Crypto regulation in 2019 has been shaped by the very interesting history that roots back in 2016, 2017, and 2018. Since its commencement, the digital currency has seen its all-time highs and even the lowest of lows (in the year 2018, Bitcoin got stuck at 3K US Dollars for a long time), and then regained its strength quite swiftly too. This flipping oscillation of the cryptocurrency’s growth and stability, the new-entry-tag of the crypto sphere, and lack of complete awareness of the potential of the cryptocurrency has made different countries of the world take a different stance when it comes to the regulation of the cryptocurrency.
Why regulatory take vary with the different countries of the world?
The saying- ‘Knowledge is freedom, and ignorance is slavery’ by Miles Davis stands true in the context of cryptocurrency too. Given the crypto, a sphere is relatively a new digital advancement, many countries due to various factors are either keeping an open mind about it and, therefore, are ready to embrace it or are repulsing it due to factors that don’t suit their needs, and some are still having their thinking caps on. For instance, countries such as China, Pakistan, Egypt have completely banned cryptocurrency and have made regulations very tight around the digital currency’s trade and investment. On the other hand, the members of G7 (Canada, France, Germany Japan, Italy, the United Kingdom, and the United States), as well as Singapore and Australia have given a green signal to the crypto sphere and are together working to build a cryptosystem to regulate the use of the cryptocurrency. The foundational work for this system is expected to be ready by the end of this year.
In order to show you the international legal crypto regulatory map, in this article, we will have a look at 2019’s different regulatory responses by different countries.
Crypto-regulations by the crypto-favoring countries:
The country allows its citizens to purchase, sell, mine the altcoins, trade crypto-assets for Belarusian rubles, forex, and electronic currency, as well as to create their own cryptos. Not only this, the country has removed any tax on holding the crypto till Jan.1, 2023. Now, that’s a very crypto-friendly take indeed!
Japan’s regulatory requirement asks all the crypto trading platforms to obtain a license from Japan’s Financial Services Agency in order to exercise any activity related to the cryptocurrency in the country. Japan is not only in favor of cryptocurrency, but also encourages participation. By far, there are 19 crypto-licensed platforms and 110 platforms are ready to get themselves registered.
The country encourages the crypto sphere, by lowering the taxes and even tax exemptions to crypto start-ups. Further, the country treats digital currency as assets liable to wealth tax and declaration in the annual returns.
The FIU (the Financial Intelligence Unit) of South Korea has recently revealed that it is planning to regulate the local crypto exchanges to make the administration more comprehensive. The users are expected to use their real names (the official names that are registered with banks) in order to trade or invest in the cryptocurrency. By far, Upbit, Korbit, Coinone, and Bithumb are offering this service.
Beyond the country’s historic attractions, the small island has attracted crypto investors from all over the world. It offers relaxed tax laws for crypto exchanges to establish them in the country. One fine example of this kind of crypto exchange is Binance.
To start with, the country boasts the largest crypto exchange- ‘Bitstamp.’ The country treats crypto as ‘intangible assets’ that are only taxed when exchanged for fiat currency and are not subjected to any VAT.
The country has recently added crypto to its latest regulatory framework. It offers low-taxes and is filled with many crypto and fintech companies to attract business from all over the world.
The open-minded countries
The United States
The U.S is leading the crypto adoption and use scenario. Currently, there are more than 45 cryptos (including Bitcoin) available for trade and investment purposes. The U.S. Financial Crimes Enforcement Network has designed laws around the digital currency usage and the IRS has designed the tax structure around it, as crypto is considered as an asset worth the attention and potential. The SEC (the Securities and Exchange Commission) treats it as securities, while the CFTC (Commodity Futures Trading Commission) treats it as commodities. The laws vary from State to State in the U.S. However, JER (Joint Economic Report) is working on streamlining the regulatory structure in the country.
Canada’s regulatory framework uses AML (Anti-Money Laundering) and anti-terrorism laws to regulate crypto in this country. The firms are expected to register with FINTRAC (Financial Transactions and Reports Analysis Centre of Canada). Otherwise, they can’t open an account in the banks. Also, as per the Money Services Businesses Act, Quebec’s financial regulator is used to regulate the number of local ATMs and exchanges. This verifies users’ identity and regulates the records.
The United Kingdom
Despite the UK being considered to be one of the global leaders in the crypto sphere, the crypto still has not achieved the status of legal tender in the country. As per the country’s regulation, VAT (Value Added Tax) is not applicable to crypto purchases. Only the goods and services received in lieu of crypto-asset have the surcharge applicable to them. The user needs to pay the capital gain tax on the profits or losses made on crypto investment and holding.
Australia is very accepting of cryptocurrency. The Reserve Bank of the country is accepting the use of crypto by the country’s citizens. The country also treats Bitcoin as equivalent to fiat currency and doesn’t charge any double tax on the digital currency.
France’s regulation is in its developing stage. The recent bill revealed new legal frameworks that will be used to govern crypto activities such as ICOs (Initial Coin Offerings) in the country.
BaFin (the German Federal Financial Supervisory Authority) treats crypto as ‘units of accounts’ fit for payments in the country. Yet, users and firms will require to take permission to purchase the crypto for any commercial reasons. BaFin was also looking into conducting an ICO, recently.
Countries that are showing a red flag to crypto
China is not at all open to any kind of local or global crypto trading or investment. Even the crypto exchange platforms are denied both local and international access. Crypto is not considered worthy of being considered for retail payments as per the ex-governor (Zhou Xiaochuan) of the People’s Bank of China.
India is also not ready to accept the digital currency yet. The Reserve Bank of India has recently issued a notice to the private banks of the country not to allow any crypto-related trade or transaction.
The mass acceptance of cryptocurrency and further its global regulation is not a straightforward affair. There are many factors beyond the subject itself that indirectly shape the acceptance of the cryptocurrency. For instance, third world countries’ challenges are way different from the first world countries. And on the other hand, the third world countries, due to their developmental stage, have a lot of scopes to imbibe new things with time; in comparison to their economically saturated fellow first world countries. Therefore, the regulation-model of cryptocurrency will take time, and its multi-faceted nature can present many surprisingly new developments over time. Many countries that are not yet ready for the digital currency may give out a green signal with time and awareness of the digital currency and the crypto sphere.