Regulators around the world are divided on how to keep up with the growing demand for digital currency. There are different standards for digital currencies in each country because most cryptocurrencies are not backed by any central government. The small regulations made in 2018 seem to drive the price of digital currencies like bitcoin. Here is a guide to where regulators and governments around the world stand on digital currency.
Some countries have accepted digital currency such bitcoin as legal tender. There are, however, no existing global policies on the exchange of digital currency. Global leaders have called for recommendations on how to come up with a global standard for cryptocurrency given the risk they pose. The International Monetary Fund (IMF) has also called for all nations around the world to cooperate in the regulation of digital currency. Christine Lagarde, the IMF Managing Director, highlighted the risks of digital currency in the promotion of money laundering and terrorism financing. He called for similar policies for digital currency as in the traditional financial sector to protect the consumer.
Bitcoin is accepted as a legal tender in Japan and a legal medium of exchange provided that they are registered with the Japanese Financial Services Agency. According to data from Cryptocompare, Japan trade about half of bitcoin daily volumes, making it the largest market for the digital currency. Japan became the first country to adopt a nationwide system for regulating the trade of digital currency.
According to the Financial Crimes Enforcement Network, digital currency does not have legal tender in the United States. On exchange policy, bitcoin is legal depending on the state. The IRS in 2014 classified cryptocurrency as property rather than currency and issued guidelines on how it should be taxed.
According to the president of the European Central Bank Mario Draghi, any country which is a member of the EU cannot introduce its currency. There have been concerns among EU leaders regarding the role played by digital currencies in the promotion of money laundering. Regulations are, however, different depending on the country. France, for instance, has plans to make a joint proposal with Germany to regulate the bitcoin market according to Autorite des Marches.
Though bitcoin is not accepted as a legal tender in the UK, it can be used for exchange, but you need to register with the Financial Conduct Authority. According to the BOE, they are required to adhere to anti-money-laundering counter terrorism standards similar to other financial institutions. According to Carney, there is a need to hold digital currency to standards similar to those applied to traditional financial institutions.
China is one of the places on the globe where trading virtual currency such as Bitcoin is illegal. In 2017, the Chinese government banned the use of Initial Coin Offerings (ICOs) as a way of raising funds for startup businesses. Domestic cryptocurrency exchanges were also shut down. In January the same year, the People’s Bank of China recommended that the Chinese authorities illegalize virtual currency trading and hold into account, business and individuals offering cryptocurrency trade or related services. Nonetheless, there are alternative channels such as mining, through which digital currency trade takes place.
Having been on the global map recently more than ever, perhaps for all the wrong reasons, South Korea is a nation worth mentioning when it comes to all matters trade. As a matter of fact, SK is the 4th largest economy in Asia. Even though the South Korean won is the only legal tender, digital currency exchange is not considered illegal in this masculine East Asian nation. However, trading virtual currency using anonymous bank accounts is prohibited. To provide virtual currency trading or related services, one is required to be duly registered with the South Korea Financial Services Commission (SKFSC). In a nutshell, digital currency regulations in South Korea tend to be fairer compared to other places around the globe. While the government indicates that it doesn’t intend to completely ban digital currency exchanges, some areas such as futures and ICOs remain under tough scrutiny. According to government policy coordination minister, Hong Na-ki, the South Korean government is yet to make conclusions on virtual currency regulation.
According to the Business Insider, Singapore is the easiest country to do business in. As a matter of fact, it has been the top business-friendly since 2012. The main financial regulator in this beautiful country is The Monetary Authority of Singapore. Despite the fact that Bitcoin (the main virtual currency) is not legal tender in Singapore, cryptocurrency exchange is legal. However, this is still under the regulation of the MAS. According to the central bank of Singapore, it is still too early to speculate whether digital currency trading will be banned or not.
The Australian government has in the past considered following the likes of Japan in strengthening their digital currency regulation and AML policies. Apparently, there is no policy in place to regulate the exchange or trade of digital currency in Australia, at least not yet! There seems to be both critics and supporters of cryptocurrency in the Australian government.
Just like with all the rest on the list, virtual currency is not legal tender in India. With the South Asian country being quite significant in Asia’s GDP India is worth the mention when it comes to digital currency regulation around the globe. Despite warnings from the Indian government, digital currency exchanges are still considered legal in the second most populated Asian country. However, the Indian government has issued a strict warning on the use of cryptocurrency and related assets in financing illegal activities and intends to eliminate the practice at all costs according to India’s finance minister. This was in addition to iterating that the country doesn’t recognize cryptocurrency as legal tender.
Different governments around the world are in the process of designing appropriate policies to regulate digital currency. Some countries like Japan have already accepted them as legal tender while others, such as the UK are cautious. Digital currency poses a risk in the promotion of terrorism and money laundering, but they also play a vital role in the financial market. You can check online for more details about AML compliance solutions. Governments around the globe should, therefore, come up with standards to regulate the currency similarly to the traditional financial sector.