Cryptocurrency Bill: The “cryptocurrency bill,” an abbreviation for “cryptocurrency and regulation of official digital currency,” was presented to the Lok Sabha, India’s parliament, in 2021. According to the Lok Sabha, the measure’s goal was “to establish a conducive environment for the issuance of the official digital currency by the Reserve Bank of India.” “It also seeks to prohibit all private cryptocurrencies in India,” the bulletin said.
When the bill was introduced, there were rumblings in the cryptocurrency business. People started talking about how the Indian government was trying to ban crypto. This caused people to panic and dump their cryptocurrency holdings on the local WazirX market.
As a result, the Securities and Exchange Board of India, which oversees local cryptocurrency exchanges, saw the need to regulate cryptocurrencies. Even if the crypto ban was ultimately unsuccessful, the government’s action caused many crypto fans in India to feel divided about the industry’s future. A complete prohibition of cryptocurrencies in the future is nevertheless a source of residual anxiety.
In the US, crypto-supporting senator Cynthia Lummis of Wyoming recently stated her intention to present a comprehensive measure to address digital assets in 2022. The following are the goals of Lummis’s proposed legislation; she also owns Bitcoin BTC $62,200:
On Twitter, Lummis urged American voters to urge their senators to consider the measure and vote seriously. This measure is the senator’s first attempt to establish federal regulations about crypto assets, and his ultimate goal is to have digital assets fully standardized throughout the United States.
Cryptocurrency Rules and Regulations
Once considered only a speculative investment asset, cryptocurrency is essential to a well-rounded portfolio. Governments worldwide are still at odds on how to control the contentious asset class known as cryptocurrencies, even as its use is on the rise. It is still unclear what the regulatory structure is for digital assets, even in the most cryptocurrency-heavy country, the United States.
So, how are other nations’ regulatory frameworks for cryptocurrency structured? Worldwide, cryptocurrency operates under a patchwork of laws and regulations. Each jurisdiction, however, classifies and taxes cryptocurrency differently based on its stance on the asset class. Here are a few of the most critical changes to cryptocurrency regulations worldwide.
El Salvador
El Salvador gained international attention in September 2021 for being the first government to accept Bitcoin and the US dollar as legal money. This audacious step exceeded the attempts of most nations to regulate crypto. Despite doubts from Salvadorans and the conventional financial industry, El Salvador’s president, Nayib Bukele, stuck to his decision.
Bukele believes the country’s unbanked population may be effectively enticed into the formal economy by using Bitcoin as legal cash. Bukele aspires to decrease the current unbanked population of El Salvador—roughly 70%—through the adoption of digital currency.
While most people in the cryptocurrency world are ecstatic about the decision, some wonder whether nations will follow suit and recognize cryptocurrency as legal tender. At the same time, the IMF has repeatedly voiced its doubts about Bitcoin and has even urged El Salvador to demonetize the cryptocurrency. Directors at the International Monetary Fund have pointed out that Bitcoin could threaten “financial stability, financial integrity, and consumer protection.”
United States
The United States ranks high among nations where crypto investors and blockchain companies put their money into cryptocurrencies. Still, the nation’s cryptocurrency regulations are vague at best. The Financial Crimes Enforcement Network requires cryptocurrency exchanges to register, and the Bank Secrecy Act also applies to them. Additionally, to prevent the funding of terrorists, exchanges must adhere to Anti-Money Laundering (AML) regulations.
To put it mildly, approaches to Bitcoin are scattered because different commissions see it as a separate asset class. Blockchain technology, like Bitcoin, is considered a commodity by the Commodity Futures Trading Commission but a security by the Securities and Exchange Commission (SEC). The Treasury, meanwhile, views it as money.
Cryptocurrency is considered property by the Internal Revenue Service (IRS) for federal income taxes. As a result, dealing in cryptocurrency is subject to taxes in the United States. The Internal Revenue Service (IRS) imposes fines for failing to declare cryptocurrency sales proceeds.
Canada
Canadian regulators have always taken the initiative when it comes to cryptocurrencies. In February 2021, they authorized the first Bitcoin exchange-traded fund (ETF). Cryptocurrency in Canada is taxed similarly to other commodities.
Contrarily, crypto investment firms are categorized as money service enterprises. As a result, they need to sign up with the Financial Transactions and Reports Analysis Center in Canada. The Canadian Securities Administrators and the Investment Industry Regulatory Organization of Canada mandate that all crypto dealers and trading platforms within the country register with provincial regulators.
United Kingdom
In Britain, cryptocurrency is not used as money but rather as property. UK cryptocurrency exchanges must register with the Financial Conduct Authority and cannot trade crypto derivatives.
Regarding Anti-Money Laundering and Know Your Customer regulations, Her Majesty’s Revenue and Customs (HMRC) has cryptocurrency-specific requirements. Who is involved in the transactions, and for what purpose does it determine if they are taxable? To help individuals with their Bitcoin tax filings, the HMRC has compiled a comprehensive Cryptoassets Manual.
