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Cryptocurrencies and Governments / A Review on Cryptocurrency Regulations

Today, with the increasing growth of technology and access to new technologies as well as the increasing level of public awareness laws, governments, as the main regulatory authority, have had to scrutinize these technologies one after the other and eventually adopt a position.


Cryptocurrency International Laws | Group of 20 Wants to Integrate the Cryptocurrency Regulations

Among the Group of 20 countries, such as Indonesia, Saudi Arabia, and China, there is an implicit ban on encrypted currencies. The United Kingdom, Africa, Italy, and Russia have tax laws on these currencies, and South Korea has anti-money-laundering and terrorism financing laws, and in Japan, Australia and Canada, both laws are effective. Saudi Arabia, Turkey, and China are also seeking to create native virtual currency.

Group of 20 selected the July deadline as the first step towards the creation of a cryptocurrency integrated laws at its second meeting of the Special Economic Task Force in Buenos Aires in July 2018.

  • This group refers to the Financial Action Task Force as follows:

“We are committed to implementing FATF standards, which include encrypted assets, and are waiting for the FATF to revise those standards and request FATF to promote global enforcement. We ask the International Standardization Institutions (SSBs) to continue to monitor their cryptographic assets and their risks in accordance with their obligations and to evaluate multilateral responses as needed.”

The last session revealed that cryptocurrencies were not at risk: “Cryptocurrencies account for less than one percent of global GDP, while projected credit transactions were as high as global GDP at the year 2008.”


Cryptocurrency Regulations | Some FATF Recommendations

In the Year 2014 FATF issued recommendations that we believe will continue to be valid for about five years. Some of these recommendations can be found below.

  1. When evaluating ML / TF virtual currency risk, the distinction between centralized and decentralized pricing will be important and key. Due to the anonymity and challenges of proper user identification, VCPPS may become decentralized which in general, due to Higher risk of ML / TF stringent standards should be considered.
  • In light of this risk assessment, countries should decide on the rules and regulations governing the platforms for exchanges between convertible virtual currencies and Fiat currencies (for example convertible virtual currencies). Some countries may decide to ban certain activities based on their own risk assessment (including, for example, consumer protection, security and monetary health, political money, and the absorption process).
  • In certain cases that countries consider the VCPPS ban, other aspects must also be considered, such as the effect that a ban at the local and global level has on the risk of ML / TF, including whether the ban on virtual currency payment activities may Conduct underground activities where they will continue operations without AML / CFT control or supervision.
  • Regardless of whether a country decides or chooses to ban or regulate virtual currencies, additional measures (additional standards) are useful to reduce the overall risk of ML / TF.
  • There is still a need for countries to further their educational and enforcement efforts. Countries should also consider monitoring VCPPS more closely for risk mitigation strategies.
  • Here, the FATF recommends distinguishing between decentralized and decentralized virtual currencies, and insists on more stringent AML / CFT rules for exchanges and warns against a complete ban on anonymity and challenges to proper identification with valuation activities that might exacerbate the underground activities, which is difficult to monitor properly.
  1. If widespread adoption of virtual currency occurs, countries should consider implementing short- and long-term committed policies to develop comprehensive oversight of VCPPS.
  2. Guiding countries to require the registration or licensing of legal people who provide MVTS in the country and to ensure compliance with AML / CFT standards. Because convertible virtual currency traders that transfer value (currency) digitally over the Internet are not under the control of regional boundaries, they generally recommend VCPPS to persons in countries where they are not physically present. It is very important that all countries comply with FATF recommendations on licensing or internal registration requirements. For these reasons, proper oversight by the national jurisdiction and proper co-operation and exchange of information between the competent authorities and the local jurisdictions where that service entity is located is of great importance.


Cryptocurrency Regulation US

The US Virtual Currency Act is a financial laws that applies to US virtual currency transactions. The Commodity Futures Trading Commission (CFTC) has regulated this laws and may continue to regulate virtual currencies as commodities.

The Securities and Exchange Commission (SEC) has also registered any initial supply of virtual currencies traded in the United States subject to authorization and classified it as “securities”.


Should Cryptocurrency be Regulated?

Due to the importance of virtual currencies, or cryptocurrencies, in future innovations and its importance in the global economy, many powerful countries have taken precautionary measures based on national interests in dealing with this technology and have avoided spontaneous actions. An interesting feature of virtual currency is its decentralization and anonymity, so governments are reluctant to exacerbate or reinforce their use by not properly controlling it and leading to underground business. In some of the leading countries, such as Singapore, even support facilities for businesses related to encrypted currencies are considered.

