Ever since its 2008 inception, blockchained cryptocurrency has significantly evolved over many fronts. With these innovations come impactful regulatory laws which govern how cryptocurrency is viewed and treated in different countries. As such, different laws have been established to create various regulatory situations across the world in all kinds of developed and emerging markets. In fact, you’d be pretty surprised at how cryptocurrency is regulated in some parts of the world. Here are some of the laws and regulations for cryptocurrency in several emerging and developed markets.
In this article:
United States, Canada, South America
Within the United States, cryptocurrency is pretty huge. But we can’t say the same for all countries within the Americas where there are some places crypto is even banned. Let’s start with the United States.
Home to one of the most highly developed and largest economies in the world, the United States has been a prominent face in the world of cryptocurrency. As such, cryptocurrency in the United States is extremely popular since its markets have seemingly endless possibilities for developing any related ideas and conducting cryptocurrency business. Bitcoin usage by country is increasing as the largest American companies have started accepting payment in digital currency. The US’s influence stretches farther than just its own economy, as any favorable regulation or law that gets passed can directly influence market conditions all around the world.
So how is crypto viewed in the United States? FinCen, a bureau of the Treasury Department, made it clear that “virtual currency does not have legal tender status in any jurisdiction.” As for exchanges, they are legal although regulation depends on the state. The Securities and Exchange Commission originally viewed digital currency as a security, but have since made it clear that both BTC and ETH are no longer securities. Initial coin offerings have been the center of much debate from the agency, pushing to introduce more regulation to closely monitor any potential scams or fraudulent activity.
The IRS says cryptocurrency is taxable just like any other form of property, reminding everyone to include any crypto income in their annual tax forms. Amid all the debate and regulation that has been heating up recently, President Trump actually had his own crypto situations to deal with as part of his foreign policy affairs. President Trump banned U.S. purchases of a cryptocurrency the Venezuelan government created as part of a campaign to pressure the government of President Nicolas Maduro. Maduro created the currency — the Petro — in an attempt to salvage his country’s failing economy, where inflation is estimated to spiral to 13,000 percent this year alone! Despite the foreign policy clash, the Petro exists to hopefully take Venezuela out of its economic crisis.
In cases like these, cryptocurrency can play a pivotal role in significantly shifting the quality of life for millions of people. Take Venezuela for example, where crypto regulation is still a bit shaky despite efforts by the President to utilize crypto to bolster the economy. With several red flags coming up, the Petro hasn’t been too successful in generating its intended economic activity. Even Venezuela’s own government is not on board, declaring the Petro an illegal debt issuance. Unfortunately, this project is being deemed “the worst investment ever” and a “worthless token”, with most people unable to comprehend what it actually is. Other South American countries have also been open to implementing digital currencies as a form of economic liberation. Loose regulation or none at all exists in countries like Argentina and Brazil, while Ecuador and Bolivia have flat-out banned digital currency.
In Canada, businesses “dealing in virtual currency” will now be regulated as Money Services Businesses (MSBs). This regulatory decision is meant to protect Canada’s financial ecosystem from laundering and other terrorist financing activities. Canada became one of the first countries to officially state how cryptocurrency businesses will be regulated, following months of debate within various levels of government.
Review: Overall, the Americas possess many crypto-friendly nations who have either introduced or are planning to implement various forms of crypto regulation. With countries like Venezuela who are open to finding a way to use digital currency to liberate their economy, we will continue to see more regulation introduced in this space over time.
Europe is home to some of the most economically sufficient countries in the world, some emerging as leaders in the digital asset space. Earlier this the year, the European Union (EU) stated that it intended to introduce measures to regulate the crypto market. Although a date hasn’t been set for this proposed regulation, it seems that Bitcoin is on its way to being legitimized through EU jurisdiction which requires that cryptocurrency exchanges go through the same AML processes as traditional banks.
