Cryptocurrency regulations
Often seen as the ‘escape’ from the bureaucracy normalised for fiat-based investments, the lack of cryptocurrency regulation is often considered an advantage: on the surface, this means creating an entry point that would not be possible for a fiat-based portfolio. However, as the cryptocurrency market has matured, so too has the interest among institutional investors from a variety of jurisdictions: advanced portfolios require the assurance that only rock-solid compliance can provide.
Yes, regulation is key to informing investment decisions; but this dilemma may also raise a deeper question of how users can remain informed with crypto regulation changing at such as rapid pace.
Cryptocurrency rapid global expansion
Cryptocurrencies have become ubiquitous, prompting more national and regional authorities to struggle with their regulation. Cryptocurrencies rapid expansion has made it possible to identify emerging patterns and so as cryptocurrencies spread across the globe, so too do the regulations established to try and govern them. The landscape is changing rapidly and keeping up to date with the rules in different territories isn’t easy.
A case from Asia: Real-time news matters
Since April 2017 Japan began recognizing bitcoin as a legal method of payment. Following months of debate, the Japanese Government passed a law which categorized bitcoin exchanges under “anti-money laundering/know-your-customer rules”, and also making “bitcoin” a means of prepaid payment instrument. The conversation was initiated by the collapse of Mt Gox, the now obsolete bitcoin exchange; following months of growing complications, ultimately, resulting in insolvency and alleged fraud. The law which came into effect on 1st April, instated capital requirements for exchanges, cybersecurity and operational stipulations.
Asset-jeopardising regulations? Harness updates to avoid
In March 2018, at the G20 the world’s economic leaders called for a globally coordinated policy on cryptocurrencies from the world’s economic leaders. The Financial Action Task Force (FATF), an intergovernmental organization, focussed on developing policies to combat money laundering, planned to develop binding rules for the world’s cryptocurrency exchanges.
As a decentralized currency the existing non-binding guidelines proposed some money-laundering controls for the marketplace — registered exchanges, customer verification and suspicious activity reported — however, only at the different nations’ discretion to comply, or not. The FATF planned to review the effectiveness of the current rules, how they are applied to new exchanges and how this new system would work with countries which have banned cryptocurrency trading.
In 2019 Japan will become the leader of the G20. The Japanese government is likely to aim, by 2019 or earlier if possible, binding rules for crypto exchanges.
In March 2018, at the G20 meeting, it was agreed by the member nations present that examination of issues with cryptocurrencies was needed, but further information was required prior to any regulation proposals being made. The deadline of July 2018 was set for recommendations on the data requirements.
Finally at the end of 2018 the G20 summit was held in Buenos Aires, financial leaders discussed the taxation of cryptocurrencies. The Group of 20 agreed on the need to establish a specific framework for the taxation of any activity related to cryptocurrencies. Today, it is difficult for States to tax companies that do not elect domicile in the country. It is on this loophole that many companies active in cryptocurrencies rely, which allows them to avoid paying taxes where traditional taxation is too high.
With this in mind, the G20 met in 2019 to formalize a solution that would provide an effective response to the consequences of the digitalization of the economy on the international tax system. According to the official G20 press release, it will take until 2020 to see these new measures officially come into force.
Data efficiently distilled: How Daneel can help
Keeping up-to-date with the global regulatory evolutions has never been more critical for the cryptocurrency investor. The marketplace is being review by the G20 member states and the outcome of the review could send a tidal wave of regulations to across the industry that will undoubtedly impact exchanges and investors. Daneel’s artificial intelligence personal assistant (AI-PA) is on hand every day to give customers the most update news and evolutions at this critical time in the global regulation of cryptocurrency. Never, in the history of cryptocurrency, has it been more important to stay informed about cryptocurrency changes.
Conclusion
Globally, regulators and governments are working collaboratively to discover what the future of cryptocurrencies looks like. It’s not black and white. Each country approaches the technology differently. However, it is clear that over the course of 2019, new legislation will come into force enshrining cryptocurrencies into law.
Stay tuned:
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