Growing cryptocurrencies from speculative investment to a new asset class has driven governments all around to look at measures to control them. While some governments bide their time, others have developed systems to safeguard consumers as of September 2024.
US United States
The U.S. revealed a fresh framework for 2022 that would let more control through. The new rule gave authority to already in-effect market authorities like the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC).
With its long list of files against crypto-centric companies and projects including lawsuits and complaints against Ripple, Coinbase (COIN), Binance (BNB), and many others over their crypto products and services, the SEC is already policing the industry.
But in 2023, a district court of appeals concluded that Ripple's sale of XRP were securities offerings only when offered to institutions, not when they were sold on exchanges. This was one of the crypto industry's one partial triumph; it was followed by another ruling in November reversing the Commission's refusal of Grayscal's application to convert her Bitcoin ETF Trust to an ETF holding bitcoin. The court ordered the Commission to re-review the proposal, which finally led to the adoption of the first Bitcoin Spot ETFs in January 2024 and Ethereum Spot ETFs in July 2024.
The ongoing struggle among authorities, broker-dealers, investors, and the crypto sector reveals that the United States is still changing independent of the frameworks implemented and the authority bestowed upon authorities.
As SEC head Gary Gensler said, the battle will probably last, "It [the approvals] should in no way indicate the Commission's willingness to adopt listing criteria for crypto asset securities. Nor does the approval suggest anything about the Commission's views as to the status of other crypto assets under the federal securities laws or about the existing state of non-compliance of some crypto asset market participants with the federal securities laws. As I've observed in the past, and without prejudging any one crypto asset, the great majority of crypto assets are investment contracts and thus subject to the federal securities laws...While we permitted the listing and trading of some spot bitcoin ETP shares today, we did not support or promote bitcoin." U.S. Securities and Exchange Commission. "Statement on the Approval of Spot Bitcoin Exchange-Traded Products, Chair Gary Gensler."
China
The People’s Bank of China (PBOC) forbids crypto companies from functioning in the nation, alleging that they promote public funding without clearance.
Furthermore, China outlawed Bitcoin mining in May 2021, prompting those involved in the industry to stop operations outright or transfer to places with a more favorable regulatory climate. And in September 2021, cryptocurrencies were prohibited altogether.
Canada
While crypto is not regarded legal cash in Canada, the government has been more vigilant than others concerning crypto legislation. Canada became the first jurisdiction to accept a Bitcoin exchange-traded fund (ETF), with several trading on the Toronto Stock Exchange.
As for crypto trading platforms, the Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC) mandate that crypto trading platforms and dealers in the nation register with provincial authorities.
Canada defines all crypto investment firms as money service businesses (MSBs) and mandates that they register with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). From a taxation aspect, Canada handles bitcoin similarly to other commodities.
United Kingdom
In October 2022, the lower chamber of the British Parliament recognized crypto assets as regulated financial products. The Financial Services and Markets bill became an act (law) in June of 2023 and expanded current legislation involving all crypto assets, services, and providers.
There are cryptocurrency-specific reporting requirements pertaining to Know Your Client (KYC) regulations, as well as anti-money laundering (AML) and combatting the financing of terrorism (CFT). Although investors still pay capital gains tax on crypto trading income, more broadly, taxability depends on the crypto activities done and who engages in the transaction.
Crypto exchanges and custodial wallet providers must comply with the reporting standards imposed by the Office of Financial Sanctions Implementation (OFSI). Crypto businesses must report the OFSI as quickly as feasible if they know or have reasonable suspicion that a person is subject to sanctions or has committed a financial sanctions infringement.
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Japan
Japan adopts a proactive approach to crypto laws, recognizing cryptocurrencies as legal property under the Payment Services Act (PSA). Meanwhile, crypto exchanges in the nation must register with the Financial Services Agency (FSA) and comply with AML/CFT regulations. Japan created the Japanese Virtual Currency Exchange Association (JVCEA) in 2020, and all crypto exchanges are members. Japan classifies trading gains derived from cryptocurrencies as miscellaneous income and taxes investors appropriately.
The government has been focusing on numerous things when it comes to legislation, including taxation. In September 2022, the government indicated it will adopt remittance laws as early as May 2023 to prevent criminals from utilizing cryptocurrency exchanges to launder money. The Act on Prevention of Transfer of Criminal Proceeds has been updated to allow for the collecting of consumer information.
Australia
Australia defines cryptocurrencies as legal property, subjecting them to capital gains tax. Exchanges are permitted to operate in the nation, providing that they register with the Australian Transaction Reports and Analysis Centre (AUSTRAC) and satisfy strict AML/CTF standards.
