Bitcoin is, of course, the world’s biggest cryptocurrency for which legality varies greatly by region, and many are still unsure or working through their legal issues. Despite the many alternatives available, Bitcoin dominates the crypto world, attracting masses around the world. So its legal status, and the idea of Bitcoin regulation, understandably draws considerable curiosity.
The scenario of international economies still is highly skeptical towards cryptocurrencies. Since the achievements of Bitcoin are gradually taking the limelight, the regulation hassle for cryptocurrencies has increased. Authorities of many nations are still opposed to this and have explicitly outlawed it. Some have embraced it and agreed that Bitcoin regulation is beneficial for their respective countries. Whether it be for mining, legal tender or as property, different rules are enforced in different regions.
If you look closely though, a pattern emerges if seen from the perspective of developed, developing and under-developed countries. Let’s discover how Bitcoin is regulated in these different parts of the world.
Note: All trading volume data are annual numbers as of 2020.
- European Union
Bitcoin is legal almost everywhere in European Union. While the European Union has not passed clear legislation about Bitcoin’s status as a currency, it has clarified that VAT/GST does not apply to the conversion of conventional (fiat) currency to Bitcoin. Transactions involving Bitcoins for products and services are also subject to VAT/GST and other taxes (such as income tax).
Cryptocurrencies and crypto assets are categorized as qualified financial instruments (QFI) in the European Union. Banks, credit unions, and investment companies are not prohibited from owning crypto assets or cryptocurrencies, gaining exposure to them, or providing services in them under EU law. The European Union has one of the world’s leading trading volumes of bitcoin on online exchanges at 204.1 Million USD.
Currently, the best and the most popular exchanges for Bitcoin in the EU are Coinbase, Kraken, Binance and more. These exchanges aren’t native to the EU though – so we’re going to be seeing them show up in many, many markets down below.
Bitcoin is legal in the United States of America (USA). Bitcoin got listed as a convertible decentralised cryptocurrency by the US Treasury in 2013. In the year 2013 In September 2015, the Commodity Futures Trading Commission (CFTC) identified Bitcoin also as a commodity. Bitcoin gets taxed as a property by the IRS. In 2018, Bitcoin was discussed in a United States Supreme Court opinion (Wisconsin Central Ltd. v. United States) concerning changing the meaning of money. A federal judge ruled in September 2016 that bitcoins are funds within the simple sense of that word.
Cryptocurrency exchanges are regulated in the same way as conventional AML/CFT facilitators, financial firms, and capital transmitters in the United States, and are subject to the same rules, including those outlined in the Bank Secrecy Act amendments of 2021. (which has established its own version of the Travel Rule). The USA is outshining over the globe when it comes to trading volumes of Bitcoin on online exchanges by the value of 1.5 billion USD.
Coinbase – which recently underwent the first ever crypto exchange IPO in the world – and Binance, remain the most popular choice of exchange for Bitcoin in the USA.
- South Korea
Bitcoin is legal in South Korea. Cryptocurrency trading is restricted for minors as well as other outsiders. Adults in South Korea can transact on registered exchanges using their actual names and accounts at a bank in which the exchange also has an account. Both the bank and the exchange are in charge of checking the customer’s identity and implementing other anti-money laundering laws.
Trading Volume in South Korea has seen a massive increase recently in Bitcoin transactions. Best platforms here for Bitcoin exchange in terms of popularity, potential, market opportunities are UPBit, Bithumb, Coinone.
Bitcoin is legal in Germany. The German Finance Ministry declared on August 19, 2013, that bitcoin has now become fundamentally a “unit of account” which can be used for tax and trading in the nation, implying that purchases made with any of it should pay VAT in the same way that purchases made with euros do. It is known as “private money” rather than “foreign currency” or “e–money.” Some cryptocurrency platforms in Germany saw a great increase in trading volume in recent years. eToro, Coinmama, Bitcoin.de are some of the popular exchanges for Bitcoin transactions.
The Monetary Authority of Singapore (the country’s central bank and financial regulator) licences and regulates Bitcoin exchanges in Singapore. Since the authorities consider Bitcoin to be a good, they have imposed a Goods and Services Tax on it. Wherever possible, MAS has decided to use existing regulatory structures for cryptocurrency exchanges.
In Singapore, businesses that associate with Bitcoin currency exchanges would be subject to taxation depending on the amount of Bitcoin they sell. Singapore has a trading volume for Bitcoin of almost 10.64 Million USD. If you want to seek the best trading platforms for Bitcoin transactions in this nation, Bityard, Yobit, and Bitit are some great options which have already been favored by the masses in Singapore.
The Australian government made cryptocurrencies legal in 2017, making them applicable to the Anti-Money Laundering and Counter-Terrorist Financing Act 2006 (AML/CTF 2006). Bitcoin (and other cryptocurrencies with similar attributes) must be regarded as property and liable to Capital Gains Tax, according to the lawmakers.
The Australian Securities and Investments Commission has issued advice on the uncertainties of investing in digital currencies on its platform including the fact that these investments are not monitored in most cases because they are not classified as financial assets under legislation.
So far, the trading volume for Bitcoin in Australia is estimated at 54.78 Million USD. Some famous exchanges in Australia are SwyftX, Coinjar and Coinspot.
Cryptocurrencies are legal in Canada. But on the other hand, they are not recognized as legal tender. Cryptocurrency transactions are subject to Canada’s tax laws and regulations, including the Income Tax Act. The Canada Revenue Agency has classified cryptocurrency as an asset, stating that using it to pay for products or services must be regarded as a barter transaction.
Canada has a trading volume of around 65 Million USD in Bitcoin with BitBuy, CoinBerry, Binance as its top popular exchanges.
