The
majority of governments are beginning to regulate cryptocurrencies, and the
regulations that are already in place are being expanded and made more
stringent. In recent years, there has been a surge, not only in the use of
cryptocurrencies by people and organizations but also in the amount of unlawful
activity that is associated with them.
The
total value of the cryptocurrency that was taken via hacking reached about $2
billion as of July 2022, compared to slightly under $1.2 billion in the same
period in 2021. Another issue is the laundering of money using cryptocurrency.
The amount of cryptocurrency that was laundered by criminals in 2018 was $8.6
billion, which is a 30% increase from 2020.
As
a result, the majority of nations are either introducing new crypto legislation
or strengthening the ones that already exist. Let’s find out what the regulations
are across the globe for cryptocurrencies.
1. China
To
settle estates, cryptocurrencies in China are treated the same way as other
types of property. The People's Bank of China (PBOC) has placed a ban on the
operation of cryptocurrency exchanges inside the nation, citing the fact that
these exchanges allow public funding without proper authorization.
In
addition, the mining of bitcoin was made illegal in China in May of 2021, which
compelled many people who were involved in the practice to either completely
shut down their businesses or transfer to other countries that had more favorable
legislative environments. Then on September 1, 2021, the use of cryptocurrency
was made completely illegal.
Despite
this, the nation has been making strides toward the creation of a digital
version of the yuan (e-CNY). It was not until August 2022 that it made the
formal decision to carry out the next phase of its central bank digital
currency (CBDC) pilot test program.
2. Canada
Although
cryptocurrencies are not recognized as a form of legal money in Canada, the
nation has been more aggressive than others regarding the regulation of
cryptocurrencies. The Canadian government was the first in the world to give
its blessing to an exchange-traded fund (ETF) for bitcoin, and many of these
funds are already being traded on the Toronto Stock Exchange.
The
Canadian Securities Administrators (CSA) and the Investment Industry Regulatory
Organization of Canada (IIROC) require crypto trading platforms and dealers in
the nation to register with provincial authorities. This registration
requirement applies to crypto trading platforms as well as dealers.
All
cryptocurrency investment companies in Canada are required to register with the
Financial Transactions and Reports Analysis Centre of Canada since the country
considers these companies to be money service businesses (MSBs) (FINTRAC). The
Canadian government approaches the taxes on cryptocurrencies in the same way
that it does conventional commodities.
3. Australia
Both
cryptocurrencies and cryptocurrency exchanges are legal in Australia, and the
country has adopted a proactive approach to the development of legislation
controlling cryptocurrencies. Australia is a global leader in the
cryptocurrency industry. In 2017, the government of Australia decided to legalize
cryptocurrencies and stated unequivocally that Bitcoin (and any other
cryptocurrencies that had Bitcoin's attributes) should be recognized as
property and subject to Capital Gains Tax. This decision was made in
conjunction with the legalization of cryptocurrencies (CGT).
The
Australian government has chosen a progressive approach to the issue of
cryptocurrencies, and the modification in tax status is typical of this
progressive approach. Until recently, Australia's goods and services tax had a
difficult history of double-taxing cryptocurrencies, which led to some
controversy (GST).
4. Japan
Under
the Payment Services Act, Japan is now the country with the most
forward-thinking legislative environment for cryptocurrencies. This is because
Japan recognizes Bitcoin and other digital currencies as legitimate forms of
property (PSA).
The
National Tax Agency issued a ruling in December 2017 that profits made on
cryptocurrency should be classified as "miscellaneous income," and
investors should be taxed following this decision.
Notable
regulatory changes include those made to the Private Securities Act (PSA) and
the Financial Instruments and Exchange Act (FIEA), all of which went into
effect in May 2020. The phrase "virtual currency" was replaced with
the word "crypto-asset," stronger limits were imposed on the
management of users' virtual money, and regulation on the trading of crypto
derivatives was made less stringent as a result of the revisions.
As
a result of the new regulations, firms that deal in cryptocurrency derivatives
will now fall within the purview of the FIEA, while cryptocurrency custody
service providers will be subject to the provisions of the PSA (even if they do
not engage in the sale or acquisition of crypto assets).
5. South
Korea
Although
cryptocurrency exchanges are allowed in South Korea, they are subject to a
stringent regulatory framework since cryptocurrencies are not recognized as a
form of legal cash there. There is a lack of clarity on the taxation of
cryptocurrencies in South Korea; at the moment, cryptocurrency transactions are
not subject to taxes since cryptocurrencies are not regarded as both cash or financial
asset.
On
the other hand, the Ministry of Strategy and Finance has made it clear that it
is contemplating levying a tax on revenue generated through crypto
transactions, and it intends to unveil a taxation framework in the year 2022.
Written by Jay Kumar Gupta
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