Cryptocurrencies: Regulations Around the World
Cryptocurrencies took the world by a storm in the last quarter of 2017 and beginning of 2018 after their unparalleled price rally. While they’ve been in existence for almost a decade, it wasn’t until this time regulators turned their attention to this fairly nascent market, seemingly realizing the effect they can have on national economies.
Nevertheless, legislators around the world have taken different approaches as some have warmly welcomed the emerging technology and its proceeds while others haven’t been so receptive.
With this in mind, below you will find an overview on some of the world’s leading economies and their regulatory approach towards the field of distributed ledger technologies and, respectively, cryptocurrencies.
Those in Favor
Switzerland, the self-proclaimed blockchain capital of the world, undoubtedly stands out on top of the crowd when it comes to cryptocurrencies. In particular, the Swiss Canton of Zug is attempting to establish itself as a comprehensive digital currency hub. Going further, back in September 2017, the Commercial Register Office in the Canton of Zug began accepting Bitcoin (BTC) as means for payment of administrative costs. Recently, the country’s stock exchange announced plans to launch a cryptocurrency exchange.
Malta is another country that pops to mind when it comes to favorable cryptocurrency settings. The country has already formulated and instituted a regulatory framework and its Prime Minister has more than once expressed his positivity on the matter. Consequentially, the world’s largest cryptocurrency exchange by means of traded volume, Binance, opened an office there.
Belarus, on the other hand, is one of the countries where cryptocurrencies are entirely regulated and in the clear. The act which governs them is a Presidential Decree on the Development of the Digital Economy and it came into full effect on March 28, 2018. According to it, people are able to buy, sell, exchange, and mine cryptocurrencies. What is more, income which is generated from cryptocurrency proceedings is tax-free until 2023, creating a safe haven for the industry’s advocates.
As we mentioned above, not all countries are in favor of cryptocurrencies. Some have seen them as a threat to their systems and have, thus, outlawed them entirely.
One such country is China. The People’s Republic of China has officially banned initial coin offerings and do not recognize cryptocurrencies as means for payments. Interestingly enough, the country’s hard stance is only towards cryptocurrencies, not towards the technology which underpins them. In fact, earlier in May, the country began drafting up their blockchain standards and are eyeing 2019 as the potential deadline.
India is another uncharted territory where cryptocurrencies aren’t exactly welcomed. The country’s government officially outlawed digital currencies in the beginning of 2018, stating that Bitcoin, and others alike, are not considered to be a legal tender. Officially, there is no regulatory framework to substantiate this, but the Reserve Bank of India (RBI) has, on multiple occasions, reiterated this by issuing public warnings for the risks of engaging in cryptocurrency transactions.
A notable mention, partially representative of the Arabic world is Qatar. The country is also known to be fairly unreceptive of cryptocurrencies, issuing a circular to all banks warning against trading in Bitcoin back in February 2018. What is more, the same circular deemed Bitcoin to be illegal and that it’s not supported by the central bank, while outlining the high risks associated with cryptocurrency trading.
Ecuador’s Central Bank has also outlawed Bitcoin, saying that it is not an authorized payment method. The reasons, trivial as they may be, include the fact that cryptocurrencies are not backed by any authority and that their intrinsic value is merely a speculation.
Those In Between
Some countries, unlike the above, have decided to take a rather neutral stance, seemingly waiting to see how other national regulations and positions work out.
The US, for instance, is a classic example of a legislation which is taking its time to decide how to proceed with cryptocurrencies. They are officially not considered to be a legal tender, the country’s financial watchdog has officially decided that Bitcoin and Ether (ETH) are not deemed securities. Nevertheless, the SEC’s position on the majority of the ICO-issued tokens remains the exact opposite – they are considered to be securities. Additionally, cryptocurrencies in the US are taxed as private property.
Canada doesn’t consider Bitcoin and cryptocurrencies, in general, to be a legal tender. However, they are not forbidden as well. This means that you can use them to purchase goods as long as the provider accepts them. Interestingly enough, though, the tax laws of the country are extended to cover digital currencies.
South Korea and Singapore, on the other hand, are slowly turning to very preferable destinations, despite the fact that their overall position is more or less restrained. South Korea recently announced that it will be allocating more than $880 million towards the development of blockchain technologies, while Singapore’s central bank (Monetary Authority of Singapore) shook hands with marquee companies like Deloitte and Anquan on a project which brings settled cryptocurrency transactions to the masses.
In a Nutshell
The world’s regulatory map when it comes to cryptocurrencies and their underpinning technology is as diverse as it can get.
It’s worth noting, though, that the entire industry is still in a fairly nascent stage of adoption, being around for less than a decade. With this said, it’s likely that we are in for a lot more and comprehensive regulatory frameworks in the making, as the technology ripes and continues to prove its validity.
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