- Advertisement -

Cryptocurrency

Their experience: How cryptocurrencies are regulated in foreign countries

The capitalization of the cryptocurrency markets surpassed $ 3 trillion for the first and only time in history at the end 2021. There is no consensus on how to regulate digital currency. This article examines the countries where most people use cryptocurrency and how their governments have changed their position on their regulation.

U.S.: “A Matter of National Security.”

13% have used or owned cryptocurrencies in the past (Statista data).

The US authorities will be analyzing the cryptocurrency market and developing a regulatory framework. This includes bitcoin, stablecoins, and NFT. In the coming weeks, the corresponding order will be published. Bloomberg sources claim that the document is in its final stages of development.

The US government is also looking into the possibility of issuing a digital currency for the state – the Central Bank Digital Currency, or CBDC. The US Federal Reserve already submitted a preliminary report and has sent it to the public for discussion prior to May 20.

The U.S. will likely be more competitive if CBDC is used, as many countries, including China are looking at issuing their own coins. The final decision on the issue will depend on whether the White House or the US Congress supports it.

Some states are also looking to develop cryptocurrency, and their mayors receive a salary paid in bitcoins.

Scott Conger, Jackson’s mayor, has pledged to allow city employees to convert part their salaries into bitcoin. He also plans to establish a mining network within an abandoned city hall building (which is impossible under current laws). Conger claims he hopes to make Jackson a tech hub in the southeastern region. Eric Adams, New York’s new mayor, has already been paid his first salary in Bitcoin and ether.

El Salvador: Bitcoin is a matter of sovereignty

The world’s first country to accept Bitcoin as a payment method.

Salvadoran President Nayib Bukele announced in June 2021 that bitcoin would be the official payment method for the country, on par with the dollar.

According to supporters, this will benefit El Salvadorans without bank accounts. It will also increase efficiency in the transfer of funds, stimulate the economy, and leave the country free from international financial institutions. El Salvador had requested funding from the International Monetary Fund, (IMF) in March.

Congress approved Bukele’s proposal in June 2021. The market would set the bitcoin-dollar exchange rate, it was believed.

Despite warnings from the Federal Reserve, El Salvador’s official payment method is bitcoin. The Chivo ewallet was also introduced. Citizens who downloaded the application were promised $ 30 in reward. The implementation was slow, and was accompanied by technical difficulties and protests.

Bukele announced plans in November 2021 to create Bitcoin City, the first global cryptocurrency city.

The IMF asked El Salvador to stop using bitcoin as a payment method in January 2022. This was due to the risks to financial stability, consumer protection, and financial stability. The president of the country responded with a meme.

El Salvador currently has spent $ 85.5 millions on bitcoin. This includes $ 15 million for its last purchase on January 22. The average price of one coin was $ 47.5 thousand.

Nigeria: How Cryptocurrencies Can Help You Save Money

In October 2021, 42% respondents from Nigeria owned or used cryptocurrencies ( Chainalysis).

The Central Bank of Nigeria (CBN) banned cryptocurrency trading in February 2021 and directed banks to “identify individuals and/or entities” that conduct such transactions or manage crypto exchanges. They also ordered them to immediately close these accounts.

However, this did not result in much: Nigerians continued using cryptocurrencies to protect savings, as the value the local currency, the naira declined. They also help to send money abroad. It is very difficult in Nigeria to buy US dollars.

Chainalysis reports that the volume of cryptocurrency in dollar terms received by Nigerian users grew steadily in 2021-2022. The total value of Nigeria’s remittances grew to $2.4 billion in May 2021 from $684 million in December 2020.

The Central Bank of Nigeria issued its own digital currency, eNaira in October 2021. This digital currency has been in development for the past three years. Nigeria was the second country (after the Bahamas), to issue its own digital currency.

India: A window of opportunity to experiment

15% of Indian respondents own or use cryptocurrency ( Chainalysis ).

The Reserve Bank of India issued in 2018 a circular that prohibited banks from interfacing with cryptocurrency organizations.

The ban was lifted in 2020. Officials considered this outdated and created a new commission that would study the possibility of cryptocurrency regulation.

India seems to have finally decided how to regulate cryptocurrency: Nirmala Sitharaman, the Finance Minister, reported that India would soon introduce a new draft law regarding cryptocurrencies. She also made two important statements. The central bank of India will create a digital currency during the 2022-2023 fiscal years, and the income from digital assets will be subject to a 30% tax.

India introduced taxation to legalize cryptocurrency. This can be used by investors and exchanges around the world to establish bases in India, where over 15 million crypto owners reside. It is also the first country to prohibit compensation for losses from cryptocurrency trading. This can be a problem for some investors and can also make it difficult to trade safely.

It is also not clear how transactions and taxes will be tracked.

Vietnam is the world leader in cryptocurrency adoption

27% of Vietnamese have or use cryptocurrency ( Chainalysis).

Vietnam has been banning cryptocurrency use as a payment method since 2017. The government does allow bitcoins to trade and be stored as assets.

According to the Global Crypto Adoption Index (GCAI), Vietnam is the first country in the world to adopt cryptocurrencies. They are most commonly used to transfer money, which allows migrants to send money home from the country without being paid.

Pakistan: Close State Scrutiny

14% of Pakistani citizens surveyed have or used cryptocurrency ( Chainalysis ).

The central bank of Pakistan proposes to ban all cryptocurrencies. They argue that trading them is risky and outweighs the potential benefits. Pakistan will not issue its own digital currency. The authorities plan to also block websites that are involved in crypto assets-related activities.

The Central Bank had not previously stated a clear position on the issue, aside from a 2018 circular that prohibited banks from dealing with cryptocurrency exchanges.

Many Pakistanis believe that cryptocurrency is the answer to their financial problems. The country has high inflation, large debts, and small foreign currency reserves.

The authorities have been looking into the cryptocurrency industry recently: In January 2022, the Federal Investigation Agency of Pakistan opened an investigation against Binance, a local unit of crypto exchange Binance, regarding alleged fraud. Several hundred investors were able to lose more than $ 100 million.

China: Prohibition and Strict Control

The country was a leader in mining cryptocurrencies before the ban.

China’s attitude to cryptocurrencies has changed drastically in the past few months. Residents of China could previously mine and trade digital coins. In May 2021, China outlawed cryptocurrency transactions by financial institutions.

It was impossible to mine cryptocurrency in June. The complete ban on mining cryptocurrencies came into effect in September. Owners and miners of crypto exchanges were forced out of the country or to sell their equipment.

The Chinese government is concerned about the environmental impact of mining and the possibility that digital currencies could be used to launder money or fraud. China is currently developing and testing its own digital currency centralized.

EU: gradual adoption

Switzerland leads the European countries in terms of cryptocurrency owners and users with 16% ( chainalysis).

The European Union includes 27 member countries. It is therefore difficult to create legislation at this level. The majority of EU countries had previously applied mild sanctions to the cryptocurrency industry.

The Markets in Crypto-Assets Regulation (MiCA) was introduced by the European Commission in September 2020. It will treat cryptocurrencies as regulated financial instruments when it enters into effect. This will increase consumer protection, clarify the activities of cryptocurrency industry and establish new licensing requirements.

- Advertisement -

Next Post