We anticipate that the full restriction or prohibition will not happen with FATF recommendations against it, but as we see in South Korea and Japan, compliance with the KYC, AML and CFT requirements is expected at all levels of the exchange.

Cryptocurrency Regulation UK

The UK has no laws specifically making it illegal to encrypt currencies. The head of the Bank of England said the existence of cryptocurrency regulations was necessary and indicated that the size of the cryptocurrency market is currently not large enough to “pose a material threat to monetary or financial stability in the UK”.

There are concerns, but no action, in combating money laundering and terrorism financing, but as for taxation, it is stipulated that income tax on encrypted currencies depends on the “activities and parties involved”. 

VAT, roughly equivalent to US sales tax, can only be obtained from suppliers for any goods or services sold in the United Kingdom for encrypted currencies. Corporate tax laws apply to foreign exchange businesses that include encrypted currencies.


Laws Bitcoin Legal Countries List

The term “Bitcoin” and the alternative cryptocurrency have been the trend talk of the planet since the decade. You can not leave this cryptographic innovation if you have been a part of the tech industry. In this section, we are going to tell you what are the countries and their government legally approved the cryptocurrency in their region.


  1. Australia

In 2013, the Australian government officially announced that

“There would be nothing to stop people in this country deciding to transact in some other currency in a shop if they wanted to. There’s no law against that, so we do have competing currencies. There would be nothing to stop people in this country from deciding to transact in some other currency in a shop if they wanted to. There’s no law against that, so we do have competing currencies.”

From this, we can be very clear that the cryptocurrency is considered to be the legalized there.



  1. United States:

The US officials confirmed bitcoin as the decentralized currency and can be used in any standard upon the users’ opinion. The country has been a pioneer for this virtual currency in 2013. Following this state, the CFTC recognized bitcoin as the valuable property and implied the taxes for it in September 2015. They have also issued guidance to use that currency and accepted as a form of payment tool in major online platforms.


  1. Japan

In mid-2014, the Japanese government responded to the legal questions regarding the regulation of bitcoins. It implies that there are no laws to restrict the people, legal institutions, financial entities from using and exchanging the bitcoins and other cryptocurrencies throughout the country. Later, the payments services act has regulated some of the bitcoin exchanges on the condition that they should keep the record of customers’ transactions and to ensure customer funds.


  1. Germany

In August 2013, the finance ministry of Germany stated that bitcoin can be represented as the unit of account which can be used for tax and trading in the country. And another important rule is that any transactions or purchases made with bitcoin must process VAT as similar to fiat currency.


  1. Brazil

In late 2014, the biggest bank of Brazil discouraged the use of bitcoin and cryptocurrency mainly due to the operational risks. But later in 2017, this statement had been reversed by the central bank of Brazil and now the cryptocurrencies are legal in the country.

  1. Turkey 

One of the hubs for financial technology innovations, Turkey has a separate position for cryptocurrencies. The bitcoin is officially legal and recently blockchain conferences, cryptocurrency starts up meetings are held in the country. The following graph shows that the bitcoin trading volume in LocalBitcoins is high in spite of the price fall.


  1. South Korea:

South Korea has been the home for many bitcoin exchanges like Bithumb, Korbit, etc. The people outside of the country are not allowed to use and trade cryptocurrency. But the residents of South Korea can register on exchanges and trade further. The bank and exchanges should be responsible for transactions and privacy.


  1. Vietnam

In short, Vietnam has been identifying the major cryptocurrencies and their use cases like payment tool. It will soon or later process the cryptocurrency as a payment tool. The trading of bitcoin and other cryptocurrency is not restricted in the country and there are lots of trade happens in a single day.


  1. Malta

Malta the central Eco-system for bitcoin and blockchain enterprises. Recently Binance has opened its branch operations in Malta legally. The Malta government legally approved the cryptocurrency and its ability to handle, store and process sensitive data in a completely decentralized way.


  1. Hong Kong

In 2014, the Financial Secretary of Hong Kong represented the bitcoin in the council that the Government sanctioned the bitcoins, other cryptocurrencies against the Organized and Serious Crimes Ordinance. However, the Government is closely watching the usage of bitcoins and its development area.


Bottom Line

The pace of technology growth has always been higher than the speed of law-making and legal enforcement in all countries around the world, and this has led countries to lose money if they do not review and impose a phenomenon; this has led to blockchain technology and its prominent product, ie cryptocurrencies also experience different behaviors in the field of legislation. Therefore, there is a need for frameworks for this new technological and financial phenomenon so that countries, in addition to assessing any threats to their country’s economic system, can safeguard its benefits to the economy and financial system, and be able to declare laws in this field.

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About Sean Patterson

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