Let’s not forget, however, that the EU banned Estonia and any other member state from creating its own cryptocurrency in 2017. Additionally, several EU states have imposed stricter supervision on crypto derivatives, making it even more difficult to accurately predict where the European Union will go with regards to further legislation. Irrespective of what each member decides going forward, we are seeing different countries look at crypto-regulation from various points of view.
Outside of the EU, countries like Italy, France, and England have also been introducing crypto-related framework within their own government. In February, the Italian Ministry of Economy and Finance published a ministerial decree with a proposed cryptocurrency framework, while France’s Finance Minister asserted his enthusiasm for cryptocurrency as well by planning to create a legal framework around offerings. Despite recent efforts to blacklist several French crypto companies, the government’s pro-crypto stance remains apparent.
The creation of the UK Cryptocurrency Task Force further emphasizes just how seriously the Bank of England is taking digital assets. The British Minister for Finance expressed that he wants to fight anarchy and ensure that there are initiatives set in place to combat illicit activities associated with decentralized technology. The Finance Minister also hinted at the possibility of integrating blockchain technology at the core of the British financial system, much to the delight of pro-crypto regulators who understand that this could indicate more favorable regulations.
Another crypto giant stirring the pot through regulatory framework is Russia. Russian President Vladimir Putin set the date for bringing cryptocurrency regulations into effect by July 1st. The State Duma — the country’s main legislative body — released and has since approved a bill titled “On Digital Financial Assets.” This bill deals with cryptocurrencies, as well as blockchain-related technologies such as smart contracts, mining, and Initial Coin Offerings (ICOs). On top of these new regulations, Russia has put in place an unprecedented set of ICO regulations, leaving many Russian-based ICO organizers strongly considering their next steps. Regardless, this is a huge leap forward for the integration of crypto in Russia and is highly indicative of what’s to come in the digital assets sector.
Review: It seems as though European leaders have finally agreed that the innovative technology underlying crypto-assets “has the potential to improve efficiency and inclusiveness of the financial system and economy more broadly,” as emphasized at the G20 summit in March. However, when it comes to regulation, the lack of consensus among global leaders makes it nearly impossible to enact any kind of broad legislation. Moving forward, we’ll just have to wait and see what regulations individual countries enact to promote or restrict the growth of digital assets.
China shocked the crypto-world back in 2017 when it implemented a blanket ban on all cryptocurrency trading and domestic exchanges. Many people were fearful of the continued Chinese governmental boycott of virtual currencies, believing that the market would essentially collapse due to the giant’s exit from the crypto space. However, markets were able to recover and even bounced back relatively quick. Blockchain technology and innovation remain incredibly popular in China, so much so that many cryptocurrency fans are not even fazed by China’s crackdown. In fact, Ripple has even stated that it is “very confident” about cryptocurrency re-entering the Chinese market by the end of this year.
Moving forward, China may now be re-considering its all-out ban and move towards more stringent crypto regulation as an alternative. It’s impossible to know exactly where China will go with its own crypto regulations, so the best thing we can do is stay updated and follow up on whatever happens.
Japan has been pretty busy with security-related cryptocurrency issues — namely cryptocurrency exchange scams — but still boasts the second highest crypto-trade volume. In fact, regulatory bodies have been in action ever since the Mt. Gox fiasco back in 2014. Yet, it’s become clear through the recent spike in exchange hacks and security breaches that this area still has much room for improvement. In addition to the increasingly strict exchange regulation, Japan has also made a huge leap towards tokenization by announcing its plans to legalize ICOs and utilize token sales for positive national gains. Resultantly, “crypto fever” has definitely taken a spot in Japan.
Pakistan has a population of almost 200 million people, with smartphone users numbering around 45 million. Despite these promising numbers, Pakistan’s Central Bank has issued a statement barring financial companies in the country from working with cryptocurrency firms, becoming the latest institution of its kind to bar the activity. However, there are still ways for people to get around that and buy digital assets through localbitcoins, brokers, or international websites. Keep in mind, it’s still a difficult process and could cost users a premium! With elections coming up, these regulations aren’t expected to change much over the next 6 months.
