In Parliament’s winter session, which begins on November 29, India plans to introduce the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021. The measure aims to outlaw all private cryptocurrencies and provide a framework for the creation of a government-backed digital currency.
While crypto transactions have yet to be regulated in India, the digital currency has been regulated in other areas of the world to varied degrees. El Salvador was the first country to embrace cryptocurrencies and even make bitcoin legal tender, whereas China is one of the few countries that opposes all cryptocurrency transactions.
Here’s a look at how cryptocurrencies are regulated around the world.
The United Kingdom (UK) In the United Kingdom, all enterprises and start-ups involved in crypto-asset activity must register with the Financial Conduct Authority (FCA). They can apply for a licence as a “Authorized Payment Institution.” Businesses must also follow anti-money laundering regulations set forth by UK legislation. Crypto assets, such as bitcoin, have also been recognised as property under UK common law.
Singapore has been at the forefront of cryptocurrency regulation. Trading in cryptocurrencies is allowed in Singapore, and the Monetary Authority of Singapore (MAS) regulates it under the Payment Services Act. A licence to operate an exchange can be obtained by a company. The favourable operating circumstances in the Asian country have enticed numerous Indian exchanges and start-ups to establish their headquarters there.
Canada: The Canadian Securities Administrators (CSA) issued a notice in 2018 outlining the securities law procedures that enterprises must follow if they wish to provide crypto coins or tokens. The Canada Revenue Agency (CRA) sees cryptocurrencies as a commodity, according to a report published this year by the Thomson Reuters Institute. This was done in accordance with the Income Tax Act of the country.
Japan: Under the Payment Services Act, Japan has taken a proactive stance on cryptocurrency legislation, recognising them as legal property (PSA). Cryptocurrency exchanges must register with Japan’s financial services bureau and follow anti-money laundering guidelines. Cryptocurrency gains fall under the area of miscellaneous income.
Australia: Because cryptocurrencies are classified as legal property in Australia, they are liable to capital gains taxes. The Australian Transaction Reports and Analysis Centre (ATRAC) requires exchanges to register and comply with anti-money laundering requirements. In 2019, the Australian government imposed new regulations on Initial Coin Offerings (ICOs).
Korea (South): Because cryptocurrencies are not considered financial assets in the country, transactions in the digital currency are not subject to capital gains tax. Crypto exchange regulations are overseen by the Financial Supervisory Services. The FSS has set tough anti-money laundering requirements for exchanges to comply. Furthermore, exchanges and other virtual asset service providers must register with the Korean Financial Intelligence Unit under new legislation enacted in 2021. (KFIU).
Cryptocurrency transactions are permitted in the majority of European Union countries. Individual members, however, are responsible for the regulation. Taxation regulations differ from country to country, with rates ranging from 0% to 50%. The European Commission proposed a framework for the Markets in Crypto-Asset Regulation (MiCA) in 2020, which would improve consumer protection and implement additional licencing requirements.