As the market capitalization of the cryptocurrency market shoots up, through price movements and a surge in new tokens, regulators around the world
As the market capitalization of the cryptocurrency market shoots up, through price movements and a surge in new tokens, regulators around the world are stepping up the debate on oversight into the use and trading of digital assets.
Very few countries have gone as far as to declare bitcoin illegal. That does not, however, mean that bitcoin is “legal tender” – so far, only Japan has gone as far as to give bitcoin that designation. However, just because something isn’t legal tender, does not mean that it cannot be used for payment – it just means that there are no protections for either the consumer or the merchant, and that its use as payment is completely discretionary.
Other jurisdictions are still mulling what steps to take. The approaches vary: some smaller nations such as Zimbabwe have few qualms about making brash pronouncements casting doubts on bitcoin’s legality. Larger institutions, such as the European Commission, recognize the need for dialogue and deliberation, while the European Central Bank (ECB) believes that cryptocurrencies are not yet mature enough for regulation. In the United States, the issue is complicated further by the fractured regulatory map – who would do the legislating, the federal government or individual states?
A related question in other countries, to which there is not yet a clear answer, is: should central banks keep an eye on cryptocurrencies, or financial regulators? In some countries they are one and the same thing, but in most developed nations, they are separate institutions with distinct remits.
Another divisive issue is: should bitcoin be regulated on a national or international basis? There needs to be a further distinction between regulation of the cryptocurrency itself (is it a commodity or a currency, is it legal tender?) and cryptocurrency businesses (are they money transmitters, do they need licenses?). In a few countries the considerations are tied together – in most others, they have been dealt with separately.
Below is a brief summary of pronouncements made by certain countries. This list was last updated in July 2020.
Australia
The Australian government has been supportive of cryptocurrency and blockchain technologies. In 2017, it declared that cryptocurrencies were legal, and they would be treated as assets subjected to Capital Gains Tax.
In 2018, the Australian Transaction Reports and Analysis Centre announced new regulations that require exchanges operating in the country to register with AUSTRAC, maintain records and verify users. To combat money laundering and terrorism financing in the future, unregistered exchanges will face charges and monetary penalties in the future.
Argentina
Under Argentina’s Constitution, bitcoins aren’t considered legal currency because they are not issued by the central bank. In spite of a strong bitcoin ecosystem, Argentina has not yet drawn up regulations for the cryptocurrency, although the central bank has issued official warnings of the risks involved.
Bangladesh
In 2015, Bangladesh expressly declared that using cryptocurrencies was a “punishable offence.” Authorities have been on the hunt for illegal bitcoin traders in the country.
Bolivia
In 2014, the central bank of Bolivia officially banned the use of any currency or tokens not issued by the government.
Canada
Canada was one of the first countries to draw up what could be considered “bitcoin legislation.” In 2014, the Governor General of Canada passed Bill C-31 in 2014, which designated “virtual currency businesses” as “money service businesses,” compelling them to comply with anti-money laundering and know-your-client requirements. The law is pending issuance of subsidiary regulations.
The government has specified that bitcoin is not legal tender, and the country’s tax authority has deemed bitcoin transactions taxable, depending on the type of activity.
China
While China has not banned bitcoin (and President Xi Jinping has continued to praise in blockchain developments as critical to technical innovations), financial regulators have cracked down on bitcoin exchanges – all major bitcoin exchanges in the country, including OKCoin, Huobi, BTC China, and ViaBTC, suspended order book trading of digital assets against the yuan in 2017.
It also appears to be withdrawing preferential treatment (tax deductions and cheap electricity) for bitcoin miners.
Ecuador
In 2014, the National Assembly of Ecuador banned bitcoin and decentralized digital currencies while the central bank stated that the online trading of cryptocurrencies is not forbidden. Still, bitcoin is not legal tender and is not an authorized payment method for goods and services..
Egypt
In January 2018, the Grand Mufti of Egypt declared that cryptocurrency trading was forbidden under Islamic religious law due to the risk associated with the activity. While this is not legally binding, it does count as a high-level legal opinion.
However, that ban was lifted in May 2019, easing restrictions by…
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