Peculiarities Of The Cryptocurrency Regulation In The World. Part II
In the first part of the article, we talked about regions with the soft cryptocurrency regulation policy. The second part is devoted to countries that show a neutral or negative attitude to the crypto sphere. So, let's start with those that have not yet decided on their position (but at the same time have very favorable forecasts) — the United States, Russia and Australia, whose governments are still trying to figure out how to regulate cryptocurrency. After that, we will talk about countries where the regulative issue has already been resolved — but not in favor of the crypto sphere.
Cryptocurrency regulation in the US, Australia and Russia
The United States of America
The issue of cryptocurrency regulation in the US remains open. It is interesting that the US as one of the leaders of the crypto sphere is placed second after Japan in terms of the BTC daily trading volume. In 2008, the United States Joint Economic Committee officially recognized the legality of using cryptocurrency and blockchain technology. Therefore, in order to own cryptoassets in the US, you just need to pay income taxes.
This has given the green light to companies that are ready to accept payments and donations in cryptocurrencies. These are large international companies, such as Microsoft, Wikipedia, Reddit, Whole Foods, Intuit. Their customers can pay for services with bitcoins.
In the US, cryptocurrencies that were received during the ICO are considered securities, and this has already affected US investors in a negative way. As a result of this kind of the ICO regulation, many companies prefer not to work with US residents at all, because they do not want to coordinate their activities with the SEC.
At the same time, the SEC has not decided yet whether it should consider cryptocurrencies traded at crypto exchanges as currencies. This issue is to be solved in the near future, and it is quite possible that after that a number of companies will prefer to leave the US market. However, it is quite obvious that the US is not the country that can ban the whole crypto sphere.
Bitcoin has been a legal means of payment in Australia since 2017, but the Australian government is still trying to answer the question of how to regulate cryptocurrency. Local residents faced the problem of double taxation after bitcoin was recognized legal. This has been taken into account by the Australian Taxation Office, but the amendments to the law have not yet been made.
The Australian authorities as a whole are loyal to the crypto sphere but strictly monitor any kinds of the fraudulent activity. The cryptocurrency regulation here is still under development and is constantly being updated with new rules. For example, one of the rules obliges cryptocurrency exchanges to report on each cryptocurrency transaction, the amount of which is equivalent to 10 000 of Australian dollars.
The Russian cryptocurrency market is still in limbo, but in general, the authorities’ attitude is rather loyal. The Ministry of Finance and the Central Bank of the Russian Federation have already reached a compromise, so we should soon expect relevant bills.
Since cryptocurrencies do not yet have a certain legal status in the Russian Federation, crypto payments are also not entirely legitimate. But as long as there is no clear regulation of the cryptocurrency market in Russia, nobody can blame others for violations.
As of autumn 2018, cryptocurrency trading between legal persons is allowed in Russia, and it is expected to be fully available to anyone. Also there is the ICO regulation, which gives a wide range of possibilities to Russian startups and investors.
Countries with a strict cryptocurrency market regulation policy
Singapore is one of the most popular countries for ICO campaigns, although cryptocurrency is not officially recognized as a means of payment here. The reason for this popularity is a fairly loyal regulation of the ICO in the country. It is noteworthy that out of 300 ICOs registered in Singapore only 11 have managed to attract investments of more than $10 million.
ICO distribution chart by country in 2018
The activity of cryptocurrency exchanges that plan to operate in Singapore should be coordinated with the Monetary Authority of Singapore. In general, the attitude of the Singaporean government to the crypto sphere is rather cautious than loyal. The Monetary Authority of Singapore officially warns that investing in cryptocurrencies is risky and investors act at their own risk.
Until mid-2017, China was the leader in the cryptocurrency sphere by the total trading volume. But in September, something went wrong, and the authorities started taking prohibitive measures. The Chinese government warned the whole world about its decision to ban any crypto activity in the country and gave local companies two weeks to cease operations. "The last Chinese warning" led to a sharp drop of bitcoin's price.
The bitcoin price drop in September 2017
After that the pressure on the crypto sector weakened, but in January 2018 a second wave swept. It touched online platforms and applications for centralized trading. The ICO regulation was also radical: cryptocurrency crowdfunding campaigns were banned.
Mining has not yet been considered illegal, thus, China is the leader of the world mining so far. However, the fate of miners is in question, because the Chinese government has already expressed its readiness to ban the mining companies.
In 2017, some companies from China switched to South Korea because of the ban. However, by the end of the year, the South Korean authorities took a number of prohibitive measures and vetoed bitcoin futures trading. The beginning of 2018 was marked by the issuance of rules that strictly regulate the activity of cryptocurrency companies.
These rules prohibited anonymous crypto trading, which caused a massive outflows of investments. In order to carry out the legal activity in the territory of South Korea, cryptocurrency exchanges must be registered with the South Korea’s Financial Services Commission and follow its AML-KYC policy rules.
The global trend shows that the majority of countries positively treat the crypto industry. The reason is that people understand the prospects of the crypto sphere development and its irreversible progress in the future. The practice shows that people are not going to stop using cryptocurrencies, which means that supporting this industry is in the government's best interest.
Many countries have not yet decided on the policy of blockchain companies and cryptocurrency market regulation, so the next few years can significantly change the situation. Investors who live in such countries have to just wait or to use opportunities available in countries that are open for foreign residents.