The biggest challenge for cryptocurrencies is regulation, cryptocurrency regulations around the world can determine a clear direction for the status of cryptocurrencies in the future.
Until now, cryptocurrencies have not been fully accepted in every country, so it is necessary to make strict regulations on this emerging asset.
Only El Salvador was the first country to officially adopt Bitcoin as the country’s official currency. Even then, they are still facing protests from some of the people because they are not ready with the policy. The protester called Bitcoin to be for the upper-class investors, but not for the lower-class people.
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Contents
- 1 Why does cryptocurrency need regulation?
- 1.1 Classifying cryptocurrencies as tradable assets
- 1.2 The importance of regulation to protect investors
- 1.3 Choose crypto assets that are well known and safe for the long term
- 1.4 Cyber security risks
- 1.5 Prevent money laundering and the funding of illegal activities
- 1.6 Regulate the taxation of cryptocurrency assets
- 1.7 Cryptocurrency and regulation
- 2 Cryptocurrency regulation countries
- 3 Final Thought
Why does cryptocurrency need regulation?
For investors, it is important that they get security guarantees and legal protection if they invest in a country. Currently, many cryptocurrency exchanges have emerged in various countries as a result of the popularity of Bitcoin.
For example Binance, this global exchange started in China, but because the Chinese government banned cryptocurrencies in its country, Binance was forced to relocate its headquarters to a country that provided a favorable law status.
Then what is the reason cryptocurrencies need regulation?
Classifying cryptocurrencies as tradable assets
The status of cryptocurrencies, which are emerging assets, is still uncertain. Bitcoin, for example, was created for peer-to-peer payment instruments that are not owned by certain entities. But the character of Bitcoin makes many stakeholders doubt Bitcoin if it becomes a currency because of its volatile value.
Regulation of cryptocurrencies as tradable assets can give investors confidence to invest in a country, in this case, investments around cryptocurrencies.
The importance of regulation to protect investors
Cryptocurrencies are emerging assets that are vulnerable to risk. Create regulations to protect investors from potential risks can provide comfort for investors to invest in that country.
Choose crypto assets that are well known and safe for the long term
The emergence of new cryptocurrencies will not all be as successful as Bitcoin. With regulations, state authorities can regulate and determine crypto assets that are safe for the long term through research by these regulatory bodies.
Cyber security risks
Cryptocurrency is a digital asset, it is not a physical object like gold which has a physical form, Bitcoin is just a digital coin people cannot store in a physical wallet like flat money.
Regulation of cyber risk by stakeholders in one country will provide comfort at least for investors.
Prevent money laundering and the funding of illegal activities
Money laundering is an important issue to prevent criminals from clearing money from criminal proceeds. With regulations in a country, at least there is an effort to make cryptocurrencies a crime-free asset.
Regulate the taxation of cryptocurrency assets
If investors start investing in crypto-asset transactions in a country, they can make regulations to regulate crypto asset taxes. It will provide an advantage as the country’s foreign exchange reserves increase GDP.
With clear tax regulations, investors can provide a portion of their investment.
Cryptocurrency and regulation
A country mostly has its own currency, so the presence of cryptocurrencies is considered to threaten the adoption of local currencies.
Therefore, cryptocurrency as a new thing, needs attention from the government, so that it does not disturb the economic stability of the country.
This requires experts to examine the impact of cryptocurrencies on the economy or local currency.
In reverse, the emergence of cryptocurrencies is expected to help the condition of the country get better. For example, adopting blockchain technology to prevent corrupt behavior.
Cryptocurrency regulation countries
The year 2021 will be quite an important year with regard to events in several countries regarding cryptocurrencies. The news of El Salvador officially adopting Bitcoin made headlines on many news portals.
Also, the prohibition of the Chinese president Xi Jin Ping for all financial services in China to conduct transactions regarding cryptocurrencies. That’s bad news for Bitcoin miners who are mostly located in China.
There are more than 200 countries in the world, but we haven’t found any reports that all countries have made regulations on cryptocurrencies. However, if we look at the adoption of cryptocurrencies, most investors are in emerging and developed countries.
Cryptocurrency regulation Europe
Europeans, most of the citizens want regulation for cryptocurrency in their country. A report from the portal Euronews, that in a poll by Redfield & Wilton Strategies on August 4 and 10 with 31,000 respondents across 12 EU member states Estonia, France, Greece, Germany, Hungary, Italy, Lithuania, Latvia, the Netherlands, Poland, Portugal, and Spain.
While the European Commission has designed a framework for the regulation of cryptocurrency assets, you can find all the information here.
Cryptocurrency regulation France
Citing from Sumsub’s report, regarding cryptocurrency regulation in France that the country has updated new crypto regulations.
Regulations that were amended in June 2021 include requiring crypto companies operating in the country to be registered through the Financial Markets Authority (AMF). Besides, cryptocurrency firms must also comply with AML and KYC rules.
The regulation is listed in Ordinance 2020-1544, which was issued on December 9, 2020, to complement French cryptocurrency regulations. For cryptocurrency firms that violate these rules will be subject to severe sanctions.
The new regulation tightens the regulation on KYC and AML which was previously only for a minimum transaction of €1000 the limit with the new rule being €0. Anonymous transactions will be banned if they do not comply with KYC. Regulations also cover sales regulations, as well as taxation.
Cryptocurrency regulation Germany
Germany, which is one of the largest economies, allows buying and selling of crypto assets. They view cryptocurrency as a personal asset, and it is subject to an individual income tax rather than a capital gains tax.
Germany has BaFin (Federal Financial Supervisory Authority) which is a cryptocurrency regulatory body. Therefore all cryptocurrency firms, trading platforms, or exchanges must obtain a license from BaFin.
