The Response Of Countries Worldwide To Cryptocurrencies

Cryptocurrency is ruling the monetary scene of many economies worldwide.

The Response Of Countries Worldwide To Cryptocurrencies

Cryptocurrency is ruling the monetary scene of many economies worldwide. With the introduction of Bitcoin in 2008, it is seen to have the potential to disrupt the traditional banking model. It has evolved into the largest cryptocurrency valued at approximately $70 billion world over. According to the research by Cambridge University, it has between 2.9 million and 5.8 million users actively using the cryptocurrency wallet. 

The research was focused on governmental attitudes towards cryptocurrencies not just limited to Bitcoin. The picture is vague with certain countries becoming global advocates, while others actively banning cryptocurrencies with various degrees of use in between. 

Japan leads the list by passing a law accepting Bitcoin as legal tender. Whereas at the other end is Bangladesh, banning the use and passing a law to jail those who are using virtual currency under strict anti-money laundering law. Even after such stringent measures have been passed, the currencies have shown a strong momentum around the technology in the last decade.

  • Argentina– though not legal currency, and since not issued by government monetary authority, they are not legal tender. It may be considered as money, but not a legal currency as they are not mandatory means of canceling debts or obligations. 
  • Australia – the government has legalized Bitcoin with consent to be used just like money removing it from double taxation policies.
  • Austria – they have not regulated virtual currency and haven’t issued a cohesive policy on how to treat it.
  • Bangladesh – a warning against transactions using cryptocurrency was issued by the Bangladesh Bank with a law making it a crime punishable by up to 12 years in jail.
  • Belgium – they are waiting for Europe wide guidance and until now no stance is taken along with many other European countries. A public warning was issued saying no Governmental oversight has been taken.
  • Bolivia – in the belief that they may cause tax evasion and monetary instability, it has banned from being used 
  • Brazil – it was declared that it is not a currency but an asset subject to 15% capital gains tax.
  • Bulgaria – accepting it, the National Revenue Agency has set new taxation guidelines stating the income from such coins is treated as income from the sale of financial assets taxed at a rate of 10%.
  • Canada – with the Bitcoin payments declaring that be treated as barter transactions by Canada Revenue Agency, the Canadian federal government announced the intention to regulate it through its anti-money laundering and counter-terrorist financing legislation.
  • Chile – in 2015 with the funding from the Chilean government, it was the first exchange where citizens could buy Bitcoin with pesos. This is due to the aim of the Chilean government to transform into an innovation and entrepreneurial hub of Latin America. The government provides regulation and oversight as in the case of financial audits and anti-money laundering regulation. 
  • China – the Chinese Yuan to Bitcoin is the most traded daily fiat to Bitcoin pair and as such China’s Central Bank (the People’s Bank of China)banned financial institutions whereas allowing individuals free to trade as they wish.
  • Colombia – the crypto even though not illegal, will not get legal recognition shortly.
  • Croatia – Bitcoin was decided not illegal after a discussion on the circulation of digital currencies by the Croatian National Bank, (CNB).
  • Cyprus – as it is not under any regulatory system, and its operation is unchecked, it was termed to be dangerous in a statement issued by the Central Bank of Cyprus and ultimately not regulating Bitcoin.
  • Czech Republic –  the virtual currency exchanges require to identify customers according to a recently introduced law by the government and subsequently adding a Value Added Tax to the currencies in the future.
  • Denmark – with its intention to consider a digital-only e-krone, the Danish government, and Financial Supervisory Authority has stated the Bitcoin businesses are to be taxed normally and individuals are not subject to taxation from trading. 
  • Ecuador – they have banned all use of Bitcoin intending to develop its digital currency on the principles of Bitcoin.
  • Estonia – digital currencies and Bitcoin are considered as an alternative means of payment subject to capital gains liabilities and VAT.
  • Finland – although not deducting capital gains losses, the government has declared to treat them as an asset subject to VAT and capital gains.
  • France – though showing some interest in the technology, it is yet to launch any major initiatives.
  • Germany – the government has advised the Bitcoin to be treated as a trading activity subject to capital gains taxes unless held for a year or more. The German Federal Ministry of Finance treats Bitcoin as a unit of account and private money subject to sales taxes and VAT. 
  • Greece – the National Bank of Greece has not issued any statement as well as no legislation on Bitcoin. However, a private company has accepted Bitcoins as a form of payment.
  • Hong Kong – even though no bank has asked for permission, the Hong Kong Money Authority hasn’t banned any bank from trading Bitcoin much because the likely answer would be no.
  • Hungary – taking into account the unregulated nature and the high return investment schemes abusing cryptocurrency, the National Bank Of Hungary, (MNB) has warned citizens against using or investing in crypto. 
  • Iceland – worried over capital flight, it has banned bitcoin
  • India – with widespread use, no clear laws are stating whether the cryptocurrencies are legal in India or not.
  • Indonesia – though without any legal umbrella, it has entered deep into the Indonesian market.
  • Iran – cryptocurrencies are illegal, with no legal mandate to stop it. A few official bodies work on a framework regulating the currency while the government adopted a wait-and-see policy.
  • Ireland – the Bank of Ireland partnering with Deloitte has shown blockchain technology could be used to trace transactions in the forthcoming EU finance rules, even though it is still unregulated. 
  • Israel – they have categorized digital currencies as property with the government set to apply capital gains tax to Bitcoin sales.
  • Italy – Bitcoin is treated as a form of currency. Purchases and sales made with Bitcoin are exempt from VAT. The tax officials are applying income tax to the uses of Bitcoin or when money is made for a sale or purchase. Buying bitcoins outside of speculative activity doesn’t require to pay income tax.
  • Japan – declaring Bitcoin as a legal tender, it eliminated the consumption tax eliminating the possibility of double taxation on Bitcoin trading.
