Cryptocurrency Regulations and Laws Around the World

The financial markets worldwide have been greatly impacted by the rise of cryptocurrencies, leading different countries to implement regulations and laws. These measures are put in place to safeguard the economy and ensure that the legal framework surrounding digital assets remains up-to-date. Staying informed about the varying positions that each country adopts towards cryptocurrencies can be a challenging task. That is why we have created this post, to conduct thorough research on your behalf and provide you with comprehensive information in a single location.

Published: 12 January 2020

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Short Overview of What to Expect

It is evident that the unpredictable and volatile nature of cryptocurrencies is attracting attention, leading countries to establish laws and regulations to regulate them. The following table provides an overview of several countries and their positions on three key aspects of the cryptocurrency market. We will provide information on the status of Initial Coin Offerings (ICO), Crypto Exchanges, and the legality of digital currencies in each location. It is important to note that most countries permit ICOs, regardless of the regulations imposed on them. Additionally, many countries do not have definitive laws regarding cryptocurrency coins and assets, as they are not recognized as legal tender. Detailed information on each country and its specific regulations will be provided in the upcoming sections.

Since the significant surge in the crypto market back in 2017, countries have begun to tighten regulations surrounding Bitcoin and other altcoins within their domestic markets. This is primarily due to the perceived risk associated with untraceable digital assets. Our research indicates that this concern is especially prominent in matters of national security, as the use of cryptocurrency can potentially fund terrorist organizations. Additionally, Bitcoin and similar crypto coins have also found utility in the realm of online gambling. Many nations have observed a rise in online casinos that accept these digital currencies, but we will delve into that topic at a later point. If you’re curious about the regulations governing this market, we invite you to explore our comprehensive article on worldwide gambling laws. Now, let’s delve further into the regulations and policies employed by different countries.

United States of America

The United States is recognized as a global frontrunner in the adoption and utilization of cryptocurrencies and blockchain technologies. It undoubtedly provides a favorable landscape for investors, who have the opportunity to acquire not only Bitcoin but also more than 40 alternative coins and digital assets. Let’s begin by discussing these assets themselves – although they are not classified as legal tender, they are generally permitted within the country. Currently, they exist in a somewhat ambiguous space, as there are no stringent regulations specifically for cryptocurrencies. The Internal Revenue Service (IRS) regards them as valuable properties, which unfortunately means that taxes are applicable.

Crypto exchanges are categorized as money transmitters due to the fact that tokens are also seen as substitutes for currency. Naturally, the regulations surrounding them vary depending on the state and the Securities and Exchange Commission (SEC). The manner in which companies and projects obtain funding through Initial Coin Offerings (ICOs) is also permissible within the country, although it may be subject to strict regulations depending on the jurisdiction in which it takes place or is promoted. The SEC in the United States has determined that ICOs will be treated as the sale of securities, in contrast to crowdselling.

Canada

The scenario is completely different with regards to Canada, the northern neighbor of the United States. The rise of cryptocurrencies, combined with the establishment of casinos that exclusively accept these digital payments, like Canada’s Roobet Casino, and the introduction of initial coin offerings (ICOs), has resulted in a significant increase in securities law enforcement. Canadian authorities acknowledge digital assets as commodities rather than legal tender, therefore they must be reported to the CRA (Canada Revenue Agency) and subjected to taxation. While initial coin offerings are still permitted, there are stringent regulations governing them.

Any issuer who sells tokens during such an offering will face significant challenges in arguing that they are actually selling utilities, commodities, or licenses for a platform or product that has not yet been developed. However, there may be some relief from securities regulators if the issued coins/assets are classified as securities.

The situation with cryptocurrency exchanges in Canada is quite interesting as they are considered to be legal, but they are subject to strict monitoring. This is because of the Anti-Money Laundering Regime that was enacted in 2014, which requires entities involved in virtual currency trading to register with the Financial Transactions and Reports Analysis Centre of Canada. This monitoring also impacts cryptocurrency exchanges outside of Canada, leading many of them to remove the Canadian Dollar from their list of accepted fiat currencies.

