The legalisation of crypto and NFT in different countries
As blockchain technology is fairly recent, many institutions haven’t yet revised their laws and regulations that refer to the online selling, trading, and buying process. The legislation around online transactions still has a long way to go, but as the technology evolves faster than laws, concepts like cryptocurrencies and non-fungible tokens (NFTs) are becoming more and more popular across the entire world.
People are earning and losing money from these emerging technologies, but more importantly, they are replacing old, conventional methods with them. This makes it even more necessary for regulatory institutions to revise existing legislation and write new laws if necessary to regulate all online transactions, which include crypto and NFTs as well.
When Bitcoin introduced the concept of decentralised finance to the world in 2009, regulators, tax authorities, and enforcement agencies began their debate on the best way to control it, and many countries still haven’t come up with a solution. This led to many consumers being confused about whether or not it is legal to use Bitcoin in their country and when travelling abroad. Simply put, the legal usage of Bitcoin will depend on the country you are in.
Bitcoin or any other cryptocurrency can be used to conduct online transactions between account holders wherever they are in the world. For some governments, this has raised a set of concerns. Some legislators and officials are saying they cannot support cryptocurrencies because they lack control and illicit ties, but some countries have already introduced regulations, mostly under anti-money laundering and counter-financing of terrorism laws intending to reduce the chances of cryptocurrencies being used for these purposes.
Countries Where Cryptocurrencies and NFT is Legal
By the end of 2021, 103 countries have been identified to have governments that directed their financial regulatory agencies to focus on developing regulations regarding cryptocurrencies and their usage in the above-mentioned laws. When it comes to countries that allow the usage of cryptocurrencies, the best examples can be The United States, The European Union, Australia, Canada, and El Salvador.
In the United States, the Department of Treasury’s Financial Crimes Enforcement Network has been issuing regulatory guidance on cryptocurrencies since 2013. In the country, Bitcoin is defined as a convertible currency with an equivalent value to a real one, but it also was categorised as property for taxation purposes.
Any institution that will administer or exchange Bitcoin or any other cryptocurrency, will fall under the definition of a money services business or MSB. A money services business is required to register and report all transactions over $10,000.
Also, the U.S. is developing regulations for both financial and non-financial institutions to create national priorities for all cryptocurrency tracking and reporting. This means that any institution that detects specific transactions or suspicious activities, must report it to the regulatory institution.
In March 2022, President Biden signed an executive order directing agencies within the federal government to coordinate all their efforts to measure the benefits and risks posed by cryptocurrency ownership, and whether there is a need to create an American digital currency.
In the European Union, Bitcoin and other cryptocurrencies are recognized as crypto assets. Using Bitcoin and other cryptocurrencies within the European Union is legal, however, the European Banking Authority has said that crypto-asset activities are not within its control, and businesses and individuals must be aware of all risks that cryptocurrencies carry with them.
In 2020, a proposal for legislation to regulate crypto assets was finalised by the European Commission, with numerous agencies endorsing it. One of the objectives of this proposal was also to ensure that the public can access and safely use Bitcoin and other cryptocurrencies.
Canada is also crypto-friendly like the U.S. In this country, cryptocurrencies are seen as a commodity by the Canada Revenue Agency for income tax purposes. Canada sees cryptocurrency exchanges as money service businesses. That said, crypto exchanges have to register with the Financial Transactions and Reports Analysis Centre of Canada, report suspicious transactions, abide by the compliance plans, and also keep specific records.
In Australia, the situation is pretty much quite similar to Canada’s. The Australian Taxation Office sees cryptocurrencies as financial assets with a value that can be taxed each time a specific event occurs. In other words, each time a person or an organisation trades, exchanges, or sells cryptocurrencies to fiat currency, or uses crypto for purchases, it will trigger a capital gains tax. Also, it is required to keep records of all transactions made using any cryptocurrency for tax purposes. However, if a person holds their cryptocurrencies strictly for personal use and makes gains on them, they might not owe tax.
Surprisingly, El Salvador is the only country in the entire world that declared Bitcoin to be legal tender in 2021. This means that Bitcoin has officially become a form of payment in El Salvador. Such advancement has set an example for many other countries to follow, including those mentioned above.
There are also other countries where cryptocurrencies like Bitcoin are legal for transactions with certain developed regulation forms, such as France, Denmark, Japan, Germany, Iceland, Spain, Mexico, and the United Kingdom. These countries are currently working on improving their legislation to ensure that cryptocurrencies can be used just like they are in the United States, Canada, and Australia.
Another country important to mention is the United Arab Emirates which regulated cryptocurrencies as well and announced they are aiming to become leaders of the crypto world. In March 2022, Sheikh Mohammed approved a law discussing cryptocurrency and NFT regulation which regulates virtual assets in Dubai. The Dubai Virtual Asset Regulation Law is presenting a detailed legal framework that protects investors and promotes responsible business growth in the virtual asset industry. The country also established an independent authority under Dubai World Trade Centre Authority, which will oversee all activities related to cryptocurrencies and NFTs.
On 17 March 2022, Ukraine officially legalised crypto in the country to fund its military fight against Russia, helping the country raise millions of dollars in cryptocurrencies. The two crypto wallets who were published on Ukraine’s official Twitter accounts, managed to gather $10.2 million during the first four days of the Russian invasion.
With the war still active on Ukraine’s territory, the country managed to gather more than $63 million from 120,000 crypto asset donations, including more than $200,000 from a CryptoPunk NFT.
Countries Where Cryptocurrencies Are Illegal
Without a doubt, cryptocurrencies are welcomed in most parts of the world, but several countries are completely against their usage in their territory. Commonly mentioned reasons among these countries are volatility and the decentralised nature of cryptocurrencies. Also, these countries’ leaders perceive cryptocurrencies as a threat to their existing monetary systems and the potential ti has to be used to support illicit activities like money laundering, terrorism, and drug trafficking. A few countries have completely banned all digital currencies, while others have made an effort to cut off any support within the banking and financial systems for its usage and trading.
Countries that have an implicit ban on cryptocurrencies are Bahrain, the Central African Republic, Georgia, Cameroon, Guyana, Vietnam, Maldives, and Libya. When talking about countries with an absolute ban on cryptocurrencies, these are China, Algeria, Egypt, Bangladesh, Iraq, Morocco, Qatar, Nepal, and Tunisia.
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