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A Guide To Cryptocurrency Regulations Around The World

A Guide To Cryptocurrency Regulations Around The World
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As demand for cryptocurrencies is increasing day by day so is the concern of crypto regulators. Every country has its own views regarding cryptocurrency and therefore has set up its own set of rules for its regulation.

Here is a complete guide to cryptocurrency regulations in some of the major countries.

Global Regulators:

Currently, there is nobody that regulates cryptocurrencies globally, however, at this year’s G20 summit that was held in Argentina, international financial leaders held a debate on cryptocurrency regulation. The summit concluded on giving a deadline of July to the G20 members to submit “specific recommendations on what to do”.

The Financial Stability Board (FSB), a watchdog that regulates finances for G20 economies said that cryptocurrencies are not stable enough to affect global financial stability.

“The FSB’s initial assessment is that crypto-assets do not pose risks to global financial stability at this time,” board Chairman Mark Carney said in a letter on March 18.

However, the International Monetary fund (IMF) asked for more cooperation as Managing Director Christine Lagarde said that crypto assets are being used for illegal activities like money laundering and financing of terrorists. In a blog post in March, Lagarde demanded that cryptocurrencies must be regulated just like the traditional financial system is being regulated.

Japan

View on Bitcoin: Legal tender as of last April.
Policy on exchanges: All the exchanges licensed under Japanese Financial Services Agency are legal to operate.

Last week, FSA in the country issues a warning to a major cryptocurrency exchange Binance for operating without being registered.

Japan is the biggest market for cryptocurrency trading and is the first country that adopted a regulatory program on the national level. Japan had been facing a lot of issues with cyber hacks and scams which has been the primary reason to adopt the regulatory system.

In March, the Japanese government issued notices to a number of exchanges ordering some to shut down while some to improve their business, in wake of the $530 million hack on Tokyo-based exchange Coinheck.

United States

View on Bitcoin: Not a legal tender according to Financial Crimes Enforcement network.
Policy on exchanges: depends on the states.

The U.S. is the second biggest Bitcoin market after Japan.

Different regulators in the country have different views on Bitcoin and cryptocurrency regulations. The Securities and Exchange Commission hinted that it views virtual currencies as security. Earlier this month, the agency increased its scrutiny and stated that it aims to impose security laws on cryptocurrency exchanges and digital wallet companies. The agency has also tried to regulate ICOs by its recent subpoenas.

The Commodities Futures Trading Commission describes Bitcoin as a Commodity. Before the Senate Banking Committee held in February, CFTC Commissioner J. Christopher Giancarlo wrote a testimony in which he promoted the “do-no-harm” approach towards ledger technologies.

The U.S Treasury Secretary, Steven Mnuchin has been very vocal about Bitcoin’s potential to be used for financing terrorism and other illegal activities.

The IRS believes the virtual currency is not a currency but rather a property. It also released a set of guidance in 2014 on how cryptocurrencies should be taxed.

European Union

View on Bitcoin: According to European Central Bank President Mario Draghi, no EU member state can introduce its own cryptocurrency.
Policy on exchanges: depends on the countries.

EU financial leaders have been very concerned about digital currencies being used for money laundering. Cryptocurrencies “present risks relating to money laundering and the financing of illicit activities,” said European Commission Vice-President Valdis Dombrovskis at a February roundtable in Brussels.

According to Dombrovskis, cryptocurrencies and crypto storage companies (digital wallets) should come under “Anti-Money Laundering Directive.

“The commission will continue to monitor these markets together with other stakeholders, at EU and international level, including in the G-20,” he said.

Draghi denied permission to Estonia for releasing its own government-backed digital currency, estcoin. “No member state can introduce its own currency,” Draghi said in September. “The currency of the euro zone is the euro.”

While France’s financial policymaker Autorite des Marches Financiers put forward a list of 15 exchanges that it will blacklist this Month. France also said it plans to regulate Bitcoin in the joint proposal with Germany.

