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For investors and customers engaged in the new digital economy, the advent of cryptocurrencies represented freedom, practicality, and security for users. However, in the perception of some states, this represents the fear of a threat to their monetary control. State fear of cryptocurrencies has led to regulations and restrictions on their use.
Read on and understand more about how these regulations work in some countries.
Cryptocurrencies in Brazil are regulated by Normative Instruction No. 1,888 of May 3, 2019, which came into force on August 1, 2019. According to this IN, any and all transactions involving cryptocurrencies must be reported to the IRS.
That is, exchanges, legal entities, and individuals need to render monthly accounts on purchases, sales, transfers to exchanges, among other financial transactions involving cryptography that are carried out. In practice, this means that the IRS must be informed of particulars about the transactions such as transaction date, amount, crypto used and in what quantity, exchange service fees, if the transaction is carried out through these companies, as well as the wallet address to which the coins are being sent.
There is, however, an exception to this rule. Transactions that accumulate R $ 30,000.00 or more must be notified to the Special Secretariat of the Federal Revenue of Brazil.
In the United States, the Network for Combating Financial Crimes (FinCEN) in 2013 declared that cryptocurrencies were not a means of exchange and therefore, there would be no obligation to accept them as a means of payment. However, this same body argues that the application of money laundering laws should extend to crypto.
In 2017, the SEC (Securities and Exchange Commission) decided to consider certain ICO tokens as securities, therefore being subject to the same laws of the North American Capital Market.
Subsequently, in 2018, the Federal Revenue Service determined that the ownership of crypto assets must be declared, and non-compliance with this determination would be considered and punished as tax evasion.
Japan, because it houses the headquarters of several expressive exchanges in the cryptocurrency market, already has specific regulations for crypto. In the country, cryptocurrencies have been considered as legal / legalized currencies since 2017.
Since that same year, the Payment Services Framework has been in force, which is the main legislation in the exchange market. These companies are considered legal and must comply with requirements determined by law, such as:
Have an office and at least one company representative in Japan;
Be registered with the local financial department;
Deliver transaction records annually to the Japanese Financial Services Agency.
Another regulation that has also existed since 2017 is the Transfers Prevention Framework for Criminal Activities, which requires companies to verify, the identities of their users and their transaction log in order to inform the competent authorities about suspicious movements.
In South Korea, all crypto transactions are carried out through banking institutions. In the country cryptocurrencies are not considered financial assets, therefore, they are exempt from taxes.
However, the South Korean government sets very strict rules for crypto transactions, they are:
Cryptocurrency users must have contracts with banks regarding the use of this technology.
Investors must have accounts open at the same banks as their chosen exchanges, to facilitate the process of switching from fiat to digital currency.
Foreigners cannot make transactions in cryptocurrencies
Suspicious transactions, pursuant to the 2017 Financial Transaction Notification and Information on Specific Use Law, must be reported to the authorities.
It can be seen that cryptocurrency regulations vary according to the state’s receptivity to cryptocurrencies, which is often seen as a threat to state monetary sovereignty, resulting in severe measures to curb its use. On the other hand, regulation can help prevent crimes like money laundering and tax evasion from being committed through cryptocurrencies.
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