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How works cryptocurrency regulations around the world?
The advancement of crypto technology and the number of investments growing around the world, made cryptocurrencies stop being a speculative investment and become part of a balanced portfolio for many investors.
With this increasing constant, many countries are still at a loss when it comes to regulating cryptocurrencies, there are many questions about which approach to take.
Given this scenario, we can identify the emergence of different regulations, allowing cryptocurrencies to be subject to different classifications and tax treatments around the world.
Here we address the current regulatory landscape of currencies in different countries.
Despite the high number of investors and companies specializing in the development of crypto platforms, the United States does not have a clear regulation for the assets.
Within a country, cryptocurrencies can be treated as a bond, commodity or currency, depending on the point of view presented.
Even if encryption changes in the country fall within the regulatory scope of the Bank Secrecy Act (BSA), being registered on the Financial Crimes Enforcement Network (FinCEN), and complying with anti-money laundering rules, the investor must be complying to understand clearly, as changes can happen at any time.
From a tax perspective, Canada has been treating cryptocurrencies like other commodities. As the first country to approve a Bitcoin exchange trading fund (ETF), it has taken a proactive stance in relation to cryptocurrency regulations within the territory.
The country also requires cryptographic trading platforms, and traders to be registered with provincial regulators, with cryptographic investment firms classified as currency services companies, and registration with the Canadian Financial Transaction Analysis and Reporting Center (FINTRAC) is mandatory.
The UK considers cryptocurrencies as property but not legal tender. Cryptocurrency exchanges must be registered with the UK Financial Conduct Authority (FCA) and trading in crypto derivatives is prohibited.
The country’s regulatory body also introduced customer knowledge protocols (KYC) as a specific requirement.
Investors must pay capital gains taxes on profits generated by cryptographic transactions, but the taxation will depend on the activities performed as well as those involved in the transactions.
Japan has a regulation in which cryptocurrencies are recognized as legal property, in accordance with the Payment Services Act (PSA), and crypto exchanges are registered with the Financial Services Agency (FSA), complying with AML/CFT obligations .
All commercial gains generated by cryptocurrencies are recognized as “Miscellaneous Income”, with investors being taxed accordingly.
Like Japan, Australia has been advancing on cryptocurrency regulations, classifying cryptocurrencies as legal property, subject to capital gains tax.
In the country, scholarships are free, being registered at the Australian Transaction Reporting and Analysis Center (AUSTRAC).
Singapore classifies cryptocurrencies as property but not legal tender, as in the UK, but the country differs from the rest in that long-term capital gains are not taxed. However, the companies that carry out the transactions are taxed, treating the gains as income.
Cryptocurrency exchanges are regulated by the Monetary Authority of Singapore (MAS) under the Payment Services Act (PSA).
As the country does not consider cryptocurrencies as legal tender or a financial asset, transactions with digital currencies do not suffer from capital gains taxes.
The regulation of exchange encryption has been overseen by the South Korean Financial Oversight Service (FSS). Cryptocurrency exchanges and virtual asset providers must be registered with the Korea Financial Intelligence Unit (KFIU).
Despite being one of the biggest emerging global powers, China has not looked favorably on the use of digital currencies, with repressive regulation that has driven many cryptographic companies out of the country.
China does not classify cryptocurrencies as legal tender, only as property for purposes of determining inheritance. The People’s Bank of China (PBOC) prohibits exchanges of cryptocurrencies in the country, claiming that these transactions facilitate public financing without approval.
The country has also banned bitcoin mining within its territory.
The country has very uncertain cryptocurrency regulations, despite following most countries and not considering cryptocurrencies legal tender, India specifies that investors must pay taxes on the profits of the cryptographic trade.
Cryptocurrency is considered legal in most parts of the European Union (EU), however currency governance can vary depending on the member state, as does taxation, which can range from 0% to 50% depending on the EU country.
As we can see, there is still a long way to go towards a clear regulation related to cryptocurrencies in many countries, with many that do not even have any type of regulation. It is necessary to be aware, as this is a period of many uncertainties, many changes can occur.