India has also been looking into crypto regulation to bolster economic activity, despite its trading volumes plummeting initially as a result of the government’s crack-down on exchanges. India’s Central Bank (RBI) also announced that they would no longer provide services to anyone dealing in crypto, but many in the industry are fighting back by finding ways to navigate prohibition through means such as crypto-to-crypto trade. With a general governmental consensus on where cryptocurrency stands moving forward, it should only be a matter of time before more framework is introduced to better monitor and deal with cryptocurrency in India.
South Korea has been in the news over the last few months as cryptocurrency regulation has been shifting from favorable legalization in the summer to much more stringent regulation by Christmas. Since January, the South Korean government has been reassessing its position, leaving the crypto-world waiting for any groundbreaking legislation which could significantly influence the rest of the market. In an initiative to crack down on fraudulent activity, South Korea’s FTC (Fair Trade Commission) has demanded that crypto brokers modify their contracts. South Korea’s comparatively small population still has a significant impact on the crypto-trade market (third only to the US and Japan in trading numbers), so when it comes to regulation, it’s safe to say that they’re an important one to watch for moving forward.
Indonesian authorities have gotten involved in the regulatory framework of digital assets, namely Bitcoin, following a recent rise in popularity of one of the world’s most popular holiday islands: Bali. Local authorities became indirectly aware of the “crypto haven” that Bali had recently become. Central bank officials and police began to investigate the trend and said that they will be looking more seriously into crypto regulation that will include AML and CFT laws.
Australia & Africa
Australia may not be the most notable market for cryptocurrencies, but it’s definitely a growing one. Currently, Australia is ranked 14th globally for BTC volume by currency. Similar to many of the other countries where cryptocurrency is beginning to emerge, we are seeing an introduction of far more regulation and framework that aims to better consolidate crypto-related laws. On April 11, the Australian government, through the Australian Transaction Reports and Analysis Centre (AUSTRAC), announced tangible plans to implement new rules on cryptocurrency exchanges. The major one being that, “Digital currency exchanges (DCE), with a business operation located in Australia must now register with AUSTRAC and meet the Government’s AML/CTF compliance and reporting obligations,” the announcement read.
As is often the case with governmental regulation of cryptocurrencies, the main aim of these initiatives is to stop money laundering and terrorism financing conducted in cryptocurrencies through their anonymous and global nature. However, the report states that “regulation will also help strengthen public and consumer confidence in the sector,” AUSTRAC CEO Nicole Rose commented.
The move by Australia to license exchanges indicates that the government is attempting to get involved with cryptocurrencies in the country. These licenses may be tangible evidence of cryptocurrency regulation, but Australia has most certainly built up a positive outlook on digital currencies. In fact, Australia followed Japan in declaring Bitcoin as legal tender.
The regulatory attitude toward crypto finance in Africa varies from country to country. This is no different than in other parts of the world, but there seems to be a strong polarization between who’s pro and anti crypto. The South African Reserve Bank has been open to integrating cryptocurrency into finance, leading many bitcoin startups to call South Africa their home. However, other nations have not been so kind to integrating crypto in their nation’s economy. Egypt, for example, has banned bitcoin and all other cryptocurrencies. Namibia has done so as well, and Algeria has announced its intention to do the same later this year.
In the majority of African nations, there has been no forward guidance from regulators regarding crypto finance, so most Africans have the legal right to buy and sell in crypto.
One of the most important aspects of cryptocurrency that gets overlooked so many times is regulation. More often than not, your average Joe will have no clue about how different parts of the world handle cryptocurrency. It’s becoming increasingly more obvious that more countries are looking for ways to integrate digital assets into their economy, using a regulatory framework as their tool to accomplish this. As we witness more laws being put into place to further protect crypto users and lower the risk of fraudulent and terrorism-related activity, be aware of how just one positive regulatory decision can significantly impact the rest of the market.
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