Cryptocurrency Laws and Regulations Around the World

• European Union

  From an overall point of view, there are no specific legislative regulations for cryptocurrencies, and they are considered legal in the member states of the EU. Each state can include its own laws for cryptocurrencies, if they need to. Generally, some countries charge capital gains tax on cryptocurrencies profit at 0-50% rate. Regarding the exchanges of crypto assets, they are not regulated either. In 2015 the EU Court of Justice stated that the exchange of fiat to cryptocurrencies must be excluded from VAT charges. Respectively, some countries like Germany (Financial Supervisory Authority (BaFin)), France (Autorité des Marchés Financiers (AMF)) and Italy (Ministry of Finance) have decided to create a network of verifications in order to allow exchanges to operate under different countries but not in the gray zone. In April 2018 the EU reached consensus regarding the Fifth Money Laundering Directive which will deliver more legislation, restricting the money laundering and crypto exchanges regulation obligating them to provide financial reports about their actions. The year 2018 was interesting after the European Supervisory Authorities (ESMA) and other insurance and pensions responsible institutions flagged all virtual currencies as an unstable investment and definitely not the best retirement planning product.

• UK

  There are no specific regulations for cryptocurrencies, but the Bank of England consider them a threat to the stability of their financial system. Also, other concerns were raised regarding the money laundering and the terrorism financing pattern. Because of that, tax applies as Value added tax (VAT) to all stock or services sold in exchange of digital assets. There is and corporate tax applicable to business profit and losses in currency exchanges, including crypto. The HM Revenue and Customs stated that the general rules on foreign exchanges and loans must be applied to the virtual currencies too. The UK government taxes the profit out of mining, transactions, and trading as a capital gains tax.

• Switzerland

  It is one of the few countries which recognize cryptocurrencies as a useful asset and treat them like such. The Swiss Federal Tax Administration (STTA) claims that they are subject to wealth and they must be declared on annual tax returns. Every exchange must obtain a license from the Swiss Financial Market Supervisory Authority (FINMA) to start trading on the territory of Switzerland. The ICO campaigns also fall under the regulation of FINMA which was published at the beginning of 2018 as the main guideline applied in the financial sectors, banking services, trading, and investment initiatives. Switzerland is one of the few countries which are constantly moving forward and integrates the usage of crypto assets and their implementation in the real-life. On the other side, the Swiss Economics Minister Johann Schneider stated that despite the digitalization they need to keep the existing financial standards and the integrity of their financial system.

• Latin America

  On this continent, we observe very mixed feelings, which leads to either friendly or hostile cryptocurrency regulations. For example, countries like Bolivia banned them and the crypto exchanges too, meanwhile Ecuador restricted the circulation of all coins apart from their government one SDE token. Others like Mexico, Brazil, Venezuela, Chile, and Argentina welcomed cryptocurrencies and even allowed their acceptance as a payment method. In some of those countries they are treated as a subject of capital gains, so income tax is applied. The situation with the crypto exchanges is pretty much the same. Most of the countries don’t have any specific cryptocurrency law which assists the governances with the crypto-trades. Because of the dark-web and all the illegal stuff done there, Mexico regulates the exchanged with the purpose of improving the anti-laundering laws and restrict the usage of crypto for illegal actions. Like every other region, most of the countries in Latin America are concerned about the integrity of their own financial systems and the risks that the publicly distributed ledger brings.

• Canada

  Canada is not a strong crypto supporter, because there’s is no legal tender. The Canada Revenue Agency tax cryptocurrencies since 2013 but it treats them quite fairly. The first investment fund was registered in 2017 by the British Columbia Securities Commission. Meanwhile, Canada has a strange policy towards exchanges because the Bitcoin regulations are not quite consistent because of some differences between the federal and provincial level of security. After the evaluation of the Canadian FATF and the Proceeds of Crime (money laundering authority) and the Terrorist Financing Act in June 2018, many more regulations are about to be included for crypto exchanges and crypto units in general.

