Exchanging virtual currency with real currency is a hot topic in E-business and E-commerce industries. Trading cryptocurrency for cash is banned and prohibited in some countries where in other countries, it is either allowed or not regulated yet. Things have already begun to heat up as countries around the world grapple with cryptocurrencies and try to determine how they are going to treat them. Some are welcoming, others are cautious. And some countries are downright antagonistic.
United States (Friendly): The U.S. has been taking an approach to foster innovation and growth of blockchain and cryptocurrency while protecting investors from high risks and fraud. On February 6, 2018, the Securities Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), took the position that “we owe it to this new generation to respect their enthusiasm for virtual currencies, with a thoughtful and balanced response, and not a dismissive one.”
Canada (Friendly): The Financial Consumer Agency of Canada (FCA) publishes online information regarding digital and cryptocurrencies. The FCA explains aspects of decentralization, peer-to-peer transactions, digital wallets, wallet security, and the risks of using digital currency. They further maintain that digital currencies are not legal tender, and that profits made from digital currencies are subject to Canada’s Income Tax Act. Goods and services exchanges for cryptocurrency must be reported as income for tax purposes, and transactions between cryptocurrencies are considered commodity transactions, and must be reported.
China (Hostile): China is notorious for some of the world’s largest bitcoin mines. In 2017, China banned cryptocurrency trading on Chinese exchanges and made ICO fundraising illegal, curving market demand, and causing a large overall downtrend in the cryptocurrency markets.
South Korea (Neutral): In February 2018, South Korea began to lighten its stance on cryptocurrency trading. Government representatives have pledged their support for regulated cryptocurrency trading. It appears that South Korea is moving forward to permit regulated cryptocurrency trading.
Japan (Friendly): Currently, Japanese Yen accounts for over 36% of Bitcoin’s trading volume, more than every other currency. USD is second at just over 31%. Japan’s high demand for cryptocurrency is supported by a well-regulated legal system that supports the industry in a way that builds credibility among investors and creates familiarity with securities trading as it relates to cryptocurrency.
Singapore (Friendly): Singapore is often considered one of the more hospitable governments toward cryptocurrencies.
Thailand (Neutral): Thailand expects to clarify its stance on how to regulate digital currencies within the coming months. The government aims to protect against fraudulent activities and deceitful investments, while maintaining the benefits of using blockchain technology.
Vietnam (Neutral/Hostile): Vietnam’s Ministry of Justice and State Bank of Vietnam (SBV) are quickly preparing a report to present to the Council of Ministers. Currently, the scope of regulations are still unknown.
Iran (Friendly): In November 2017, Iran’s High Council of Cyberspace (HCC) said it would welcome bitcoin and cryptocurrency trading, subject to regulations.
Russia (Friendly): In January 2018, the Russian Finance Ministry drafted a bill that would legalize “digital financial assets” stored on blockchain networks as electronic securities. The bill would define the scope of regulations on cryptocurrency, and would not prohibit trading.
Switzerland (Friendly): During 2017, Swiss ICOs raised about $550 million in funding, totaling about 14% of the global $4 billion ICO market. As a response, the Swiss Financial Market Supervisory Authority (FINMA) published ICO guidelines on February 16, 2018, under the Swiss anti-money laundering and securities laws.Many tokens are also subject to Switzerland’s favorable tax laws, which are partly responsible for the high demand for blockchain companies to base their ICOs there.
France (Neutral): In January 2018, Bruno Le Maire, the French Minister of the Economy, announced the creation of a group to develop cryptocurrency regulations. The group will be responsible for proposing guidelines and drafting regulations to prevent tax evasion, money laundering, financial crimes, and terrorist activities
Germany (Friendly/Neutral): In Germany, cryptocurrency is not considered a commodity, stock, or currency. It is classified as private money, similar to foreign currency. Thus, trading cryptocurrency in Germany is tax free for short-term gains under 600 EUR, and tax free for long-term capital gains of over one year.
Italy (Friendly): The Ministry of Economy and Finance of Italy (MEF) recently finished public consultations regarding new regulations for cryptocurrency in Italy. The MEF will aim to improve anti-money laundering laws by holding exchanges responsible to prevent illegal cryptocurrency transactions and money laundering.
Poland (Friendly/Neutral): Poland has often promoted cryptocurrency and blockchain technology. Poland is working with The Polish Blockchain Technology Accelerator, which is subsidized by the Ministry of Digitalization, to create a national cryptocurrency called Digital PLN (dPLN).
Venezuela (Friendly): In December 2017, the Venezuelan government announced Petro, its state-run, oil-backed token as a form of legal tender to pay for taxes, fees, and public necessities. The cryptocurrency entered the pre-sale phase on February 20, 2018.
Brazil (Hostile): In May 2017, Brazil set up a commission to discuss regulation of cryptocurrency. It has since held seven public hearings. In December, Brazil announced it would take the stance to prohibit the issuance of cryptocurrency in national territory, prevent its commercialization, intermediation, and acceptance as a means of payments and settlement of debts.
Mexico (Friendly): Mexico is one of the leaders in cryptocurrency exchange trading in Latin America, and has one of the largest financial technology (fintech) markets in the region. Mexico is planning to pass a bill to regulate fintech and cryptocurrency markets within the next few weeks.
South Africa (Friendly): UBU is a Universal Basic Income project that aims to significantly reduce poverty in Africa through decentralized distribution of digital currency to the poor. Projects such as UBU would provide digital currency to help people invest and earn money in nations that often suffer from poverty and hyper-inflated national currencies.
Australia (Friendly): The Australian Taxation Office (ATO) treats financial gains from trading cryptocurrency as property subject to capital gains taxes.
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