Germany, which is a European country, also implements Anti-Money Laundering directives. So every crypto asset holder must comply with KYC as a condition for AML.
Cryptocurrency regulation Asia
Asia is the largest continent in the world, consisting of Central Asia, East Asia, Southeast Asia, South Asia, and West Asia. Each country treats differently for cryptocurrency regulation.
China is one of the countries in East Asia along with Japan, Hong Kong, Macau, Taiwan, South Korea, North Korea, and Mongolia.
The country, which is currently one of the developed countries which some analysts predicted to beat the dominance of the United States, has a negative attitude towards cryptocurrencies. China banned cryptocurrency because they worry to make economic instability.
Cryptocurrency regulation in Malaysia
Bank Negara Malaysia stated about Bitcoin, which is not a legal tender that BNM does not operate Bitcoin, so they advise being careful with the risks of Bitcoin ownership.
According to Freeman Law, Malaysia treats cryptocurrencies as securities according to the securities laws regulated by the Security Commission (SC).
The regulation has undergone several revisions as of 2020 October 28, for digital asset guidelines, where companies can raise funds through issuing tokens but must be approved and registered as an asset exchange to facilitate IEO. They also emphasize AML and KYC policies in their efforts to prevent terrorist funding transfer.
Cryptocurrency regulation in India
India is one of the countries in South Asia, with a dense population. Although the regulation of cryptocurrency is not yet clear, cryptocurrency transactions are increasing sharply in the country.
Investment in cryptocurrencies grew from $923 million to nearly $6.6 billion by May 2021. According to WazirX CEO Nischal Shetty, the government is in no hurry to determine the status of cryptocurrencies.
The SC Garg Committee advises India to ban cryptocurrencies, as it does not serve currencies. Its inconsistent value is the reason that private crypto-assets cannot replace flat currencies.
RBI itself is reportedly going to create its own digital currency, so the government is still in no hurry to make regulations on cryptocurrencies. This information update refers to Financialexpress. which reports a bullish market amid delaying cryptocurrency regulations.
Cryptocurrency regulation China
China is the most heavily regulated country on cryptocurrencies. In 2013 the government banned crypto, then in 2017, again they shut down local crypto exchanges, by the ministers and the PBOC, forcing large exchanges like Binance to relocate.
2020 even though the government banned local exchanges, China is still a country with a large contribution in crypto transactions.
2021 Chinese government tightens crypto rules again, they ban all institutions, banks from dealing with cryptocurrencies. Therefore many Bitcoin miners are relocating their factories to other countries like Kazakhstan.
The largest miners come from China, and also account for 70% of cryptocurrency transactions come from China, the Chinese government’s policy towards cryptocurrencies has a high impact on the value of crypto.
Cryptocurrency regulation Australia
Location Australia on the smallest continent. In 2017 this country has legalized cryptocurrency, which views the crypto as property, so it is subject to capital gains tax.
However, all exchanges must comply with the Anti Money Laundry and Counter-Terrorism Financing Act 2006 (AML/CTF 2006).
The regulatory body for Australian cryptocurrencies is the Australian Transaction Reports and Analysis Center (AUSTRAC). So all operating exchanges must be registered through the Australian Transaction Reports and Analysis Center (AUSTRAC).
Cryptocurrency regulation South Africa
The growth of crypto-asset investment in South Africa requires further regulation. This is to prevent cryptocurrency fraud cases.
January 2021 reported a growth of $145 million as the fastest growth in history. The new regulation is subject to accommodate transparency and plays a role in complying with the Anti Money Laundering rules.
South Africa will tighten regulations on cryptocurrencies to prevent stability risks as a result of increased crypto fraud.
According to the IFWG Crypto assets regulatory working group, crypto assets are not e-money. However, there is a need for regulation with the aim of providing comfort and security for overall economic stability.
South Africa’s main concern with crypto assets is that users must have legal documents, to prevent money laundering, tax evasion, and terrorist financing.
Cryptocurrency regulati0n America
Cryptocurrency regulations in the United States also view cryptocurrencies as ineligible as currency. When illicit activities using Bitcoin, for example for the sale of drugs, it has hurt government regulations.
However, seeing the increasing growth of crypto investors, America is trying to take an approach to make cryptocurrency regulations.
According to The U.S. Securities and Exchange Commission (SEC), cryptocurrencies are securities, so all cryptocurrencies will be subject to securities law.
Meanwhile, The Commodities Futures Trading Commission (CFTC) considers cryptocurrencies, mainly Bitcoin and Ethereum, to be commodities. It means cryptocurrencies allow to buy, sell or trade through futures contracts in exchange overseen by CFTC.
Unlike China, America has legalized exchanges like Coinbase but they must comply with Anti Money Laundering and Know Your Customer (KYC).
Cryptocurrency regulation El Salvador
El Salvador, became the first country in the world to make Bitcoin a legal tender. The country is adopting Bitcoin as a legal tender, as many of El Salvador’s citizens reside abroad. With Bitcoin, they can transfer funds at low fees for cross-border transfers.
El Salvador President Nayib Bukele has submitted a proposal on Bitcoin to parliament and got approval so that Bitcoin becomes a legal tender, so anyone they can pay for food or services using Bitcoin. To support the use of Bitcoin the government created a wallet called Chivo.
Final Thought
Future cryptocurrencies are still possible to continue to grow and give rise to new types of crypto assets. Currently, more thousands of coins are in the cryptocurrency market. It has grown rapidly after the creation of Bitcoin in 2009.
In the span of only ten years, Bitcoin derivatives appeared with a very fantastic number.
Note: This article is only subject to information and does not constitute investment advice or solicitation, crypto, forex and CFDs are risk assets, each investor is responsible for his own investment.
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