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Cryptocurrency Regulations Around the World

Cryptocurrency Regulations Around the World

The world has become increasingly fascinated with cryptocurrencies. Despite the high volatility and price fluctuations, the institutional and retail interest in cryptocurrency investing has been growing rapidly in the past years, making investors and governments alike could no longer ignore the growth of decentralized finance. It is therefore, cryptocurrency regulations are being slowly introduced into global financial markets — to help monitor these emerging digital currencies and to allow for clearer guidelines and a measure of security.

Days passes in years, it is noteworthy to mention that regulatory and compliance issues have always been one of the most controversial topics in the cryptocurrency sphere, as some believe that regulatory challenges were the biggest hurdle for crypto investment to go mainstream, others argue that crypto-related products must be well regulated before entering the mainstream investment market. Legislative attitudes towards digital currency vary widely around the world.

As the fastest growing crypto region, Asia has the widest regulation spectrum than any other region. Japan has one of the most progressive regulatory climates for cryptocurrencies, widely considering bitcoin as legal tender and passing a law in mid-2017 identifying cryptocurrencies as legal property. In late 2018, Japan also approved self-regulation for the crypto industry.

By contrast, China currently has one of the most restrictive environments in the world for cryptocurrency. As early as December 3, 2013, the People’s Bank of China (PBOC), the Ministry of Industry and Information Technology (MIIT), the State Administration for Industry and Commerce (SAIC), the China Banking Regulatory Commission (CBRC), the China Securities Regulatory Commission (CSRC), and the China Insurance Regulatory Commission (CIRC0 jointly issued a notice warning the public about the risks of bitcoin, the ‘Notice on Precautions Against the Risks of Bitcoins’, which banned bitcoin transaction, as well as ICOs and crypto exchanges in 2017─though many, have found workarounds through sites not yet firewalled.

As it leverages the “one country, two systems” principle, which gives it a high degree of autonomy, Hong Kong is considered a unique jurisdiction. Regarding cryptocurrency regulation, the country does not regulate nor prohibit the possession or trading of Non-Structured Finance Virtual Assets, as Bitcoin and other currencies of its kind are considered to be virtual commodities and not electronic money, provided the cryptocurrencies are possessed and traded in good faith. There are other regulatory considerations depending on the use of cryptocurrencies, such as the running of ICO campaigns or trading Bitcoin futures contracts.

Singapore is commonly referred to as one of the world’s “crypto havens”, not only because it is a world financial centre, but also as a result of its balanced legal and regulatory regime fostered by the Monetary Authority of Singapore (MAS). For cryptocurrency, it is not regulated in Singapore, however, the activities surrounding it or its characterization resulting from its activity are what determines whether it will be regulated under securities or other legislation. In 2018, MAS issued a warning to eight cryptocurrency exchanges who were found to have permitted trading of coins that were securities in Singapore. It is clear that MAS took a firm standpoint on these exchanges. Hence, cryptocurrencies may only be listed on regulated exchanges or recognized market operators.

In India, the use of technology, including blockchain has boomed significantly over the past few years. Such development has not gone unnoticed by most regulators such as the Reserve Bank of India (RBI). While the present government has supported innovation to promote a digital or cashless economy, cryptocurrency still remains an outlier. Despite a vague declaration on crypto regulation, its government is moving towards a wholesale ban on the use of cryptocurrency.

The government of South Korea implemented a rule that allows trades in cryptocurrencies only from a real-name bank account. Traders or dealers must have contracts with banks concerning cryptocurrency trades. Currently, there are several pending bills on cryptocurrency proposed at the National Assembly.  It is unclear when or if these pending bills will be enacted into law in the country.

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While in Europe, the EU Parliament has passed no specific legislation regarding cryptocurrency. However, the crypto future is determined by individual member states and are considered legal. On another note, the EU is actively exploring further cryptocurrency regulations.

Both Canada and the U.S. take a similar approach to cryptocurrency legislation at the federal level, as both countries view cryptocurrencies as securities. However, provincial and state regulations differ widely in their taxation requirements of profits from crypto investments. In Mexico, Argentina, Brazil, Chile and Venezuela, cryptocurrencies are widely accepted as a means of payment.

How about Malaysia? Is the country taking part in the cryptocurrency space?  Recently, the Securities Commission Malaysia has conditionally allowed buying and selling of cryptocurrencies, mainly Bitcoin and Ethereum, through a regulated company such as Luno. However, there is no such clear regulatory framework on cryptocurrencies in the country.

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