United Kingdom

While there are currently no specific laws governing cryptocurrencies and no official regulation, they are not recognized as legal tender. According to the HMRC, crypto assets are distinct and cannot be equated with traditional investments or payments. As a result, the tax treatment of these assets depends on the specific activity and parties involved. It is important to note that virtual currencies are subject to capital gains tax. As the FCA has not yet established universal criteria, ICOs will be evaluated on a case-by-case basis. All companies engaged in virtual currencies and cryptocurrency exchanges must register with the Financial Conduct Authority (FCA) or obtain an e-license if available. Once all the necessary procedures have been completed, players can enjoy playing exciting online roulette games by using cryptocurrency deposits.

China

China has perhaps the most unfriendly environment for cryptocurrencies due to its strict regulations. The government has completely prohibited initial coin offerings (ICOs) that are based on digital currency or assets, including securities. Although the Chinese government supports the underlying technology of cryptocurrencies and the People’s Bank of China is working on its own digital currency project backed by fiat money, the concept of cryptocurrencies is met with skepticism in the country. Financial institutions are prohibited from engaging in cryptocurrency transactions and cryptocurrency exchanges are also illegal in China. While digital currency can be used, there are stringent regulations and complications associated with it.

European Union

In general, Europe remains an ambiguous region for cryptocurrencies as the laws surrounding them are still in development. The most recent significant change occurred with the finalization of the Fifth Anti-Money Laundering Directive. This directive defines virtual currency as a digital representation of value that is not issued or guaranteed by a central bank or public authority. It further states that these digital assets are not necessarily tied to a specific currency and do not have the same legal status as traditional money, but they are accepted as a medium of exchange. In summary, cryptocurrencies are still considered legal, but they are not recognized as legal tender. Initial Coin Offerings (ICOs) are also still permitted, but their regulation is determined by each jurisdiction. Crypto exchanges are also legal, but additional legislation may alter their status or impose further regulations.

Malta

Malta is well-known for its progressive approach to cryptocurrencies and the technology behind them, making it the leading country in terms of crypto regulation. Although they are not considered legal tender, digital currencies are regulated and recognized as a means of exchange, a unit of account, or a store of value, unless they are utility tokens. There are no specific tax regulations or VAT charges for cryptocurrencies. Both cryptocurrency exchanges and initial coin offerings are legal in Malta but are primarily regulated by the Virtual Financial Assets Act and three other bills. The Malta Digital Innovation Authority has also been established and will serve as the main governing body for cryptocurrency policy and blockchain technology in the future.

Switzerland

The Swiss government has long been known for its progressive attitude towards blockchain technology and cryptocurrencies. In Switzerland, cryptocurrencies are not recognized as legal tender, but they are considered assets that must be reported on annual tax returns and are subject to the country’s existing wealth tax system. Initial coin offerings and exchanges are also legal, although they may be subject to financial regulations depending on the circumstances.

India

Similar to the government of China, India has a negative stance on cryptocurrencies. Digital currencies are not considered legal tender and are heavily regulated, making it challenging for them to operate in the country. The Central Board of Direct Taxation has stated that individuals or organizations that make profits from Bitcoin and other altcoins are required to pay taxes on them. Additionally, the RBI has implemented a banking ban on dealing with cryptocurrencies, making it even more difficult for people to acquire them using fiat money. While ICOs and exchanges are still legal in India, they are subject to strict regulations.

South Korea

South Korea has strict regulations surrounding digital currencies. The country currently has a ban on initial coin offerings, which is not expected to be lifted in the near future. The Financial Services Commission has warned about the high risks associated with ICO investments and has reported instances of illegal fundraising from Korean investors by ICOs held abroad. While cryptocurrencies and their exchanges are not completely illegal, they are still subject to regulation and require government registration. They are also not considered legal tender. However, there is some positive news as well. In July 2019, the city of Busan was designated as a regulation-free zone for the development of blockchain technology.

