Ever since cryptocurrency came into the limelight, it has been widely accepted by many individuals, companies, and organisations. Cryptocurrency is using decentralised blockchain technology; it is not controlled or established by the government, bank, or other central authority. The fact that this digital currency is decentralised has made governments worldwide worried and divided on how to regulate this digital currency.
Transactions are done around the globe using cryptocurrency, and people now view fiat money differently. Some countries have embraced cryptocurrency, and many other countries still struggle to accept it.
Countries that have accepted it previously are now renouncing their voice because some governments see cryptocurrency as a threat to the national economy (because they are not in control). This struggle for acceptance brings us to the rules and regulations guiding crypto investors and entrepreneurs worldwide. We will be examining the crypto regulations of some countries.
With the range of civilisation and exposure of the US coupled with countless blockchain firms and crypto investors, the country is yet to embrace and state a vivid regulatory structure for cryptocurrency. The Commodity Futures Trading Commission (CFCT) addresses Bitcoin as a “commodity”, the Security and Exchange Commission (SEC) sees cryptocurrency as a “security”.
At the same time, the Treasury refers to it as a ‘currency’, and the Internal Revenue Service (IRS) categorises cryptocurrency as “property for federal income tax”. The United States demands that crypto exchanges register with the Financial Crimes Enforcement Network (FinCEN).
In addition, crypto exchanges in the US are categorised under the Bank Secrecy Act (BSA). Also, they are to support combating the financing of terrorism and anti-money laundering. Crypto investors and entrepreneurs must consider these and many other regulations.
The United Kingdom has a different perspective on this virtual currency as it does not view cryptocurrency as a legal tender but just a property. All cryptocurrency exchanges in the UK must register with the United Kingdom Financial Conduct Authority (FCA), and they are not allowed to make crypto derivatives trading.
Crypto investors in the UK pay capital gain tax on profits made via crypto. In addition, the amount of tax paid to the government depends on the crypto activities performed and who performs such transactions.
A regulatory framework that takes an advanced stand has been created regarding cryptocurrency in Canada. Canada was the first country to confirm and allow transactions with cryptocurrency through Bitcoin exchange-traded fund (ETF) and executed the first confirmation on February 18, 2021. On February 19, 2021, the second exchange was performed in the Toronto Stock Exchange and also conducted the second exchange.
Canada also sees cryptocurrency like other commodities when it comes to tax payment. Also, cryptocurrency investment firms are classified as money service businesses (MSBs) registered under the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).
Lastly, all cryptocurrency trading dealers and platforms in Canada must register with the provincial regulator. This regulation was stated by the Investment Industry Regulatory Organisation of Canada (IIROC) and the Canadian Securities Administrators (CSA).
Like Canada, Australia sees cryptocurrency as legal property, making it mandatory for them to pay capital gain tax. Cryptocurrency exchanges are not sanctioned in Canada as long as they meet specific AML/CTF requirements and are registered under Analysis Centre (AUSTRAC). Later in 2019, an essential prerequisite for initial coin offerings (ICOs) was introduced, and the Chinese government banned the exchange offering of privacy coins.
Under the Payment Services Act (PSA), Japan also recognises cryptocurrency as legal property. Profits gotten from cryptocurrency trading are treated as “miscellaneous income”. Crypto investors in Japan are taxed according to their profits. For cryptocurrency exchanges to operate in Japan, they must abide by the AML/CFT rules and register with the Financial Services Agency (FSA).
In China, cryptocurrency exchanges are not allowed to operate in the country because it is believed that they ease public funding without permission from the government. After China’s crackdown on cryptocurrency rules and regulations, the world’s largest virtual currency exchange, Binance, which had its headquarters in China, had to move.
Also, in 2021, those mining coins in China had to stop or relocate their business to another country that allows them to do so freely after China banned crypto mining.
Almost every country in the European Union sees cryptocurrency as legal, and the taxation and exchange vary based on the jurisdiction. Tax is between 0% and 50%. In 2020, the Markets in Crypto-Assets Regulation (MiCA) proposed a regulation that multiplies customer protection.
This regulation protects a lot of crypto exchanges and brands like cs go gambling sites. The framework introduced in 2020 also announced new licensing requirements and created distinct crypto industry conduct.
Singapore is similar to the UK in terms of cryptocurrency as it also views it as property. Singapore is a secured zone for crypto as long-term capital gains are not placed under tax except companies that transact regularly and treat gain as income for cryptocurrency.
Before venturing into trading or investing in this digital currency, individuals need to research and understand all aspects, especially the rules guiding cryptocurrency in their jurisdiction. Having a great understanding of the risk and the advantages of cryptocurrency makes it easier for investors and entrepreneurs to navigate through and make enough gain on cryptocurrency.