When the cryptocurrency first appeared, no one took it seriously. But every day, the world of crypto is growing and becoming more and more popular. That is why the regulatory authorities began to pay more attention to cryptocurrency and began to think about how to regulate it so that it would not destroy the capitalist and centralized financial system of fiat currencies. Today in this article, we will look at how cryptocurrency is regulated in different countries.
Among developed countries, the United States showed perhaps the least interest in regulating the crypto sphere. However, due to the size and federal structure, several current legislative trends and variations were expressed at different levels – federal, departmental, and state levels.
At the US federal level, the regulation of cryptocurrencies is discussed only within the framework of bills against financial crimes and money laundering. There is no separate cryptocurrency legislation, and it was not planned.
The activities of American regulators are mainly related to the protection of American crypto investors from fraudulent projects and projects that do not meet the requirements and give them other financial promotions, for example, during the ICO boom in 2017.
In the UK, the status of cryptocurrencies is still not clearly defined. Until 2014, cryptocurrencies were classified as “single-purpose vouchers,” transactions with which were subject to VAT. In 2014, the Office of Taxes and Customs Duties stated that bitcoin is neither a currency nor money, so the cryptocurrency was not regulated by UK financial legislation and did not fall under the UK Law on the Legalization (Laundering) of Proceeds from Crime. But since January 2020, the situation has changed: now the FCA (Financial Conduct Authority, the financial regulatory authority in the United Kingdom) is engaged in combating money laundering and terrorist financing, including controlling crypto assets in the UK.
Also, just the other day, the British advertising supervisory authority ruled against (banned ads) several cryptocurrency advertisements (misleading cryptocurrency ads, misleading claims, consumer harm), stating that crypto assets are a priority for turning on the “red alert” signal and protecting consumers.
Seven companies whose financial advertising violated the rules of the Advertising Standards Authority (ASA) banned ads, including trading platforms eToro and Coinburp. Exchanges EXMO, Luno, Kraken, and Coinbase, as well as a promotion with cryptocurrency cashback from the Papa John’s pizza chain.
The European Union
At the leadership level, the EU demonstrates a conservative attitude towards digital assets. In particular, the EU reacted uneasily to the idea of launching Libra cryptocurrency by Facebook, banning its circulation on its territory due to the unpredictability of risks that could entail the appearance of a new means of payment and, in fact, sinking Mark Zuckerberg’s initiative.
Recently, anti-money laundering measures have been strengthened. They are aimed at the transparency of the cryptocurrency market: since January 2020, the Fifth Anti-Money Laundering Directive (5AMLD) has been in effect, which eliminates anonymity.
Despite the fact that India is one of the largest and fastest-growing crypto economies in the world, there is still no clear regulation in the country, and the position regarding cryptocurrencies is uncertain.
In South Korea, regulation of cryptocurrencies has been established at the moment, and a related change in the taxation system is being discussed. On March 5, 2020, the South Korean government adopted amendments to the legislation, according to which all companies in the crypto market must identify users comply with financial statements and certified information security management systems. A year is allotted for the implementation of the amendments.
In July, there was news that a 20% tax on income from cryptocurrency trading will be introduced from October 1 next year.
The legal status of the cryptocurrency and the attitude of the law to transactions with it in Russia have been actively discussed since 2015. There have been many more initiatives, plans, and proposals during this time than there have been real actions.
Only in July 2020 the law on digital financial assets and digital currency was adopted and came into force on January 1, 2021. The adopted law defines the concept of cryptocurrency (finally) but prohibits its use to pay for goods and services.
It can be noticed that all countries are slowly trying to form their relations with cryptocurrency, each in their own way. So far, we can only guess how this attitude will eventually form. Will the old centralized banking system and the new decentralized crypto exchange and proposed financial promotions rules find a balance among them?