The cryptocurrencies are designed to be free from centralized agencies. The rise of cryptocurrencies is attributable to several factors. The factors include disillusionment with centralized currencies, adverse impacts of inflation, and recession. However, governments around the world along with central bank agencies have created different crypto regulations to protect the interests of the users. Therefore, it is necessary to briefly describe these regulations for the best interests of users and investors worldwide.
Crypto Regulations Around The World
There are significant differences in the crypto regulations around the world. Some crypto regulations can be interpreted as restrictive, while some can be interpreted as lenient.
Western Countries
Canada
Cryptocurrencies are not a legal tender in Canada. However, the country nevertheless is proactive about crypto regulations. The country became the first one to approve a Bitcoin exchange-traded fund (ETF). Canada has the Securities Administrators (CSA) and Investment Regulatory Organization of Canada (IIROC) to ensure that every crypto trader and platform registers with these regulators.
United States
In 2022, the US indicated support for further regulation. The country has agencies such as the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC). The SEC is already overseeing the crypto sector with some regulatory powers. It also has the power to file lawsuits and complaints against any wrongdoing by the cryptocurrency sector. It also has filed cases against prominent crypto firms. This phenomenon implies that the American crypto industry is evolving but the road is not clear of restrictions, some of which can be legitimate. The good news about the US is that the SEC approved the first Bitcoin Spot ETFs in January 2024. This has positively impacted the industry.
Australia
Australia’s cryptocurrency regulations are lax and the country formally recognizes these as legal property. The Australian Transaction Reports and Analysis Centre (AUSTRAC) is the monitoring body and all crypto exchanges need to register through it. Overall, there are no large restrictions on cryptocurrency transactions, trading, selling, or buying. In October 2023, the government announced the introduction of a regulatory framework and there will be a 12-month transitional period before approval.
Major Asian Countries
India
India remains the only large economy that continues to have an ambivalent view on crypto regulations. It is neither penalizing crypto users nor legalizing cryptocurrencies. The only noteworthy regulation towards cryptos is that the government has levied 30% taxes on all forms of crypto investments and a 1% tax deduction at source (TDS).
Singapore
Singapore formally classifies cryptocurrency as property but is short of recognizing it as legal tender. The Monetary Authority of Singapore (MAS) is the sole regulatory body for cryptocurrencies. The country has not allowed advertising of cryptocurrencies since 2022. From 2023, the country has regulations to substantially regulate Stablecoins and the issuers must have prior approval by the MAS. Despite formal regulations, Singapore indeed is a safe tax haven for capital gains on cryptocurrencies.
Japan
The cryptocurrency regulations in Japan are progressive. The country officially recognizes the currencies as legal property under the Payment Services Act (PSA). However, all crypto exchanges need to register with the Financial Services Agency (FSA) and comply with CFT obligations. Since 2020, all crypto companies using Japanese territory are members of the Japanese Virtual Currency Exchange Association (JVCEA). The government has a positive attitude as it treats trading gains from cryptocurrency as taxable under miscellaneous income.
Crypto Regulations in The European Union (EU)
Cryptocurrency is mostly legal in the territories under the control of the European Union. However, there can be national laws and regulations that are quite distinct from each other. The taxation range of the EU can range from zero to a whopping 48%. Overall, the KYC/CFT obligations are stricter because of successive directives.
Also Read- Decentralization in Blockchain Technology
Conclusion
The crypto regulations in the world may have significant variations but there are many undeniable similarities too. The KYC verification procedures are similar and it is conducted primarily to know and verify the identity of the account holder. Some countries have similar viewpoints and laws on preventing fraud and terrorism financing. However, the variations are significant and it is perfectly rational to view certain regulations as lenient, necessary, strict, restrictive, or unnecessary. Therefore, users should read crypto regulations and compliance requirements thoroughly before dealing with cryptocurrencies.
No Comment