With the transformation of cryptocurrencies from a speculative investment to an essential element of a balanced portfolio, it is not surprising that governments all over the world are now taking notice of the digital currency market. As of now, most of them are still divided on how to regulate this emerging asset class, but there are updates happening in different markets. Anyone who wants to invest in this space has to be aware of the cryptocurrency regulations that may apply, depending on their location. Let’s take a look at some of the updates regarding cryptocurrency regulations across the world:
Even though there is a substantial number of crypto investors and blockchain companies in the US, there is still no regulatory framework for this asset class. It is regarded as a security by the Securities and Exchange Commission (SEC), while the Treasury refers to it as a currency. The Commodity Futures Trading Commission (CFTC) refers to Bitcoin as a commodity. For federal income tax purposes, the IRS has classified them as property. Crypto exchanges are required to register with FinCEN and are under the regulation of the Bank Secrecy Act (BSA).
Canadian regulators have generally taken a proactive stance when it comes to cryptocurrencies. In February 2021, it became the world’s first country to approve a Bitcoin exchange-traded fund (ETF). Furthermore, crypto trading dealers and platforms in Canada are required to register with the provincial regulators. Crypto investment firms are classified as money service businesses (MSBs) and have to register with FINTRAC. For taxation purposes, cryptocurrencies in Canada are treated the same as commodities.
Cryptocurrency is considered property in the UK, but not legal tender. Crypto exchanges are also required to register with the Financial Conduct Authority (FCA) and cannot offer crypto derivatives trading. In addition, the AML, KYC and CFT policies are applicable and capital gains tax are applicable on all crypto trading profits.
A progressive approach has been taken by the land of the rising sun when it comes to crypto regulations. They have recognized cryptocurrencies as legal property and crypto exchanges that operate in Japan are required to comply with AML/CFT regulations and register with the Financial Services Agency (FSA). Trading gains generated from cryptocurrencies are considered ‘miscellaneous income’ and investors are taxed accordingly.
Cryptocurrencies are not classified as legal tender by the emerging global power, but it does categorize them as property for the purpose of inheritance. Crypto exchanges have been banned from operating in China by the country’s central bank as it said that they help facilitate public financing without approval. Likewise, a ban was also imposed on bitcoin mining in China in May 2021, which forced many to shut down their operations or relocate to other areas that offer a more favorable regulatory environment.
A relatively proactive stance has been taken by the land down under in regard to crypto regulation. Cryptocurrencies are classified as legal property, which means they are subject to capital gains tax. Exchanges can operate in the country, as long as they register with AUSTRAC and also have to meet with specific AML/CFT obligations. In 2019, exchanges offering privacy coins were banned by the ASIC and they also added regulatory environments application to initial coin offerings (ICOs).
In most of the EU, cryptocurrency is legal, but exchange governance varies for individual member states. Taxation also varies, from 0% to 50% and reporting requirements have also been tightened as have the KYC/CFT obligations.
Along with these countries, other jurisdictions around the world are also gradually updating their regulations when it comes to cryptocurrencies. When signing up with a crypto broker, such as FinuTrade, you should be aware of the laws applicable, depending on where it is operating from. This will help you in finding the right crypto broker that can be trusted and can offer you the best services for your needs.