United Kingdom

View on Bitcoin: Not a legal tender. “Only Sterling is legal tender in the U.K,” says Mark Carney.
Policy on exchanges: Legal but need to be registered with the Financial Conduct Authority. The exchanges, according to BOE must be meeting the same anti-money laundering counterterrorism standards as all of the other financial institutions.

Carney said that the wild increase in cryptocurrency prices is “speculative media”.

“The time has come to hold the crypto-asset ecosystem to the same standards as the rest of the financial system,” he said in a speech. “Being part of the financial system brings enormous privileges, but with them great responsibilities.”

Carney believes that virtual currency “has pretty much failed” to be like traditional money.

“It is not a store of value because it is all over the map. Nobody uses it as a medium of exchange,” Carney said.

As a warning to consumers, the Financial Conduct Authority defined cryptocurrencies as “high-risk, speculative products.”

South Korea

View on Bitcoin: Not legal tender.
Policy on exchanges: Legal but needs to be licensed with South Korean Financial Services Commission. Use of anonymous bank accounts for crypto trading is forbidden.

South Korea is a major market for cryptocurrency while regulators differ in their opinions about Bitcoin and other digital currencies.

In 2013, financial authorities in the country said that Bitcoin and cryptocurrencies were not legitimate currencies.

Earlier this year, South Korean Finance Minister said that the government was planning a crackdown against crypto exchanges in the country.

Last year, Financial Services Commission banned trading of Bitcoin Futures on local financial institutes and also prohibited the use of anonymous bank accounts for crypto trading.

The government did make clear that it does not intend to close down local exchange permanently, however; ICOs and futures will stay under scrutiny.

China

View on Bitcoin: Not legal tender.
Policy on exchanges: Illegal

The Chinese government is very strict regarding cryptocurrencies.

Bitcoin trading in the country is illegal. Last year, the Chinese government banned all domestic crypto exchanges and ICOs.

In January, a senior Chinese central banker suggested that the government should consider banning the trade of all virtual coins and businesses that provide crypto-related services.

Despite the strict regulatory rules, crypto activities are still taking place in the country through mining, which authorities are looking to shut down too.

Singapore

View on Bitcoin: Not legal tender.
Policy on exchanges: Legal but may be overseen by the Monetary Authority of Singapore.

Although the Singaporean currency doesn’t account for much daily global Bitcoin trading volume, the country still came out as a hub for ICOs. According to a PwC report, two out of the 15 largest ICOs took place in Singapore.

Singapore can be considered as a crypto-friendly country as it hasn’t implemented strict rules regarding the digital assets. In fact, in February, Singapore’s central bank said, “it is too early to say if they will succeed.”

However, the Monetary Authority in the country did warn citizens “to act with extreme caution and understand the significant risks they take on if they choose to invest in cryptocurrencies.”

India

View on Bitcoin: Not legal tender.
Policy on exchanges: Legal. The government has not yet regaled exchanges but issued cautions.

The Indian government is taking steps to outlaw Bitcoin and other cryptocurrencies to be used in payment systems and is even looking to appoint a regulator for exchanges.

The Indian government will “take all measures to eliminate the use of these crypto-assets in financing illegitimate activities or as part of the payment system,” India’s finance minister told lawmakers in February.

The tax department in the country also sent notices about crypto investment to a lot of citizens after a national survey showed that more than $3.5 billion worth of transactions had been made in the period of 17 months.

Switzerland

View on Bitcoin: Legal
Policy on exchanges: Legal but need to be registered with the Swiss Financial market Supervisory Authority.

The Swiss government has been the friendliest towards cryptocurrencies. Out of the 15 largest ICOs, 10 happened in Switzerland, according to a PwC report.

The town of Zug is home to some of the major blockchain businesses including Ethereum Foundation and the digital wallet company, Cardona.

The Swiss Financial Market Supervisory has put forward clear guidelines for Initial Coin offerings. Swiss Economics Minister Johann Schneider-Ammann said that he wants to see the country as a “cryptonation”.

While Swiss National Bank Chairman, Thomas Jordan says that he sees Bitcoin as more of an investment than a currency.

Also Read: Cryptocurrency Regulations and The G20 Summit

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