The crypto industry is 12 years old now, and most of the world’s governments have already elaborated their regulations for it. In some countries, Bitcoin is banned; in others where it’s legal, there’s a variety of things that you can or cannot do with digital assets.
Some countries create their own regulations, while some rely on existing frameworks like FATF (Financial Action Task Force). International laws such as AML and CFT regulate the exchange of digital assets globally, trying to make the cryptocurrency ecosystem safer.
Let’s see what Bitcoin regulations exist in different parts of the world.
Crypto laws in Europe
The European Union is favorable to crypto. Here, it’s completely legal, and you can freely buy, sell, and store Bitcoins. Tax policies vary from state to state. In countries like France, Bitcoin is even classified as legal tender. By implementing the Fifth Anti-Money Laundering Directive in 2020, the EU put the market under strict AML regulation.
Some of the EU countries are especially welcoming of digital assets. I.e., Malta officially describes cryptocurrencies as “a medium of exchange, a unit of account, or a store of value”. No special tax is imposed on cryptocurrency businesses here, and you don’t have to pay VAT for crypto transactions. This made Malta attractive for many world-scale crypto companies.
One more crypto-friendly country is Estonia: it recognizes crypto coins as “a value represented in digital form”. Nevertheless, any project that wants to base in this country, has to comply with strict KYC/AML regulations.
Some of the countries close to the EU are rather crypto-friendly, too. The United Kingdom allows for operating with digital currencies, has elaborate tax laws, and registers crypto exchanges in the Financial Conduct Authority. The progressive Digital Ledger Technology Regulatory Framework was adopted in 2018 in a British overseas territory Gibraltar. Similar laws exist in Switzerland where cryptocurrencies are treated as assets and are taxed correspondingly.
Crypto Regulations in The Americas
Although one could think the USA are a crypto-friendly country, this is not really the case. The crypto legislation in America is sophisticated: two agencies are responsible for the subject, SEC and CFTC, and it’s very hard to meet their requirements. In 2020, two gigantic and super-ambitious projects Libra and TON have crashed against SEC’s charges and skepticism. In America, Bitcoin is considered property. You have to pay capital gains tax if you want to withdraw your Bitcoin profits, but don’t have to pay anything if you simply hodl it.
In Canada, crypto regulation is quite scarce. Though exchanges are legal and comply with the AML policy, there’s quite a lot of room for maneuver. In Mexico, crypto is classified as “virtual assets” by the Central bank and also has to abide the AML laws.
In South America, cryptocurrencies feel very different from state to state. In Bolivia, they are completely banned, while in Ecuador, serious restrictions are imposed. In most other countries, cryptocurrencies are considered assets; however, the laws are scarce and don’t build a solid ground for the digital coins’ development and adoption. In some countries, there are no crypto laws whatsoever.
Asia and Australia
In China, crypto laws are strict: you can buy or sell Bitcoin, but value transfer through crypto is highly unwanted, and crypto exchanges and ICOs are banned. However, two things are important: mining in China is allowed (and constitutes over half of total Bitcoin’s hashrate), and the government encourages using blockchain technology (only for purposes in the “real economy”, though). However, the recent China’s crackdown on mining might be showing that the government is seeking to put crypto under stronger control.
In China-dependent Hong Kong, however, things are not that bad. They have a pretty solid legal framework for digital coins, and crypto exchanges can be officially registered. The same thing relates to Singapore: crypto here is legal, is treated as a good, and is subject to the local analog to VAT.
Japan has been home to numerous crypto projects since the early days of crypto, so the country has a good legal and economic environment for digital assets. Bitcoin in Japan is treated as property and implies tax from 15% to 55%, while crypto exchanges have to comply with strict AML/CFT rules and prove their cybersecurity level.
In 2019, a young woman based in Tokyo decided to try a “BCH survival challenge” — she was poised to shop and visit restaurants only paying with Bitcoin Cash for 3 days. The challenge went successfully, proving that Tokyo is one of the most crypto-friendly cities in the world. This wouldn’t have been possible without favorable crypto legislation in Japan.
In South Korea and Australia, cryptocurrency has not been present for as long as in Japan, but their legal background is strong, too. In Korea, crypto has even been tax-free until recently. In May 2021, it was announced that a tax of up to 20% will be imposed, with the mining expenses being deducted.
Things are less bright in India. In March 2020, the country was widely celebrating the ban on crypto lifted by the country’s Supreme Court. However, the decision has been reversed, and cryptocurrencies remain in limbo to date. Fresh news suggests that crypto legislation is currently under consideration in the Indian government.
Crypto laws in Africa
In Africa, very few countries have adopted at least some crypto regulation. In most of the countries, there are simply no laws that would coordinate the exchange of crypto in the region — and that may put those who operate with it at risk. For instance, in South Africa, cryptocurrency is unregulated, but sellers are obliged not to take payments in digital coins.
Cryptocurrency is officially banned in Algeria, Egypt (considered as haram here), Libya, Morocco, Namibia, Zambia, and Zimbabwe. Nigeria joined this club too in February 2021. Officials stated that cryptocurrencies may harm the economy due to their volatility, and cannot be considered legal as they have been issued by unauthorized entities.
Such a decision raises a big concern: firstly, many locals are already using digital assets since there is a lack of financial services in the country (PayPal isn’t working in Nigeria). Secondly, the crypto industry in the country is on the rise, and many hi-tech businesses have been put at risk. As for these kinds of enterprises, they are actually doing a great job in the current environment: Africa-based crypto businesses are trying to adapt themselves some of the international legal crypto frameworks to raise their credibility. We hope these efforts will raise the local authorities’ awareness of cryptocurrency, and digital assets will get more legal traction in the promising African region.