Japan

In Japan, digital currencies are considered legal and regulated, although they are not recognized as legal tender by the government. The crypto market in the country remains somewhat uncertain, with ongoing discussions about future legislation. However, initial coin offerings (ICOs) are permitted and subject to regulation depending on the specific circumstances.

The Japan Cryptocurrency Business Association (JCBA) recently released recommendations for future ICO regulations and proposed new laws for crypto exchanges. These proposals will result in changes to the Financial Instruments and Exchange Act and Payment Services Act. One notable suggestion is that crypto exchanges may be required to have a source of funds to reimburse customers in the event of hacking attacks.

Australia

In the past two years, Australia has been taking progressive measures towards the adoption of cryptocurrencies. In 2017, the Australian government officially recognized cryptocurrencies as legal and established that Bitcoin and other altcoins should be treated as property, making them subject to the Capital Gains Tax. The country also allows for legal cryptocurrency exchanges, with the government requiring all exchanges to register. Failure to register can result in criminal charges and financial penalties. Additionally, initial coin offerings (ICOs) are permitted but must adhere to strict regulations and will be subject to scrutiny under the general consumer law and the Corporations Act.

Singapore

Singapore has adopted a more positive stance towards cryptocurrencies compared to other countries. While digital assets are not considered legal tender, they are still regulated and classified as “goods”, making them subject to the Goods and Services Tax. The country also allows for the legal operation of crypto exchanges and trading. Over the years, the Monetary Authority of Singapore (MAS) has taken a more lenient approach to cryptocurrencies. However, in 2018, MAS announced plans to introduce additional regulations for cryptocurrencies, including the implementation of anti-money laundering (AML) and combating the financing of terrorism (CFT) measures similar to those applied to traditional fiat money.

Latin America

The legislative landscape for cryptocurrencies in Latin America varies greatly among different territories. In countries like Mexico, Argentina, Brazil, Venezuela, and Chile, digital currencies are widely accepted and deemed legal. In these regions, cryptocurrencies are treated as assets and are subject to income tax or capital gains tax depending on the specific area. On the opposite end of the spectrum, Bolivia and Ecuador have implemented a ban on cryptocurrencies, with the exception of government-issued SDE tokens. While there are few regulations governing crypto exchanges in Latin America, they are generally considered legal, except in Bolivia and Ecuador as previously mentioned. Notably, Mexico stands out as the only territory that has revised its anti-money laundering laws to require exchanges to register and report to the government. From our understanding, initial coin offerings (ICOs) are also generally permitted in most countries that have a favorable stance towards crypto assets.

Estonia

While cryptocurrencies are not recognized as legal tender in Estonia, they are considered to be a form of value in digital format. As such, they are subject to VAT and any other applicable financial taxes. The Financial Intelligence Unit of Estonia and the Anti Money Laundering and Terrorism Finance Act serve as the primary regulators of crypto assets in the country. Exchanges are also permitted, although stricter regulations were implemented in 2017. These regulations require exchanges to register with the government and obtain two licenses from the FIU: the Virtual Currency Exchange Service License and the Virtual Currency Wallet Service License. ICOs, on the other hand, do not have specific rules in place. If you’re interested in learning more, you can refer to our guide on the top online casinos in Estonia.

Gibraltar

Despite not being considered as legal tender, cryptocurrencies are subject to thorough regulation in Gibraltar. The same applies to cryptocurrency exchanges, which are permitted to operate within a well-defined regulatory framework established by the government. Digital currencies are not subject to any taxes, and exchanges are only required to pay a favorable 10% corporate income tax. The government introduced the Digital Ledger Technology Regulatory Framework in 2018, which mandates that all cryptocurrency exchanges operating within the country must register with the Gibraltar Financial Services Commission (GFSC). Initial Coin Offerings (ICOs) are legal in Gibraltar, and those conducted within the DLT framework are closely monitored.

