The year 2017 was an extraordinary year for cryptocurrencies and it seems that 2018 is meant to become the year of regulatory reckoning. As various countries throughout the world are dealing with cryptocurrencies, things have started to heat up and are trying to find ways to deal with them. While some countries are welcoming cryptocurrencies, others have actively banned them completely.
There has been huge speculation on whether cryptocurrencies are a passing fad or something more significant. As the industry is growing substantially, various technologies, such as – blockchain, are adding more potential and utility of cryptocurrencies. Moreover, it is attracting greater attention from governments and stakeholders all over the world. They have started to get hype to the fact that cryptocurrencies are here to stay.
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Considering the huge amount of investment involved, various steps have been taken to regulate the industry. Different countries are implementing varying policies to handle the market.
Here’s a look at how these 5 countries are treating cryptocurrencies’ regulations.
Currently, the USA has no clear direction on the regulation of cryptocurrencies. Securities and Exchange Commission (SEC) has not approved any exchange-traded products holding cryptocurrencies. It has warned investors of the risks involved and halted various ICOs. The government has also hinted at the requirement for greater regulation.
Financial technology in the United States varies across states considerably, with the friendliest regulations in Texas, Tennessee, Montana and South Carolina. Meanwhile, legislators in Washington are skeptical of cryptocurrencies.
Unsurprisingly, the US hosts the highest number of cryptocurrencies users in the world. As home to Silicon Valley, cryptocurrency and blockchain-friendly states, it has been at the forefront of the digital currency space.
Canada maintains a generally crypto-friendly stance along with making sure that it is not used for money laundering. The Canada Revenue Agency (CRA) sees cryptocurrency as a commodity and not a government-issued currency. This means that all the transactions are considered as barter transactions. According to basic tax principles, such transaction may result in income or expense treatment. If a taxpayer engages in investing or trading in cryptocurrencies, the loss or gains occurred as a result, are treated as being on account of income.
Moreover, the Canadian federal government has proposed to regulate and standardize cryptocurrency with its counter-terrorist and anti-money laundering legalization.
Japan has adopted a friendly approach towards cryptocurrencies and is a positive early adopter. Financial Services Agency of Japan, which is the financial regulatory arm of Japan, has developed laws to regulate digital currency exchanges, giving a push to cryptocurrencies. It has approved 11 exchange operators to enter the market along with cryptocurrencies, making trading easier on these platforms. The Japanese government has set up a framework through the Payment Services Act (PSA), making the usage of cryptocurrencies legal.
Owing to the support of the government, many cryptocurrency operations are booming in the country and in the future, ICOs may even select Japan to host their operations.
China has always been taking actions to crack down on all activities related to cryptocurrency. According to China Daily, China is likely to ramp up crackdown on cryptocurrencies and initial coin offerings (ICOs). This would increase monitoring of digital accounts along with regulation of foreign currency flows.
All the financial institutions are barred from partaking in transactions related to cryptocurrencies. However, individuals are free to trade Yuan to Bitcoin.
According to latest reports, China is now targeting overseas websites as people have started switching to these platforms to engage in digital currency transactions.
Once viewed as a cryptocurrency-friendly country, India seems to be changing its stance in 2018. While trading is carried by unregulated digital exchanges, people are expecting huge returns. However, a burst can occur anytime. Finance ministry and the RBI have repeatedly issued warnings against investments in cryptocurrencies.
A tough stance from Indian government stems from various concerns such as illegal activity proliferation, tax evasion, money laundering, hiding black money and sponsoring terrorism.
Cryptocurrency is not legal in India and cannot be used to buy goods and services. But, this doesn’t mean that they are banned.
Although cryptocurrencies, particularly Bitcoin, have been in existence for years, countries still do not have definite systems that regulate, restrict or ban the cryptocurrency. The anonymous and decentralized nature of cryptocurrencies has challenged governments on how to permit its use along with preventing illicit transactions.
Overall, cryptocurrencies continue to remain in the grey area as technological surge has left legislators far behind.
Nishant Kadian is a technical writer with Ace Cloud Hosting. He has a strong interest in technical stuff and enjoys writing on QuickBooks Cloud, Cloud Computing, and Data Center technologies.