Cryptocurrency Regulations

Cryptocurrency regulations have taken the digital asset investors by storm, here is how countries are regulating cryptos

Talking about cryptocurrency regulations might lead to several controversies and debates, but there are several crypto analysts and experts who believe that crypto regulations and frameworks should be welcomed with open arms by industry leaders and investors. According to policymakers and financial regulators, crypto regulations might bring stability to the volatile crypto market, and protect investors from scams and frauds. Besides, the introduction of regulatory frameworks can also prevent black marketing and terror financing with the help of cryptocurrencies. But still, there are many cryptocurrency fanatics who still believe that the introduction of regulations with their anonymity would hinder innovation, technically, going against the very spirit of cryptocurrencies and blockchain technology. Since the crypto landscape is constantly evolving, the introduction of new crypto regulations will enable investors to navigate through the right choices, learn how to differentiate between the legal and illegal modes of conducting transactions, and associate the country’s legislation based on acquiring crypto assets. 

Governments feel the need to regulate cryptocurrencies due to the fact that it a very practical and helpful means for tax evasion and criminal activity. Until now, crypto regulations mainly included restrictions on crypto mining, cryptocurrency exchanges, and its use as means of payment. The underlying goal of these institutions is to discourage the use of purchasing cryptocurrencies. To strongly implement these goals, most national financial institutions are deploying heavy crypto taxes, like those in India, and from IRS in the US. Investors are mostly attracted to the crypto market due to its decentralized nature. There are several benefits that a decentralized market can yield which the investors are not likely to give up because the governments think it is the right thing to do. Due to this unique feature of decentralization, the number of cryptocurrency users has risen to more than 300 million individuals and 18 million businesses worldwide. These numbers quite prove that individuals have started considering cryptos as a legitimate store of value.


Cryptocurrency Regulation Policies Around the World

The United States of America has proven itself to be the largest innovator in the field of cryptocurrencies. Sometimes the country struggles to maintain a consistent legal approach when it comes to cryptocurrencies, but the IRS has been consistent in implementing rules and taxes on crypto profits and earnings through cryptocurrencies. The crypto regulations laid down by the Financial Crimes Enforcement Network (FinCEN) reveal that the country has not accepted digital assets as legal tender. Meanwhile, the SEC has indicated digital assets to be securities and deploys security laws to digital wallets and exchanges. Recently, the executive order revealed by the Biden government encourages more crypto adoption and urges the national institutions to prepare for a crypto revolution. 

Now if we look at the UK, the government does not have any specific legislation on cryptocurrencies and the domain is governed by the Financial Conduct Authority (FCA), which grants licenses for crypto businesses and exchanges. The FCA implements strict rules, particularly for those trading in crypto futures and options trading (F&C). The organization regularly issues warnings on potential risks of cryptocurrencies and asks investors to step into the market with caution. The government collects taxes on cryptocurrencies quite similar to other countries, but by bringing businesses or the exchanges themselves under corporate tax rules. 

Further, if we move forward to China, the country has been the toughest on regulating cryptocurrencies, starting from initially inviting crypto mining to completely banning them in June 2021. The move was so powerful that made the global crypto market lose almost 40% of the total crypto mining operations.

Singapore classifies cryptocurrency as property instead of legal tender. The country’s Monetary Authority of Singapore (MAS) licenses and regulates exchanges as outlined by the PSA act. The country has acquired the reputation of being a safe haven for cryptocurrencies since its long-term capital tax is not taxed.

Moving towards India, the country’s major financial institutions and the Government, after various speculations have led to the decision of implementing a crypto tax of 30% including a 1% TDS. The RBI is set to introduce its own form of ‘digital rupee’ to encourage Indian investors to use centralized coins instead of the decentralized ones like Bitcoin and Ethereum. 


The Future of Crypto Regulations

While regulations based on possessing and transacting crypto regulations are constantly evolving, experts think that investors and crypto businesses organizations need an ample amount of time to adapt to these constantly emerging regulations. The crypto landscape might face additional legislation in the future, but for now, investors of other countries should brace themselves for similar regulations.