The development of the cryptocurrency industry is moving by leaps and bounds and the authorities of the world powers simply can not ignore it anymore. Every day the number of investors grows and market capitalization has crossed the $1 trillion mark. Let’s consider what actions the governments of different countries are taking against this background.
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The first category includes countries where the cryptocurrency market flourishes without facing serious obstacles. Digital traders, investors, and miners feel most comfortable here. Among them are European countries: Switzerland, Slovenia, Portugal, Estonia, the UK, and Germany. Portugal, for example, had its first real estate transaction for Bitcoins in 2022. Cryptocurrency in these countries is represented as property and is only regulated to prevent fraud, money laundering, and terrorist financing. No taxes need to be paid.
Countries, where Bitcoin is recognized as legal tender, deserve special mention – Japan and El Salvador. That is, the digital currency is equated to a national currency and regulated accordingly.
In the United Arab Emirates, crypto-assets are property or goods in case of a sale, so they are subject to VAT. But there is a nuance, there is no generally accepted way to determine the rate, so there are often difficulties.
The Emirates attracts investors and participants in the cryptocurrency community primarily by the tax system, and more specifically, the absence of taxes on capital gains, which in the long run can bode well for profits.
America has never planned to develop special legislation concerning cryptocurrencies, as Estonia or Switzerland, for example, have done. The World Bank, the FBI, and the Treasury Department refer to coins as “virtual currencies. And all the regulation is to stop fraudulent activities. Nevertheless, the press often condemns certain bills designed to “bring order” to the sphere.
California and Wyoming were the first states to allow cryptocurrency transactions without licenses. Nevada, Louisiana, Kentucky, and most other regions have followed suit. Companies in New York, Washington, Alaska, Alabama, and Vermont have to license blockchain and crypto-industry activities. Some states will have to obtain official permission from the authorities, but in general, in the USA there are no barriers to working with crypto.
Note that since 2021, the USA has taken the lead among other countries in mining cryptocurrency. Therefore, we can expect legislative decisions in this direction.
The legal status of cryptocurrency under discussion
The second category includes countries that do not yet have a clearly defined attitude of state authorities toward digital assets. The situation here is equally likely to turn in one direction or the other.
Since January 1, 2021, Russia has had a law on digital financial assets and digital currency. Even though this document appeared later than in some developed countries, there are a lot of gaps in it. The law will be finalized. Now it does not regulate the principles of the work of miners, even though now Russia is the 3rd largest producer of cryptocurrency in the world.
Citizens of Russia are not forbidden to keep savings in cryptocurrency wallets, make transfers and invest if these actions do not contradict the legislation. At the moment, it is impossible to buy goods and services for Bitcoin. And any profits are taxed depending on the amount.
India is already close to China in terms of population, which means the country has an important place in the global economy. Any decisions and changes at the legislative level inside the country can shake up the cryptocurrency community, or, on the contrary, push it to growth. Against this background, there is uncertainty: the Indian government does not yet understand how to deal with crypto-assets.
On the one hand, as of September 2022, a digital rupee project is actively being developed. On the other hand, the Reserve Bank of India is considering the possibility of banning Bitcoin and ether in the future, when the national cryptocurrency is fully operational.
Singapore is one of the world’s financial centers. Money turnover here reaches colossal volumes. But the cryptocurrency industry is still not well defined. Coins are recognized as property in Singapore, they can be exchanged for goods and services, as well as will have to pay income tax, depending on the size of the profits.
Experts speculate that the authorities in Singapore will follow the path of legalization. This is good news for the cryptocurrency community given the importance of the economy.
Prohibition or serious restrictions
There are countries in the world where any operations with crypto-assets are completely prohibited. Among them are:
The governments of these states agree that Bitcoin and its followers are not a currency in the general sense and also open the door to fraudulent activities.
China creates serious obstacles to the development and popularization of cryptocurrencies. Since 2014, financial institutions have been prohibited from exchanging, selling, covering analytics, publishing current rates, and conducting other transactions related to digital assets. All these actions are considered illegal and lead to sanctions from supervisory authorities. And in 2021, mining was banned altogether, leading to huge power spillovers and a redistribution of power in global coin mining.
Individuals in China can store money in cryptocurrencies or make transactions between themselves, but only at their own risk.
Each country has its own opinion about digital currencies, some of which are directly opposed to each other. There is no common ground yet. In September 2022, leaders of the International Monetary Fund issued a statement saying that regulators should “build on what they have missed and get specific. It is noted that cryptocurrency has long “ceased to be a niche product. Against this background, further development of the legal framework is expected.
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