In 2019, the Australian Securities and Investments Commission (ASIC) implemented legal regulations for initial coin offerings (ICOs). It prohibits exchanges from supplying privacy coins, which are cryptocurrencies that protect anonymity by hiding the movement of money across their networks. In 2021, Australia announced intentions to build a licensing system around bitcoin and perhaps introduce a central bank digital currency (CBDC). In October 2023, the Australian treasury revealed intentions to develop a regulatory framework, with a draft to be issued sometime in 2024. There will be a 12-month transitionary phase if the framework is authorized and implemented.
Singapore
Like the U.K., this island state recognizes cryptocurrencies as property but not legal money. The Monetary Authority of Singapore (MAS) authorizes and supervises exchanges as defined in the Payment Services Act (PSA).
Singapore released advise in 2022 instructing digital payment token (DPT) providers to avoid publicizing their services to the public.
In August 2023, the Monetary Authority of Singapore (MAS) proposed a framework that will govern stablecoin issuance in the nation, requiring any issuers to comply to particular standards. Stablecoins must be authorized by the MAS to be permitted to use the title "MAS-regulated stablecoin" to distinguish themselves from non-regulated stablecoins.
Singapore, in part, obtains its image as a cryptocurrency safe haven because long-term capital gains are not taxed. However, the nation taxes enterprises that routinely deal in bitcoin, recognizing profits as income.
South Korea
In South Korea, bitcoin exchanges and other virtual asset service providers must register with the Korea Financial Intelligence Unit (KFIU), a component of the Financial Services Commission (FSC). South Korea also banned all privacy coins from exchanges in 2021.
In 2023, the South Korean government's Act on the Protection of Virtual Asset Users entered into force. The Act formally constituted the Financial Services Commission as a regulator for virtual assets and detailed their permissible and prohibited uses. Additionally, the Act protected user safety by mandating issuers or service providers to follow specified standards.
India
India is on the fence regarding crypto policy, neither allowing nor penalizing its usage. There is a law in circulation that forbids all private cryptocurrencies in India, but it has yet to be voted on. There is a 30% tax payable on all crypto investments and a 1% tax deduction at source (TDS) on crypto trades.
Overall, India continues to hesitate to prohibit crypto outright or to regulate it. The country's Finance Bill of 2022 classified virtual digital assets as property and detailed tax rules for collecting taxes on revenue from them.
Brazil
Bitcoin is not legal cash in Brazil, but the country enacted a law recognizing cryptocurrencies as payment methods throughout the country, encouraging the growth of digital currencies. Brazil’s Chamber of Deputies passed a regulatory framework authorizing the use of cryptocurrencies as a form of payment in the country on Nov. 29, 2022.
The measure was adopted as a law and went into force on June 20, 2023, as Law No. 14,478, “Legal Framework for Virtual Assets”. The Brazilian Central Bank was designated the responsible authority to regulate, permit, and monitor activities of crypto exchanges, pursuant to Decree No. 11,563 of June 13, 2023.
European Union
Cryptocurrency is legal throughout much of the European Union (EU), however exchange administration relies on individual member states. Meanwhile, taxes also varies per nation inside the EU and spans from 0% to around 48%.
Recently, the EU’s Fifth and Sixth Anti-Money Laundering Directives (5AMLD and 6AMLD) have come into force, increasing KYC/CFT standards and standard reporting requirements. In September 2020, the European Commission proposed the Markets in Crypto-Assets Regulation (MiCA)—a framework that strengthens consumer safeguards, mandates specific crypto industry conduct, and adds additional licensing requirements.
In April 2023, Parliament passed steps that allow legislation mandating some crypto service providers to get an operational license. MiCA was provisionally agreed on in 2022 and brought into force in July 2023. This law is meant to offer regulators the tools they need to track crypto being used for money laundering and terrorism funding while giving users with safeguards.
Is There Any Regulation on Crypto?
Cryptocurrency legislation are continually being explored, created, and applied internationally. Many nations are establishing laws and regulations, while others lag for various reasons.
Which U.S. State Is Crypto-Friendly?
Many states are crypto-friendly, including as California, Florida, and Texas.
What Are the Rules for Trading Crypto?
It depends on where you reside and the laws that have been established. There are also numerous general rules that you might consider following.
The Bottom Line
While Bitcoin has existed since 2009, governments and regulators globe are still working out methods to oversee its applications. Consumers and companies must be safeguarded against fraudulent conduct, and preventative measures must be established to resist illegitimate crypto applications. Many nations are developing, but it is a slow and challenging process.