Luxembourg

The Luxembourg government is taking a progressive approach towards cryptocurrencies. While there are currently no specific regulations in place for digital assets, they are not considered legal tender. The Financial Minister has recommended that cryptocurrencies be accepted as a form of payment for goods and services, but further changes are expected in the future. The Commission de Surveillance du Secteur Financier (CSSF) regulates crypto exchanges and businesses involved in cryptocurrency must obtain official licenses. Initial Coin Offerings (ICOs) are still legal and there are no specific regulations for digital assets, but the government is cautioning the public about the risks associated with cryptocurrencies.

Final Thoughts

While there are various strategies being employed by different nations to embrace the increasing popularity of cryptocurrencies, it is evident that certain commonalities exist among all governments. Primarily, digital assets are universally not recognized as legal tender, and secondly, exchanges are generally considered legal, albeit with certain exceptions or stringent regulations. The future of cryptocurrencies in different countries remains speculative, as they are being regulated or banned in some regions, while simultaneously the global community is beginning to embrace the fundamental blockchain technology.

Cryptocurrency Online Casinos

In addition to conducting financial transactions, cryptocurrencies such as Bitcoin can also be utilized for online gambling. Bitcoin casinos are gaining popularity worldwide as a viable option for individuals seeking to maintain the privacy of their financial information. These casinos offer a wide range of games, including slots and table games, that accept various cryptocurrencies. If this topic intrigues you, we invite you to explore our selection of the best Bitcoin casino sites in the UK and discover your next preferred gambling destination.

Certainly, it’s not just the United Kingdom that is witnessing a surge in the popularity of Bitcoin gambling. Numerous other nations across the globe are also observing a rise in crypto gambling activities and demands. We would like to highlight two such countries, namely Canada and India. Based on our expertise and extensive research, we can confidently recommend these two countries, along with the United Kingdom, as prime locations for Bitcoin casinos. If you find this intriguing, we cordially invite you to explore our articles on Bitcoin casino gambling in India and Bitcoin online casinos in Canada.

FAQ

Given the abundance of information and the lack of excitement surrounding the subject, it’s only natural to have a few queries. That’s precisely why we’ve taken the initiative to compile this segment, in which we’ll address the five most common questions posed by our readers after perusing the article.

What is cryptocurrency?

Cryptocurrencies are virtual forms of currency that operate online and rely on blockchain technology for secure transactions. These currencies utilize cryptographic functions to ensure transparency, immutability, and decentralization, free from control by external authorities or financial institutions. Certain digital currencies also provide enhanced security and anonymous transactions.

What are cryptocurrency regulations and laws?

In order to safeguard their economies, countries must establish laws and regulations due to the unpredictable and decentralized nature of cryptocurrencies. Implementing these measures can help reduce the risks associated with illegal activities, scams, and tax evasion. Investing in cryptocurrencies and engaging in trading carry various risks, which is why certain countries such as China have implemented strict regulations.

How will regulation affect cryptocurrency?

There is much speculation surrounding the impact of regulations on cryptocurrencies. Advocates for digital assets and their decentralization are opposed to stringent laws that could potentially have the opposite effect and centralize the market. Only time will reveal how the entire crypto sphere will be transformed as countries continue to embrace the technology and strive to oversee and regulate transactions.

What is the tax law for cryptocurrency?

While not recognized as official currency anywhere in the world, cryptocurrencies are acknowledged as a form of asset or value storage in numerous nations. Consequently, certain financial regulations will be applicable to them, particularly in regards to taxation, such as VAT, corporate income tax, or capital gains tax.

Why it’s important for law enforcement to understand cryptocurrency?

Cryptocurrencies offer quick transactions, privacy, and secure encryption. As a result, numerous nations are concerned that these features make it easy for malicious actors to finance illegal organizations, operations, or even terrorist groups. To address this issue, many jurisdictions have implemented anti-money laundering legislation and established government agencies responsible for monitoring and preventing such activities.