  • Kazakhstan –  it is all set to be the hub of cryptocurrencies planning to sell blockchain-based bonds while the president announced that it is high time the country looked into the possibility of launching an international payment unit. By this, they intend to get rid of monetary wars, black marketeering, and decreasing market volatility.
  • Kenya – has warned that virtual currency is insecure and prone to fund terrorism.
  • Kyrgyzstan – they have completely banned Bitcoin within the borders.
  • Latvia – after the announcement of the national airline carrier that they accept Bitcoin as an alternative payment method, the government has issued a warning about using the digital currencies.
  • Lebanon – warning about the Bitcoin, the Central Bank has raised several risks in transacting using digital currencies thereby prohibiting the use of e-money under a decree. Prohibiting the use by financial institutions, the policy of use for private citizens is still unclear. 
  • Lithuania – it has brought forward a wait and see the policy as the regulatory laws are still evolving across Europe.
  • Luxembourg – by granting a payment institution license to a bitcoin exchange, the company became the first nationally licensed Bitcoin exchange in the world.
  • Malaysia – though not recognized as legal tender, and no regulation of the Bitcoin operations by Bank Negara Malaysia, it has advised the public to exercise caution and be aware of the risk associated while using the crypto.
  • Mexico – although the government has not banned the use of digital currencies, but talks with regulators introducing Bitcoin and blockchain specific to Mexico.
  • The Netherlands – the Dutch Finance Minister gave the Bitcoin the status of an item of barter, with no specific licensing or compliance requirements. As it is not a financial product defined by law, and since the purchase or sale is not a financial service, the financial services act does not apply,’ he said.
  • New Zealand – it regards cryptocurrencies to be vulnerable and is considered as a payment system rather than a currency.
  • Nigeria – the digital currencies were officially outlawed by the Central Bank of Nigeria for reasons like money laundering and terror financing, prohibiting banks to use them, hold or transact ensuring existing customers are virtual currency traders with effective AML/CFT controls.
  • Norway – since bitcoins do not come under the definition of money or currency, it is subject to capital gains tax laws, but the largest online-only bank, Skandiabanken announced plans to offer customers the chance to link their regular bank accounts with Coinbase account.
  • Pakistan – with no stance on Bitcoin, it takes Bitcoin to be a commodity and not currency.
  • Philippines – the Philippine Central Bank has plans to regulate Bitcoin exchanges as remittance companies and recognize Bitcoin as a legitimate payment method and thereby issuing regulatory framework for users, exchanges and companies.
  • Poland – recognized trading and mining officially as an official economic activity but needs regulation from the EU.
  • Portugal – unregulated and taxable
  • Russia – regulators are taking into consideration, that bitcoin and other cryptocurrencies legally eager to tackle money laundering, which incentivizes greater oversight, regulation and ultimately legitimacy.
  • Singapore – they consider Bitcoin as a good purchased to purchase goods, therefore subject to a specific tax. It is necessary that exchanges and ATM providers green list or de-anonymize their users while also declaring that virtual currencies are not securities not subject to regulation
  • .Slovenia – they declared Bitcoin was neither a financial asset nor a currency and should be taxed based on the circumstance of use whether through trading profits or mining.
  • South Africa – according to the revenue service, any transaction or speculation in Bitcoin is subject to general tax rules, adding the responsibility of citizens and residents to report every transaction detail to the South African Revenue Service.
  • South Korea – no laws regulate the use of bitcoin, where people buy Bitcoin in 7-elevens.
  • Spain – working on establishing a cryptocurrency regulatory framework, the government has confirmed they are exempt from Value Added Tax with a street full of Bitcoin-friendly stores. Spanish banks BBVA and Bankinter invest in Bitcoin companies.
  • Sweden ­–  the Swedish regulator has declared Bitcoin as a legal currency. Looking forward to shifting to the digital currency, the central bank is cutting down interest rates, leading to an increase in demand, supporting bitcoins and alternatives to protect capital. 
  • Switzerland – the financial markets have brought forward the first Swiss private bank for Bitcoin asset management paving way for the global banks to offer digital currency products.
  • Taiwan – with a neutral stance on Bitcoin, it is speculating on moving toward more restrictive policies.
  • Thailand – though declared illegal, the opinion is changing and making it not illegal. Buying it in the country and selling it outside is still strictly prohibited.
  • Turkey – issuing guidance, the authorities say that Bitcoin does not meet standards of electronic money while the volatility leaves users prone to high-level risk. The exchange stopped operations after local banks closed the main accounts of the exchange without prior notice.
  • Uganda – authorities warn citizens to stay away from digital currencies, where it is unregulated but not illegal.
  • Ukraine – apart from regulations and political uncertainty, the major bank has announced the purchase in any of its nationwide ATM terminals.
  • United Arab Emirates – their response is currently under review.
  • United Kingdom–  the bitcoin technology continues to be monitored by the bank of England classifying it as private money, with VAT applied and subject to capital gains tax where P&Ls are involved.
  • United States – with the highest number of users, the highest number of Bitcoin ATMs and the highest Bitcoin trading volumes globally, the US leads the way. The picture is different in different statesTexas, Kansas, Tennessee, South Carolina, and Montana are the friendliest based on state regulation, while New York, New Hampshire, Connecticut, Hawaii, Georgia, North Carolina, Washington, and New Mexico have regulations even though not favorable for digital currency. This puts the other 37 states/territories under gray areas as of now.
  • Venezuela – despite the growing popularity, arrests and torture of Bitcoin users by the government is finally slowing down the process.
  • Vietnam –  moving from banning to now streamlining the industry to tax, monitor and eliminate any negative impacts.
  • Zimbabwe – not yet ready for regulation, according to a government regulator.

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