In Turkey, Bitcoin regulation is going through interesting changes. Bitcoin is legal to only hold and trade. The Central Bank of the Republic of Turkey released a regulation on April 16, 2021, restricting any use of cryptocurrencies, including Bitcoin and other digital assets centered on distributed ledger technology, to pay for products and services, directly or indirectly, beginning April 30, 2021, citing potential “irreparable” harm and transaction threats.
In Turkey, the trading volume of Bitcoin in Online Exchanges is tiny – merely 5 Million USD. But the trusted exchanges in Turkey has Binance in the list again, along with BitPanda, CEX.io and more.
The Payment Services Act acknowledges Bitcoin and other digital currencies as legal property in Japan, which is considered to have globally the most dynamic regulatory climate for cryptocurrencies. Cryptocurrency is defined as a property value under the Payment Services Act.
The Act also specifies that cryptocurrency is restricted to property values electronically stored on electronic devices and is not intended to be used as legal tender. Japan’s trading volume of Bitcoin in Online Exchanges is estimated to be 6.6 Million USD.
Coinmama, CEX.io, Coincheck are very popular choices in exchanges of Bitcoin transactions.
Businesses that deal with cryptocurrency must be authorized, maintain records, implement security protocols, and protect customers. The law on cryptocurrency transactions must adhere to anti-money laundering regulations as well as guidelines for users and investors.
In the United Kingdom (UK), Bitcoin is legal. Bitcoin is not regulated in the United Kingdom, according to the government, and is viewed as a ‘foreign currency’ for different uses, which include VAT/GST. Bitcoin is considered ‘private money.’ There’ll be no VAT due on the value of Bitcoins when they are traded for sterling or other international currencies such as the euro or the dollar.
The UK has one of the highest trading volumes in the world in terms of Bitcoin in online exchanges with 193 Million USD. eToro, CoinJar, BitPanda have attracted masses in the UK for being best exchanges for Bitcoin transactions.
Bitcoin is legal in India. Due to the recent evolution of crypto, lawmakers and authorities seem to have recognized the opportunity to adopt a new technology early. But the relationship has not been without its ups and downs. From the famous ‘RBI ban’ as they call it in 2018, to news of a full blown law to ban crypto in 2021 that so far hasn’t materialized, India has had its share of excitement around Bitcoin legalization.
There’s no denying though, that India’s climate saround cryptocurrency is becoming progressively stringent. Many cryptocurrency services and revolutionary technologies are finding it hard to run with a lack of clear Bitcoin regulation in India. The Indian government has announced that it is willing to investigate the use of blockchain technology to improve the country’s financial services sector, so Bitcoin regulation is likely around the corner.
With around 64 Million USD, India has pretty solid trading volumes for Bitcoin. Some of the best crypto exchanges here are WazirX, CoinDCX, Unocoin.
In Russia, Bitcoins are legal to mine solely. Bitcoin exchange platforms have been blocked, and court rulings have declared bitcoin to be a currency substitute that is illegal in Russian Federation territory. Cryptocurrency is a monetary alternative, according to existing Russian legislation. The problem of monetary surrogates in the Russian Federation is prohibited by article 27 of the Federal Law “On the Central Bank of the Russian Federation.”
The Russian Central Bank and Rosfinmonitoring have repeatedly warned Russian people that any cryptocurrency transaction carries a high risk of losing value. The Bank of Russia does not issue cryptocurrencies.
On March 20, 2018, a bill on digital financial assets was presented in the State Duma. Bitcoins were listed as property in the bill, and not considered to be legal tender. Cryptocurrency exchanges for rubles and foreign currency are permitted, but only through authorized exchanges. A concept of a smart contract was also included in the bill. Russia is also leading the world when it comes to Bitcoin trading volumes at 421.38 Million USD. Crypto.com, StormGain, Bitit are some of the exchanges that are quite popular in Russia.
China doesn’t actually consider cryptocurrencies as legal tender. Furthermore, its banking sector does not acknowledge them or provide services related to them. For the sake of investor security and financial risk management, the government has enacted a number of regulatory measures to clamp down on activities involving cryptocurrencies. The declaration that initial coin offerings are illegal is one of the steps taken by the country. China has a pretty solid trading volume of 198 Million USD. Coinmama, CEX.io, BTCC are very famous exchanges in this country.
In Brazil, cryptocurrency is still to be monitored. Corporations that trade in virtual currencies are not governed, supervised, or authorised to transact by the Brazilian Central Bank, which has released statements about the risks raised by this form of currency and its failure of assurance by the monetary authorities. Brazil has a trading volume of 25.22 Million USD for Bitcoin in Online Exchanges. Coinmama, Binance, YObit.net are popular exchanges in Brazil.
With over $500 million value of Bitcoin exchanged in the last five years, Nigeria seems to have the world’s second largest Bitcoin sector.
However, the Central Bank of Nigeria released a circular on February 5, 2021, reminding financial firms in Nigeria that, as a follow-up to their January 2017 circular, trading in cryptocurrency or facilitating payment for it remains illegal and will result in severe penalties.
In Nigeria, Trading Volume of Bitcoin in Online Exchanges is a relatively small 5 Million USD. Luna, Binance, Quidax are popular exchanges in Nigeria.
Bitcoin Regulation Moving Forward
Even with positive developments in the understanding of blockchain by many government bodies around the world, Bitcoin regulation still has a long way to go. Since Bitcoin is still in its early stages, it is too early to say whether it will be the way of the future or what impact Bitcoin will have in the coming years.
Hitesh Malviya is the Founder of ItsBlockchain. He is one of the most early adopters of blockchain & cryptocurrency enthusiast in India. After being into space for a few years, he started IBC in 2016 to help other early adopters learn about the technology.
Before IBC, Hitesh has founded 4 companies in the cyber security & IT space.
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