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Regulation of Cryptocurrency around the world



Early 90’s trade reforms have changed the world drastically- the policies of free trade and computer revolution are impacting all the aspects of human life and we will see this impact for the generations to come. One such impact is that of the digital currency which is gaining popularity all around the world. In this blog, we will see the regulations of these digital currencies and the laws regarding them in different countries.





A cryptocurrency is a digital or virtual line of currency that works as a medium of exchange in the virtual world. Cryptocurrencies around the world are used for buying goods and services or trading them for profits. In early 2009, an anonymous programmer or a group of programmers under the code-name Satoshi Nakamoto introduced Bitcoin which uses a completely decentralized system that closely resembles peer-to-peer networks for file sharing.





Some of the terms used by countries to refer to cryptocurrency are a digital currency, virtual commodity, crypto-token, payment token, cyber currency, electronic currency, and virtual asset. There are various regulations in different countries to govern cryptocurrencies around the world. Here is a list of a few countries and their regulations and legislative positions towards cryptocurrencies and the activities associated with them.


1.India


Cryptocurrencies: Does not recognize as legal tender


Cryptocurrency exchanges: Effectively illegal and regulations are being considered.

The Indian government does not consider cryptocurrencies as legal tender and takes necessary measures to eliminate the use of these currencies in India for criminal uses. There is no clear information over the taxation on cryptocurrencies but Bitcoins are taxed in India. In early 2018, the Reserve bank of India announced a ban on the trading of cryptocurrencies but now in march 2020, the Supreme Court of India has lifted the ban on cryptocurrency trade.


2.The United States


Cryptocurrencies: Not considered as legal tender.


Cryptocurrency exchanges: It is legal and regulation varies by state

The laws governing cryptocurrencies vary according to states in the United States, even the definition of the term ‘Cryptocurrency’ changes from state to state. It’s difficult to find a consistent legal approach to cryptocurrencies in the United States.


3. Singapore


Cryptocurrencies: Not considered as legal tender


Cryptocurrency exchanges: It is legal and requires you to register with the Monetary Authority of Singapore.


It is legal to exchange and trade cryptocurrencies in Singapore, the government has taken an amiable approach on the position than regional neighbors. Even if the cryptocurrencies are considered legal tender, Singapore’s tax authority treats Bitcoin as ‘goods’ and they are considered for Goods and Services Tax.



4.Australia


Cryptocurrencies: It is legal and treated as property.


Cryptocurrency exchanges: Exchange is legal and one must register with AUSTRAC.

It is legal to trade cryptocurrencies in Australia, the government has taken some progressive steps to regulate the use of cryptocurrencies. The Australian government has declared that cryptocurrencies(especially bitcoin) were legal and should be treated as property and subject to Capital Gains Tax (CGT).



5.Japan


Cryptocurrencies: Legal and treated as property


Cryptocurrency Exchanges: It is legal but one should register with the Financial Services Agency.

Japan is the world’s progressive country when it comes to cryptocurrencies, it recognizes Bitcoin and other cryptocurrencies as legal property under the Payment Services Act. Japan is one of the largest markets for Bitcoin. The gains from cryptocurrency are categorized as ‘miscellaneous income’ under the National Tax Agency.


6.China


Cryptocurrencies: Not considered as legal tender


Cryptocurrency exchanges: Legal, Ban on Banking

Financial institutions are not allowed to facilitate cryptocurrency transactions. Bitcoin transactions were banned by the People’s Bank of China (PBOC) in 2013 and financial institutes were asked to close bitcoin trading accounts in less than two weeks. All the cryptocurrency exchanges or trading platforms were banned by the government in September 2017 with closing most of the bitcoin mining operations in early 2018.


7.The United Kingdom (UK)


Cryptocurrencies: Not considered as legal tender


Cryptocurrency exchanges: It is legal after the given requirements are satisfied by FCA.

Cryptocurrencies are not considered legal tender in the UK and they don’t have specific laws governing cryptocurrencies. Bitcoin is treated as a foreign currency and ‘Private money. When a bitcoin is traded for sterling or for any other foreign currency, no VAT is charged on them. Profit or losses from cryptocurrencies are subject to capital gains tax in the UK.



8. Switzerland


Cryptocurrencies: It is legal and accepted as payments to some extent.


Cryptocurrency exchanges: It is legal and regulated by SFTA

In Switzerland, cryptocurrencies are recognized as legal and it is legal to trade them. Cryptocurrencies are identified as assets and one should mention them on annual tax returns according to The Swiss Federal Tax Administration (SFTA).


9.The European Union (EU)


Cryptocurrencies: It is legal and member states should not introduce their own cryptocurrencies.


Cryptocurrency exchanges: Regulations vary by member-state

Cryptocurrencies are considered legal in the EU, but the exchange regulations vary and depend on the member states. The taxation on cryptocurrencies also varies from state to state but most of the states charge capital gains tax on profits earned by cryptocurrencies.


10.Latin America


Cryptocurrencies: Laws vary from country to country


Cryptocurrency exchanges: Relatively less regulation and laws vary by country.

In Latin America, cryptocurrency regulations run the judicial spectrum. Bolivia and Ecuador have harsh regulations on cryptocurrencies whereas, in Mexico, Argentina, Brazil, Venezuela, and Chile, the government accepts cryptocurrencies for payments at retail outlets and to merchants. Most of the cryptocurrencies are treated as assets in these countries and are subject to income tax to some extent.


In the coming years, we can see that Initial Coin Offerings (ICOs) and the cryptocurrency market will undergo vast changes in different parts of the world with increasing regulations on trading them. An effectively regulated market will help in reducing the herd-driven volatility while trading and the cryptocurrency market as a whole will regulate efficiently.


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