Crypto’s global status has led to an explosion of regulations in different regions of the world that would govern its transfer, exchange and related investments. Hence, this guide will help you navigate the ever-evolving regulations which regulators have introduced or the ones that are still under review.
Cryptocurrency regulation in the US is clouded with uncertainties as legislation on cryptocurrency varies from state to state. To make matters worse, federal regulators are not in sync when it comes to agreeing to specifics that would serve as regulatory oversights for cryptocurrencies and crypto exchanges. On one hand, the SEC has come out to declare cryptocurrencies has securities while Commodities Futures Trading Commission (CFTC) has adopted more friendly regulations when it approved the public trading of crypto derivatives.
Also, the IRS has declared crypto as a property that is taxable while compiling tax regulations that would govern crypto. However, there is a move by the three major regulators to develop a regulatory framework for cryptocurrency in the country.
Canada has actively included crypto in many of its anti-money laundry laws in recent years. Although it is not yet classified as a legal tender, Canada Revenue Agency CRA since 2013 has mandated that they are taxable. On crypto exchanges regulations, federal regulators in Canada have constantly regarded crypto as securities and have subjected them to existing securities laws.
In the meanwhile, regulators are looking to expand the Proceeds of Crime and Terrorist Financing Act to encompass cryptocurrency-related firms and exchanges.
Singapore is one of the crypto friendly nations that have taken a softer approach to crypto regulations. Crypto exchanges are legal in this country, however, crypto is not a legal tender. Instead, crypto is subjected under the Goods and Services Tax. In recent months, various officials in the country have pointed out that crypto is also susceptible to the nation’s anti-money laundry laws that govern Fiat currencies with regulators being skeptical about the speculations that come with cryptocurrency.
Australia is one of the few countries that consider cryptocurrency legal. The country had officially stated that bitcoin and other cryptocurrencies are classified under property which means that they are subject to Capital Gain Tax. This declaration also put to rest the controversies surrounding double taxation of cryptocurrency as it was also subject to the Goods and Services Tax. On crypto exchanges, regulators in the country have mandated that exchanges are to undergo registration and adopt KYC rules and comply with AML laws. Exchanges that are defaulting in any of these requirements risks being subjected to criminal charges and would face stiff financial penalties.
Japan’s progressive regulatory stand on cryptocurrency has ensured that the nation remains a powerhouse in the crypto space. Crypto is legal in Japan and it is considered as a miscellaneous income which means that the tax rate is between the range 15% to 55%. However, recent scandals bordering on crypto exchanges hacks have led to modifications in the regulatory frameworks that govern crypto exchanges. Now, crypto exchanges are to register with the country’s Financial Services Agency (FSA) which has stricter rules on cybersecurity and AML.
South Korea does not consider crypto as a legal tender, however, crypto exchanges are legal and they are governed by an ever-evolving regulatory framework. The nation stated that it will release new regulations that will clearly specify the taxation of crypto as cryptocurrency currently does not fall under any existing tax regulation.
China continues its harsh take on cryptocurrency and crypto exchange and there are indications that it is looking to also ban crypto mining. Also, there is a probability that China would release more regulations that would finally ban foreign crypto exchange platforms and ICO websites.
The UK does not see cryptocurrency as a legal tender and crypto exchanges are to register with the Financial Conduct Act in order to operate. Also, regulators have stated that the unique nature of cryptocurrency makes it difficult to place it under specific tax laws, instead, taxation will generally depend on the parties involved in the transaction and the activities it is used for. Regulators in the UK are looking to draft new crypto regulatory frameworks that would focus on Anti-money laundering laws.
Switzerland is a crypto friendly nation that has done exceptionally well when it comes to crypto regulations. Cryptocurrency is a legal tender in this nation and it falls under the Swiss wealth tax. Switzerland is also one of the few nations that have a regulation in place for ICOs.
Crypto regulation in the EU as a region has not had a definitive form since each member state has taken on the responsibility of issuing rules for crypto-related activities. However, the Fifth Money Laundering Directive encompasses crypto-fiat currency exchanges and requires the compliance of crypto exchanges in the region to strict KYC and AML.
Malta has established itself as a world leader in crypto regulation as it continues to lay down clear rules that govern crypto related activities within its borders. Although crypto is not a legal tender in this nation, it recognizes it as “a medium of exchange, a unit of account, or a store of value.” The recent legislation the government released in November establishes the Malta Digital Innovation Authority as the official regulatory body that will govern crypto related issues henceforth.
Laws in this region vary from country to country and the scope of crypto regulation in this region is somewhat sparse. Countries like Bolivia and Ecuador have banned crypto within their borders while Mexico has moved to regulate exchanges. Other nations that have accepted the circulation of cryptocurrency include Argentina, Venezuela, Brazil, and Chile.
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