementation of a code of conduct that touches on data security, individual privacy, and AML.
Switzerland has been open and embraced cryptocurrencies from its emergence. The government has a relaxed financial impetus such as tax exemptions and low taxation to cryptocurrency startups.
The country’s finance regulator classifies cryptocurrencies as assets that one needs to declare when declaring annual returns so that they are taxed. In 2016, the Swiss Crypto Valley, which is the city of Zug, started accepting Bitcoin as a payment of city taxes. The Crypto Valley hosts many cryptocurrency companies whose estimated value is around $44 billion.
Johann Schneider-Ammann, the Switzerland Economy minister in 2018, declared his intention to make the country the first crypto nation in the world.
This small island nation lacks any predefined laws that regulate digital assets. A few years back, however, Joseph Muscat, the country’s prime minister, came up with an economic strategy designed to attract global investors to Malta. The country also has very relaxed tax laws, allowing big cryptocurrency companies to operate in the country. One such firm is Binance.
Luxembourg houses Bitstamp, one of the world’s biggest digital currency exchange platforms. However, the local government of this tiny European country defines cryptos as intangible assets that are not taxable unless they have been exchanged for fiat. Also, all transactions involving cryptocurrencies in Luxembourg are tax exempt.
Without any doubt, the US leads globally when it comes to adoption and use of cryptocurrencies. Currently, investors are able to purchase over 45 digital assets across the US, including Bitcoin. Cryptocurrencies are defined by the US Financial Crimes Enforcement Network (FinCEN) as money transmitters hence should adhere to applicable niche regulations. The IRS also considers cryptos to be assets of value, thus taxable commodities.
Vancouver and Toronto are regarded as the Bitcoin hubs of Canada. The big crypto market in the global powerhouse uses its Anti Money Laundering and anti-terrorist finance laws to regulate the digital assets market. All firms dealing with digital currencies are required are mandated to register with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). Local banks are prohibited from opening accounts for clients dealing with digital coins if they are not registered with FINTRAC.
In 2017, the Ecuador government banned Bitcoin and other cryptocurrencies. It consequently launched its own electronic currency, Dinero Electronico, pegged on the US dollar; which is the country’s official currency. Despite being illegalised by the government, Bitcoin usage hasn’t stopped in Ecuador.
In March 2018, Mexico classified cryptocurrencies as virtual assets, but not legal currency. This means that they are recognised as transfers of value and are vulnerable to money laundering. Because of this vulnerability, the Mexican government requires, since September 2019, that transactions exceeding a certain amount be reported to the Mexican government.
Australia is open-minded towards cryptocurrencies. The country’s regulatory body, the Reserve Bank of Australia doesn’t prevent its citizens from trading in and using digital currencies. In 2017, the Aussie government announced that Bitcoin would no longer be double-taxed, and would be henceforth treated like regular money.
New Zealand currently doesn’t have a comprehensive regulatory framework or specific legislation related to digital currencies. However, the Financial Markets Authority states that some cryptocurrency transactions could be regarded as financial services. This means these transactions are subject to the fair dealings requirements in the country’s Finance Act. Other laws might also be applicable if the digital asset is based in the country, and is used to offer services to retail clients.
• South Africa
In South Africa, there are no laws or regulations regarding the use of virtual currencies. This means that cryptocurrency traders do not have any legal recourse as they trade. Cryptocurrencies are also not recognised as legal tender or a means of payment and are not reflected in receipts.
In December 2015, the Central Bank of Kenya announced that the public should be wary of cryptocurrencies due to their volatility and the absence of regulation. However, the Kenyan law doesn’t prohibit their use or crypto trading. In 2018, the government launched an 11-member Blockchain and AI task force that was to look into emerging technologies, digital assets being one of them.
Conclusion on Cryptocurrency Regulation Around the World
The reception of cryptocurrencies by governments from different parts of the world has been varied. Some have fully embraced the digital assets, and some have a neutral attitude while some (which is a small percentage) have outright rejected and banned them. But it’s clear to us that cryptocurrencies are here to stay and sooner or later will be considered legal tender globally.
Read more on this topic: 10 Expert Recommendations For NZ Crypto Regulation.
About the author:
Jay Jackson is a blockchain enthusiast and a freelance writer at topcryptowriter.com. He works closely with brands (people, businesses and startups) in the crypto sphere. He currently writes Blog posts, Guides, Press releases, ICO reviews, eBooks & Whitepapers. You can find him on LinkedIn.
The above references an opinion and is for informational purposes only. Do not take this as personalised financial advice or investment advice. The views expressed by the author do not necessarily represent the opinion of BitPrime.
Last updated: 04/02/2020