The Other Side of Blockchain Technologies: Global Cryptocurrency Regulations
Over the years, cryptocurrency’s influence has continued to grow. Regulatory frameworks are required to take care of the ways this asset class is managed. Some governments openly include trading in their existing framework – such as Japan or Sweden, to eventually bring up the national economy from the state it is in. Others allow the industry to grow under a strong regulatory framework, as is the case with Belarus. Let’s review some of the more prominent examples of regulation throughout the world.
Overall, Australia’s stance toward crypto regulation is proactive. It classifies them as legal property, incurring capital gains tax for profits or losses. After registering with the Australian Transaction Reports and Analysis Centre (AUSTRAC), crypto exchanges can begin operating freely. However, they have to also meet AML/CFT obligations as well. As of 2019, privacy coins have been delisted and ICOs have a new set of regulatory requirements set out by the Australian Securities and Investments Commission (ASIC).
Governance of crypto and its exchanges in the EU varies, but most members deem virtual currencies legal. Taxation can range from 0% to 50%, while reporting requirements and KYC/CFT obligations have become stricter with the Fifth and Sixth Anti-Money Laundering Directives (5AMLD, 6AMLD). The Markets in Crypto-Assets Regulation (MiCA) is a proposal by the European Commission that is yet to take effect. It offers a framework with a focus on consumer protections, introducing new licensing and conduct guidelines.
The country of love is in love with crypto, whose operations, regulated by the French Court, are deemed legal within the premises of the country. A bill on the governing of ICOs has also been passed, but firms are required to meet and follow the set standards. Those include capital requirements and consumer protection. Freedom of crypto in France is additionally granted upon agreeing that the appropriate amount of taxes would have to be paid.
The German Federal Financial Supervisory Authority (BaFin) classifies digital currencies as “units of account” to be used for the purpose of payment. Before engaging in the commercial purchasing operations, individuals and firms must obtain approval. BaFin has highlighted that ICOs will be examined on a case-by-case basis, which is a potential opportunity for rising tokens. Regulated financial institutions like banks can also operate with crypto on behalf of clients after an amendment in the AML rules.
Regulators within Canada are currently looking at crypto in a positive light. It is the first country to approve a Bitcoin exchange-traded fund. The Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC) require dealers and trading platforms for crypto to be registered with provincial regulators. Taxation of crypto in Canada is similar to other commodities and all investment firms have to register with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) as they are considered money service businesses. Local banks do not open client accounts dealing with crypto if these conditions are not met.
When it comes to cryptocurrencies, Mainland China has been seeing red all the way back since 2013. In 2021, after many rocky years, it imposed national bans and blocks over digital currencies and any activities pertaining to them.
A decree by the president of Belarus gives local residents of the country the right to operate crypto. The buying, selling and creation of crypto all fall within this right. Mining is not prohibited, and trading crypto in exchange for other currencies is permitted, including the Belarusian ruble. There will be no tax on crypto until 2023.