After over a decade of revolution in the global financial system, the role of cryptocurrencies has inevitably changed. From insignificant and highly speculative assets for insiders, they have since become a new category in commercial portfolios for both retail investors and big corporations. But to achieve full adoption on the market, regulations are necessary.
Despite its ups and downs, crypto has grown and grown and made many people millionaires. But there are still several countries that have not embraced cryptocurrencies for the benefits that they can offer. Working within this dynamic industry, Mining City keeps its finger on the pulse of what is legal, and what is not.
Because of the decentralized nature of digital currency and the fact that there is no central entity ruling over it, different countries have tried to regulate crypto assets in their own way. We can distinguish places where cryptocurrencies are legal, restricted, or illegal. Additionally, there are crypto-friendly countries that encourage people to use digital currencies and those with no legal framework regarding them.
Cryptocurrency Regulation as of December 2020
Countries, even within Unions, such as individual European Union countries, can decide on how much they want to include crypto into their national tax and legal framework. The laws can be as flexible or strict as their governments would like them to be. The individual Securities and Exchange Commissions of each country take a very individual view of how companies within the crypto space are allowed to operate.
Cryptocurrencies are legal in most countries, which means that possessing and trading is allowed. People can freely use crypto assets and explore the revolutionizing features that they provide. Apart from everyday users, also start-ups and emerging fintech corporations can work with digital assets to develop their vision and enhance innovation. As a result, some countries decided to impose taxes on profits from cryptocurrency operations.
Among the countries where the use of cryptocurrencies is legal are Australia, Brazil, France, Germany, Thailand and Turkey.
Some countries decided to regulate certain aspects of operating with crypto assets, e.g., ICOs (Initial Coin Offering – a form of fundraising using cryptocurrencies), banking, or using it as a legal tender payment. Basic operations like holding, trading, or managing cryptocurrencies are not forbidden, but some of them may not be legal.
For example, even though people can perform various operations with cryptocurrencies, they cannot use them as a method of legal payment.
Among the countries where the use of cryptocurrencies is limited are China, India, Ecuador, Egypt, Morocco, Indonesia, Pakistan, and Zambia.
There are also a few countries in which cryptocurrencies are banned. All aspects of crypto assets are therefore prohibited and, in some cases, even punishable by law.
These countries include Algeria, Bangladesh, Bolivia, Macedonia, and Nepal.
In some places around the world, cryptocurrencies are not under any regulations or they are simply an unknown concept. And many people take advantage of that fact, concluding that if something is not forbidden is permitted.
Among the countries where the complete use of cryptocurrencies is unregulated are Trinidad and Tobago, Belgium, Hungary, Latvia and Kenya.
Crypto-friendly countries encourage companies dealing with cryptocurrency and those operating in the fintech industry to build businesses under their jurisdiction. Through various legal incentives, they are offered more legal freedom and friendly tax laws.
Friendly rules also apply to individual users in the form of easy and clear tax laws.
Crypto-friendly countries are Japan, Switzerland, Estonia, Singapore, Luxembourg, and Malta, as well as islands like Bermuda and the Cayman Islands.
*Please keep in mind that information provided in this article may change*
https://coin.dance/poli#legalitymap (All data relevant as for December 2020.)
Upcoming Changes in Regulations of Cryptocurrency
With further development and market adoption of the cryptocurrency, more regulations are on the way. Many countries have already created tax laws related to incomes from crypto assets, as well as certain frameworks regarding banking services and collecting funds through ICOs or other types of fundraisers.
The same situation applies to cryptocurrency as a payment method. In many countries some regulations regarding that aspects are already in place, e.g., purchases made with cryptocurrencies need to be included in the tax return.
Authorities are still working on regulations for digital assets, with a big focus on monitoring transactions and connecting crypto to real-life users with official documents. Therefore, exchanges and services from the crypto industry implement KYC (know your customer) and AML (anti-money laundering) policies to provide transparency in case of legal issues.
In 2020, many countries took various steps in introducing new legal framework for financial activities related to cryptocurrencies. Brussels adopted the Fifth EU Anti Money Laundering Directive at the beginning of the year and The European Securities and Markets Authority (ESMA) announced its plan to regulate digital assets until 2022.
Additionally, the Royal Bank of India (RBI) recently stated that cryptocurrencies are not banned in the country, which points to further regulations of crypto assets due to growing adoption. Meanwhile, regulations are ongoing in the US and other major economies. The US Crypto Currency Act 2020–2022 was introduced in March and is aimed at providing legal frameworks of digital assets.
Why Do Regulations Matter?
With regulations in place, both private market participants and big enterprises will have clear rules to follow. This could motivate new users to join the industry and have a positive impact on developing more businesses operating with cryptocurrencies.
The era of cryptocurrency wild west came to an end. More and more people and corporations wish to participate in the financial evolution that cryptocurrencies started. And it won’t be possible without regulating certain aspects to make them fit the current world order.
CEO of Mining City, Greg Rogowski
“Mining City keeps up to date with all the latest updates in terms of crypto regulations in all the countries it operates,” says Mining City CEO, Greg Rogowski. “We work with lawyers across the globe who advise us on how to keep within the legal framework wherever we are.”
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