What is the regulatory framework for cryptocurrencies in different countries?

In recent years, cryptocurrencies have witnessed massive acceptance and adoption that cuts across continental and regional borders, however, there have been several reported cases where cryptocurrency was used to easily carry out criminal and fraudulent transactions due to the privacy and anonymity that the technology provide. This proneness to abuse and illegality such as money laundering, financing of terrorists and kidnappers requesting for a ransom payment in cryptocurrency will increase as more cryptocurrencies are allowed to go into circulation unregulated.

In order to mitigate against these foreseeable problems, the move towards regulation by various statutory bodies and government has become highly imperative. However, due to the varying degree of interest and perspective, the regulation of cryptocurrency cannot be covered by the law of a single country. For example, In the United States, the cryptocurrency regulation varies from state to state, in Germany, taxation on the use of cryptocurrency is increased or reduced depending on the purpose of the transaction. In France, cryptocurrency futures trading is regulated by the French government.

As can be seen from the above examples, the regulatory framework guiding cryptocurrency transactions varies from one country to the other. In this article, we will be examining some detailed regulatory frameworks that have been put in place by the government of some country to control the cryptocurrency activities that go on within their border and territory.

China

In China, Cryptocurrency regulation is more stringent as its trading is completely banned. However, although there are some restrictions on the transaction between individuals, China is still known as a cryptocurrency mining power due to a large amount of miners that are residents there and because they are major producers of Cryptocurrency mining facilities.

Malta

In 2016, the Malta government set up a blockchain task force to help create and implement a nationwide blockchain strategy aimed at realizing decentralized ledger technology opportunities and setting the necessary safety measures in place.

Malta is also a pioneer in the regulation of the game industry and game law, creating a robust framework that is well regulated by licensees. The Malta Gaming Authority (MGA) has issued a position regarding the adoption of cryptocurrency within the Maltese game context, creating a sandbox for MGA licensees to use specific cryptocurrencies. The Malta Financial Services Authority has also published three rulebooks covering the roles of virtual financial asset agents, ICO issuers, and cryptographic service providers.

Argentina

Argentina is a regional leader in cryptocurrency introduced in Latin America and one of the pioneer countries that adopted cryptocurrency. This could be as a result of the country’s economic instability and foreign exchange restrictions. The citizens are trying to protect their savings from the country’s inflation and overcome the ban that was placed on buying foreign currency and remitting money abroad with cryptocurrency.

In Argentina, this is perfectly legal because cryptocurrency is not prohibited, but the government issues regulations relating to taxable, anti-money laundering (AML), and financing terrorism. However, the government does not enforce any specific regulation regarding the issuance, exchange or general use of cryptocurrency, and is observing the impact and trends of cryptocurrency in the Argentine market.

The government plan to amends its AML law to include Bitcoin transactions by including stock markets, wallets, and brokers as necessary to report certain transactions with cryptocurrencies to public institutions for the sake of regulation. Other obligations that are to be observed include the KYC procedures, the monitoring, and reporting of suspicious transactions, and the appointment of compliance officers who are responsible for conducting due diligence.

Russia                                                                          

The Russian government initially showed a strong stance against the handling of cryptocurrencies according to a bill that was passed in May 2018, but soon after that, some of the regulations such as mining restrictions were deleted and more changes such as changing the cryptocurrency to the term “digital light ” came up soon after.

The Russian President Vladimir Putin is noted to have said that the government will proceed with some restrictions on cryptocurrency this year 2019, and it is expected that it will be improved as needed while watching the world situation and the distribution of cryptocurrency.

Cayman Islands

The Cayman Islands securities system favors ICOs and STOs over other countries and regions and is, in fact, gaining popularity as a token generator for ICOs, STOs, and platform development companies. The Cayman Islands Special Economic Zone establishes a physical presence in the Cayman Islands and provides an environment for hiring staff.

In addition, the Cayman Islands have no existing or proposed laws or specific regulations on investment means for investing in ICOs, STOs, cryptocurrency exchanges, or virtual currencies. Therefore, there is no law that takes into account the problems that arise in the field of cryptocurrency, and it is necessary to consider the application of existing laws.

 Africa

While most advanced countries are encouraging the regulations on cryptocurrencies, the progress of regulations by the developing nations of Africa has been quite slow. This could be partly because the legal tenders (government recognized and minted currencies) of most African countries are highly unstable, therefore they prefer to keep their money in stable cryptocurrencies.

Furthermore, cryptocurrency trading is known to be very active across the continent of Africa as large volumes are traded on a daily due to the lack of regulation. Many people are of the opinion that cryptocurrency should be used as a tool that such developing countries can trade stably as an alternative to unstable currencies. However, there are also concerns that the unregulated use of such will lead to increased criminality. Therefore, it is hoped that regulation will be put in place to checkmate this.

On a final note, it can be seen that the regulation of cryptocurrencies even though subjective from country to country has a common goal of reducing the general risks associated with trading in cryptocurrencies and transactions at the same time, as well as checkmating the systemic risks that can lead to confusion and inconveniences that can occur in certain places and institutions.

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