Legality of cryptocurrencies
differing jurisdictions continue to have vastly differing views on the legitimacy of cryptocurrencies. Cryptocurrency legalization is unlikely to gain worldwide support because the laws and regulations are mired in political interests and scepticism.
Many countries are reevaluating their comfort levels with crypto, causing regulatory ramifications to vary in various areas. While cryptocurrency is still considered lawful in most nations, its applications vary by economy. However, as we will see in the following section, some countries have severely limited or outright forbidden the usage of Bitcoin.
Countries Where Cryptocurrencies are Restricted or Illegal
Ecuador
Bitcoin and other decentralized currencies were declared illegal in Ecuador in 2014, marking the beginning of the prohibition on cryptocurrencies. The government changed its monetary regulations to permit using its own “electronic money” through voting in the National Assembly.
The goal of the digital currency that Ecuador’s central bank created was to serve as the country’s national currency. In subsequent releases, Dinero Electrónico was a mobile payment system that enabled USD P2P transactions via standard mobile phones.
The program ran from 2014 to 2018 until it was canceled. Although the Central Bank of Ecuador relaxed regulations on buying and selling Bitcoin and other cryptocurrencies in 2018, the country’s government still does not allow using cryptocurrency as a payment method.
Qatar
In 2018, the Central Bank of Qatar warned financial institutions against cryptocurrency trading. “Do not deal with Bitcoin, exchange it with another currency, open an account to deal with it, or send or receive any money transfers to buy or sell this currency.” The letter pleaded with the concerned institutions. There may be consequences for those found.
Because of concerns that it “is highly volatile and can be used for financial crimes and electronic hacking as well as risk loss of value because there are no guarantors or assets,” the Qatari government has maintained its stance against cryptocurrency trading.
Turkey
Many sought refuge in cryptocurrency after the Turkish lira’s steep decline in value. The country’s central bank, however, banned cryptocurrency in April 2021.
According to the proclamation, paying with cryptocurrency or any other digital asset is against the law. Several individuals accused of being involved in cryptocurrency fraud were apprehended after Turkish President Recep Tayyip Erdoğan proclaimed war on cryptocurrency.
Vietnam
According to the State Bank of Vietnam, it is against the law in Vietnam to buy, sell, or use Bitcoin or any other cryptocurrency. Those who violate the law may be fined 150 million VND ($6,592.50 approx.) to 200 million VND ($8,790.00 approx.). The country’s plans to begin regulating cryptocurrencies are still in the planning stages, but they were announced in 2021.
China
China has outlawed cryptocurrency transactions in 2019. This comes after the country was formerly home to the world’s largest pool of Bitcoin miners. The Chinese government claims that it implemented the crypto ban to reduce energy consumption and carbon emissions caused by cryptocurrency mining. Additionally, the government has forbidden banks from engaging in digital asset transactions or cryptocurrency mining.
Bangladesh
The Money Laundering Prevention Act and other financial restrictions in Bangladesh make trading cryptocurrency unlawful. The Bangladesh Bank also prohibits foreign currency trade because of its decentralized nature. The government has stringent anti-money-laundering regulations that, if violated, carry the penalty of years in prison.
Russia
Because of concerns that cryptocurrency could be used for illicit purposes like money laundering or terrorist funding, Russia has maintained a long-running war against Bitcoin and other cryptocurrencies. Finally, in 2020, cryptocurrency was given limited legal status in Russia.
The country has not yet legalized cryptocurrency as a payment method—furthermore, the Russian central bank suggests prohibiting cryptocurrency use and mining. Nonetheless, several influential politicians and tech executives have spoken against the crypto ban, saying it will hurt the country’s tech industry. At the beginning of 2022, Russian President Vladimir Putin joined the chorus of crypto fans by acknowledging the benefits of crypto mining.
Egypt
According to Egyptian Islamic law, Bitcoin and all cryptocurrencies are illegal. The government has taken a hard stance against cryptocurrency, seeing it as a threat to national security and the economy.
In 2019, the Egyptian government declared its intention to review cryptocurrency crypto, introducing new regulations that would encourage the responsible use of cryptocurrency. Unfortunately, no additional information has been shared about these proposed laws.
Morocco
The Moroccan foreign exchange office considers digital currency transactions an “infringement” on its rules. Therefore, in 2017, the country outlawed crypto trading due to concerns about the absence of regulations. Notwithstanding this, among North African countries, Bitcoin trading is most active in Morocco.
Nigeria
In February of 2021, the Nigerian government banned cryptocurrencies. The government outlawed the provision of cryptocurrency services by financial institutions and banks, even though the country boasts Africa’s most significant cryptocurrency market. The closure of bank accounts discovered to be using cryptocurrency exchanges was also threatened. Nigeria’s Securities and Exchange Commission also declared that it will not regulate cryptocurrencies now.
Bolivia
By 2022, Bolivia’s Central Bank had adopted a resolution banning cryptocurrency. Even though cryptocurrency has been on the books since 2014, “private initiatives related to the use and commercialization of crypto assets” were the intended targets of the most recent resolution.