• USA

  It is hard to distinguish common cryptocurrency regulations for all states because laws define them in a different way. Some of the states recognize them as a legal tender but others do not. There is a contrast also regarding the possession of cryptocurrencies as personal property, but they are all issued by tax guidance. The situation with the crypto exchanges is pretty much the same. Several major federal regulators have jurisdiction such as the Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC) to apply laws for digital assets and their derivatives. The Justice Department coordinates with SEC and CFTC regarding the future regulations of cryptocurrencies and the development of effective customer protection and regulatory oversight. In 2018, the US Treasury raised the question about the urgent need of regulations and laws on cryptocurrency in order to reduce the percentage of domestic criminal activities. Let’s examine New York and California as representatives from both East and West parts of USA. The state of California currently doesn’t have any defined guidelines on how to deal with cryptocurrencies. California’s Money Transmission Act warned the customers about the risks behind the digital assets but still, the legislation suggested was not widely accepted by the committee. On the other coast in NY city, everything was great before 2015, when the state of New York released cryptocurrency law called BitLicense. The crypto law inquires an enormous amount of information to be provided and delivered to the authorities which cost thousands of dollars. Many exchanges quit the NY market, in between giants like Kraken decided to do so. Others like Coinbase and Gemini chose to stay and pay their dues but that appeared to be a hard task for all startups with smaller capital. The cryptocurrency regulations and laws apply for all companies that possess, store or transmit cryptocurrencies, that includes the custodial wallets too. Depending on the crypto business in hand, both Bitlicense and money transmitter license might be needed to keep your money flow legally.

• China

  The crypto transactions, ICO campaigns, and exchanges were banned in 2013 by the People`s Bank of China (PBOC) and since 2017 China does not consider them as legal tender. China appears to be one of the harsh countries in a global perspective regarding Bitcoin regulations. So, with domestic exchanges being banned, is cryptocurrency mining legal? The strangest thing is that it is still allowed. However, that could change soon because of the last suggestion of PBOC in January 2018 to entirely ban the mining operations because of the higher electrical consumption and the risk of taking down the national financial systems. Later on, in February 2018, a group decision of the main authorities (Ministry of Industry and Information Technology, the Institute of International Finance and the Chinese government) was made, to ban both local and foreign platform and exchanges working with digital assets.

• India

  Is cryptocurrency legal in India? The current crypto regulations there are quite confusing, also they suppress the use of crypto. The exchanges are legal, but cryptocurrencies are not a legal tender. There is certain unclarity around the tax status of crypto assets. The Central Board of Direct Taxation stated that any profit made from Bitcoin or derivatives of his must be taxed, the suggestion of the Income Tax Department was to account it as capital gains tax. The regulations for exchanges are extremely harsh in 2018. After the prohibition of crypto trades in April 2018, the Reserve Bank of India (RBI) totally banned financial institutions and banks from any trades or actions related with crypto units and gave respectively 4 months to all domestic exchanges to step out of the market. The expectation about the future is quite mixed because the Indian government committee is consisting of new legislation to improve the protections for the common users.

• Australia

  The Australian laws towards cryptocurrencies are indeed a friendly ones. They progressively implemented them as a legal tender and based on the regulations consisted in 2017, they are accounted as personal property and they are subject to Capital Gains Tax (CGT). In 2018, the Australian Transaction Reports and Analysis Center (AUSTRAC) implemented more regulations for crypto exchanges, requiring registration of each one with AUSTRAC. Each exchange must identify its users and keep records to comply with government AML/CFT reports. Unregistered exchanges are subject of criminal and financial charges. I expect a bright future for the crypto enthusiast in Australia because the government is pro-active regarding digital assets and their usage. Of course, more cryptocurrency regulations will be overviewed in order to increase customer safety.

• Singapore

  This is another crypto-friendly country, the crypto trades and exchanges are legal, but cryptocurrencies are not legal tender. All digital assets fall under the criteria of “goods” and they are applied with Goods and Services Tax (Singapore’s VAT). The overall impression is that the Monetary Authority of Singapore (MAS) supports the idea of crypto but it is concerned about the money laundering activities and terrorist financing side of it. In 2018 MAS released massage dedicated to the public, advising about the risks that crypto assets hide. In January 2018, Tharman Shanmuganathan (deputy Prime Minister) stated that they will be subject of AML and CFT measures as the traditional fiat currencies.

If you cannot find your country in the list above and you are looking to find more information about the current legal restrictions and usage of cryptocurrencies and other digital assets, I suggest you visit this site to check more on cryptocurrency regulations around the world.