The Legal Status of Cryptocurrencies across the Globe
Cryptocurrencies have hit the earth as a storm ever since their introduction in 2009. Crypto is now a global phenomenon. As such, many countries and their governments have tried to regulate, limit, and even slow down the adoption rate and the popularity of this emerging technology.
Thankfully, there are many positive signs. More and more jurisdictions are embracing the use of cryptocurrencies, and are becoming crypto-friendly destinations. This has sparked crypto enthusiasts to pick other places to call their home.
The ideal country for a crypto enthusiast is not just a place that has plenty of shops that accept Bitcoin. We have to consider the quality of life, the stability of the region, the political structure, employment opportunities, and small things, such as the weather and internet speeds. Free access to crypto services and exchanges is a must.
Here is a list of top destinations that are very lenient towards cryptocurrencies.
Singapore is a great location to deal with digital currencies for several reasons. There are no taxes on capital gains on cryptocurrencies in Singapore. Crypto is not accepted as legal tender by the National Government, but the countries’ new Payment Services Act allows crypto exchanges to operate for 6 months without requiring a license.
Singapore is politically very stable and open to new businesses. 44 different shops accept Bitcoin and crypto payments, which is more than enough for a start.
Sweden is an “economic powerhouse” and a country with one of the best welfare systems in the world. Just like Singapore, Sweden doesn’t consider crypto to be money. But since 2014, holders of cryptocurrencies don’t have to pay taxes on their crypto capital gains.
The Swedish government is one of the first that began preparations to launch its own electronic crypto version of its fiat currency, the Swedish Krona. The advantages of Sweden also include affordable public transportation and cheap costs of living.
Australia’s sunny climate is a reason to visit the country. Its acceptable nature towards crypto is a reason to stay. The city of Brisbane started accepting payments via digital assets at their local airport back in 2018. Since then, around 25 other locations have started accepting Bitcoin payments in Brisbane. Add Melbourne and Sydney, with its 100+ crypto-friendly shops to that equation, and you got yourself a nice center for crypto activity.
Brisbane is also the location where Australia’s payment platform Living Room of Satoshi operates from. The platform allows customers to pay utility bills, school fees, rent, and taxes with cryptocurrencies.
The USA is a regulatory nightmare when it comes to cryptocurrency laws. However, California is one destination that is more accepting of this new technology. Crypto-related companies and service providers don’t require any specific licenses to operate in California. It is also the 1st state that introduced crypto regulations in the USA. This approach has resulted in California becoming the headquarters for digital asset exchanges such as Coinbase and Kraken.
The modern crypto user wants to live in a jurisdiction where his decentralized way of life will not be seen as a threat. Besides the mentioned countries, other favorable locations include Japan, Germany, Switzerland, Malta, and Portugal.
It is now time to take a look at how different countries approach cryptocurrency regulations and what is their stance on crypto.
Global Crypto Regulations
The United States
In the USA, each state has its own laws that govern the use of cryptocurrencies. Overall, cryptocurrencies are not considered to be legal tender. However, digital exchanges are legal and allowed to operate. Different federal authorities have different takes on crypto.
The Financial Crimes Enforcement Network (FinCEN) says that cryptocurrencies are not money but considers exchanges to be “money transmitters”. The Internal Revenue Service (IRS) looks at cryptocurrencies as a property that is taxable by law.
The Securities and Exchange Commission (SEC) claims that cryptocurrencies are securities, and since March 2018, security laws are being applied to the crypto industry. The Commodities Futures Trading Commission (CFTC), on the other hand, has classified digital assets as commodities and allows crypto derivatives to be traded publicly. Several laws are currently being considered by the US Congress, and we might see further changes to crypto regulations in the US.
China has introduced strict regulations for cryptocurrencies. They are not considered legal tender, and crypto exchanges are considered illegal. Since 2013, all national financial institutions are not allowed to process Bitcoin transactions. After 2017, ICOs and cryptocurrency exchanges were banned as well.
Interestingly though, mining is considered to be legal. As of May 2020, 65% of global Bitcoin hashrate was concentrated in China. Certain government officials have started showing appreciation for blockchain technology, and it is believed that the Central Bank is working on a digital currency on its own.
Cryptocurrencies were not a legal means of payment in India. Digital asset exchanges are legal on paper, but the government doesn’t make it easy for them. The Reserve Bank of India ordered that all banks stop processing crypto transactions in 2018. India’s exchanges were also banned from trading crypto assets.
This decision was overturned in March 2020 by the Supreme Court, and financial institutions in India are again allowed to be involved in crypto. Cryptocurrency users in India have to pay taxes for the profits they generate with their Bitcoin trading.
Crypto is legal within the EU. Cryptocurrency exchanges are allowed, and they are regulated by each individual jurisdiction. A consensus has been reached that members of the EU will not introduce their own national digital currencies. Residents in the EU pay taxes on capital gains, and the rates vary by country.
From January 2020, all exchanges that process fiat and crypto transactions are obliged to implement KYC on their users. Exchanges need to register with their local regulators, which will issue licenses that will allow them to operate in the entire EU. The European Central Bank is also seeking guidance on how to introduce its own digital asset.
Countries That Have Banned Cryptocurrencies
As we have seen above, different countries have introduced different ways of how to regulate cryptocurrencies and Bitcoin. In most countries of the world, Bitcoin is legal, but in certain jurisdictions, the possession of BTC is considered illicit.
These countries include:
- North Macedonia
- Saudi Arabia
The opponents of cryptocurrencies believe that they should be banned. But the beauty of Bitcoin is that it doesn’t really pay attention to what regulators and lawmakers want. A member of the U.S. Senate Committee admitted that the US government would be unsuccessful if they tried to ban cryptocurrencies.
Crypto is a global movement that can be used wherever the Internet is used. Therefore, one group of people can’t make the decision to ban a global phenomenon. Instead of trying to stop the revolution, governments and bankers should find ways to improve their own policies and give the people more freedom and financial independence just like Bitcoin does.