Regulation of cryptocurrencies in different countries — approaches and rules

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Regulation of cryptocurrencies in different countries — approaches and rules

In 2017, the Securities and Exchange Commission of the United States (SEC) estimated the ICO market volume at $4 billion. Due to limited legal regulation, unfortunately, not all ICOs were organized legitimately. As a result, investors and official players (banks) were hurt. In order to prevent such issues in the future, central banks and others behind the financial industry should clearly define the handling of cryptocurrency. In this article, we will tell you what legal conditions surround “coins”across the globe.

Singapore

The Monetary Authority of Singapore (MAS) has published several regulatory documents regarding placing tokens and trading them. Bitcoin and altcoins are treated not as a means of payment, but as a digital asset or a security (if certain criteria are met). MAS is not engaged in meticulous regulation of cryptocurrency, so its status is sometimes “floating.” For example, in some operations with tokens, VAT is imposed, in others it is not.

USA

In the U.S., the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) oversee financial matters, although, it is worth noting, the views on bitcoins vary from state to state.
In 2014, the Internal Revenue Service (IRS) decided that virtual currency should be treated as property (for federal tax purposes) like real estate or gold. Sometimes, the issuance of cryptocurrency is done as the sale of securities and, accordingly, is regulated as usual shares. Sale and exchange of cryptocurrency sometimes fall under the rules of banking secrecy legislation. The attraction of capital through the ICO, according to many financiers, fits into the requirements of the Securities Act (1933).
The SEC and the CFTC are now trying to create a regulated environment for participants of the cryptocurrency market, especially investors, since the SEC directly sees its mission as the protection of investors.
In 2018, the U.S. will adopt legislation under which owners of “coins” have to pay tax on them. Previously, the Internal Revenue Service required a tax only when exchanging cryptocurrency for fiat (a situation typical for many countries).

Japan

In Japan, virtual currency was recognized as a form of payment in April 2017. In fact, this was followed by a “boom” of mining in May and June, which led to a widespread shortage of video cards.
Cryptocurrency in the Land of the Rising Sun, however, is not money, but a negotiable asset. It is clearly delineated as electronic money. Large retailers accept bitcoins (the same can be said for the U.S., i.e. offers in Microsoft and Dell stores), and the exchange of “crypts” for fiat is not subject to VAT.

Europe

In the interpretation of the European Central Bank, bitcoin is a convertible decentralized virtual currency. In the summer of 2014, the Central Bank recommended that bankers not carry out transactions with cryptocurrency until direct regulation is created.
In general, the EU is concerned about the “dark side” of the cryptocurrency market, namely the laundering of illegal income. Now, services related to bitcoin and its alternatives are monitored for suspicious transactions and adhere to identification requirements in banks and other financial/lending institutions.
In addition to the European Central Bank, the organization ESMA (European Office for Supervision of the Securities Market) is watching the ICO.
For instance, in Germany, the local financial regulator, the German Federal Bank, has been defining bitcoin as private money since 2013. As a result, such assets are taxed as capital.
In Switzerland, “coins” are not shares, but assets. License for operations with them is not needed. Nevertheless, sometimes special permission is required — for example, when buying/selling a crypto-currency in the framework of existing trading platforms on a commercial basis.
Finally, in England, on the initiative of the FCA (the Office for Financial Regulation and Control) a site was organized for testing projects in mutual appeals “crypts”. Regulation is a matter of time. In England, as in Australia, the FRG, Canada and Brazil, cryptocurrency investments fall under the capital gains tax (0–25%). In Switzerland, cryptocurrency is equated to foreign currency and is VAT-free.

China

In the PRC, officials are coldly eyeing the “crypt”. Here, it is a virtual product, in other words — a non-monetary asset. Ordinary citizens are allowed to store bitcoins/altcoins and conduct operations with them. However, in September 2017, a ban was introduced on ICOs.

South Korea

Following the PRC, Hong Kong and Singapore, South Korea is looking at restrictions on “coins” as well.. According to a recent speech by Park San Guy, head of the Ministry of Justice, the necessary bill is already being prepared, and Park San Givod has called for a drop in the rates of BTC and ETH. Earlier, South Korea was considered one of the most progressive countries in the field of digital coins, but local officials brought the “white heat” due to increased hacker attacks.