From Hitesh Malviya
Bitcoin is of course the world’s largest cryptocurrency, for which the legality varies widely across the region, and many are not sure yet or are working on legal issues. Despite the many alternatives available, Bitcoin dominates the cryptocurrency world and attracts investors from all over the world. The legal status understandably arouses considerable curiosity.
Most major international economies are still very skeptical about cryptocurrencies. Since Bitcoin and other companies began to receive institutional recommendations, the regulatory burden on cryptocurrencies has also increased.
Regulators and governments in many countries are still against this “asset class” and have specifically banned it. Some others accepted and agreed that bitcoin regulation would be beneficial for them. Be it for mining cryptos, using them as legal tender or as property, the rules are different in different regions.
However, if you look carefully, a pattern emerges from the perspective of developed, developing, and underdeveloped economies. Let’s take a look at how cryptocurrencies are regulated in different parts of the world.
- European Union: Bitcoin is legal almost everywhere in the European Union. While the EU has not passed clear laws on the status of Bitcoin as a currency, it has made it clear that VAT / GST does not apply when converting conventional (fiat) currency to Bitcoin. Transactions in bitcoins for products and services are subject to VAT / GST and other taxes (e.g. income tax).
Cryptocurrencies and crypto assets are classified as Qualified Financial Instruments (QFI) in the EU. Under EU law, banks, credit unions and investment companies are not prohibited from owning, dealing with or providing services in crypto assets or cryptocurrencies. Unsurprisingly, the EU leads the world in online trading of bitcoin on online exchanges with $ 204.1 million. Right now, Coinbase, Kraken, Binance and more are the best and most popular exchanges for Bitcoin in the EU. However, this exchange is not based in the EU. So we’ll see them in many other markets as well.
- USA: Bitcoin is legal in the USA. Bitcoin was listed as a convertible decentralized cryptocurrency by the US Treasury Department in 2013. In September 2015, the Commodity Futures Trading Commission (CFTC) identified Bitcoin as a commodity. Bitcoin is taxed as property by the IRS. In 2018, Bitcoin was discussed in an opinion from the US Supreme Court (Wisconsin Central Ltd. v US) on changing the meaning of money. A federal judge ruled in September 2016 that Bitcoins are funds in the simple sense of the word.
The exchange of cryptocurrencies is regulated in the same way as traditional money laundering / CFT intermediaries, financial firms and capital transmitters in the US and is subject to the same rules, including the rules set out in the amendments to the Bank Secrecy Act of 2021 (own version of the travel rule).
The US outperforms the rest of the world in Bitcoin trading volume on online exchanges at $ 1.5 billion. Coinbase, which recently went public for the world’s first crypto exchange, and Finance are the most popular bitcoin exchanges in the US.
- South Korea: Bitcoin is legal in South Korea. However, trading in cryptocurrencies is restricted to both minors and other outsiders. Adults in South Korea can do business on registered exchanges using their real names and accounts at a bank that the exchange also has an account with. Both the bank and the exchange are responsible for verifying the customer’s identity and implementing other anti-money laundering laws.
Bitcoin transaction volume has increased massively in South Korea recently. The best platforms for Bitcoin exchange in terms of popularity, potential and market opportunity are UPBit, Bithumb, Coinone.
- Japan: Payment Services Act recognizes Bitcoin and other digital currencies as legal property in Japan, which is considered to be the world’s most dynamic regulatory climate for cryptocurrencies.
Cryptocurrency is defined as a property value within the meaning of the Payment Services Act. The law also states that cryptocurrency is limited to real estate values that are electronically stored in electronic devices and are not intended to be used as legal tender. Japan’s Bitcoin trading volume on online exchanges is estimated at $ 6.6 million.
Coinmama, CEX.io, Coincheck are very popular options for Bitcoin exchanges there. Companies dealing with cryptocurrency need to be authorized, keep records, implement security protocols, and protect customers. The cryptocurrency transactions law must comply with anti-money laundering regulations and guidelines for users and investors.
- India: Bitcoin is not currently illegal in India. Due to the recent development of the cryptocurrency, legislators and authorities seem to have recognized the possibility of introducing the new technology early on. But the relationship wasn’t without its ups and downs. From the famous “RBI ban” in 2018 to the news of an upcoming crypto-ban law in 2021 that has not yet been implemented, India has seen some ups and downs related to bitcoin regulation.
However, it cannot be denied that India’s climate around cryptocurrencies is becoming increasingly severe. Many cryptocurrency services and revolutionary technologies find it difficult to work without a clear regulation. The Indian government has announced that it is ready to investigate the use of blockchain technology to improve the country’s financial services sector. This suggests that bitcoin regulation is likely around the corner.
With around $ 64 million in trading volume for Bitcoin, India has a pretty solid user base. Some of the best crypto exchanges in the country are WazirX, CoinDCX, Unocoin.
- China: China does not consider cryptocurrencies as legal tender. In addition, the banking sector does not recognize them and does not provide related services. For reasons of investor safety and financial risk management, the government has enacted a number of regulatory measures to curb activity with cryptocurrencies.
Declaring that initial coin offerings are illegal is one of the country’s moves. China has a pretty solid trade volume of $ 198 million. Coinmama, CEX.io, BTCC are very well known exchanges in this country.
Bitcoin regulation in motion
Despite the positive development of understanding of the blockchain by many government agencies around the world, Bitcoin regulation still has a long way to go. With Bitcoin still in its early stages, it is still too early to say whether it will find its way in the future or whether it will face regulatory challenges for its existence in the years to come.
(Hitesh Malviya is the founder of itsblockchain.com. Views are his own)
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