Cryptocurrencies were created as a decentralized means of payment or opposition to fiat currencies issued by countries' central banks. Although it seems governments should be against the implementation of decentralized assets, many countries are working on the inclusion of cryptocurrencies into their systems. However, there are also those who are cautious about cryptos.
Cryptocurrencies were created as a decentralized means of payment or opposition to fiat currencies issued by countries' central banks. Although it seems governments should be against the implementation of decentralized assets, many countries are working on the inclusion of cryptocurrencies into their systems. However, there are also those who are cautious about cryptos.Countries regulate cryptocurrencies in different ways. Still, the key element for any regulation is public safety. The main issue about cryptocurrencies is that their decentralization could contribute to money laundering, drug traffic, and tax evasion. As it's clear that countries can't ignore cryptos due to their fast spread, it's a question of how to provide them with legal status. Let's discover how different continents deal with crypto assets.
Crypto Acceptance by Regions
Let’s consider how the legislation varies regarding regions and countries.
Legal Status of Cryptos by Regions
North America: Legal / Regulated
South America: Legal / Indecisive
Southeast Asia: Legal / Mostly Regulated
North Asia: Legal / Regulated
West Asia: Illegal / Unregulated
South Asia: Legal / Regulated
Europe: Legal / Regulated
North Africa: Illegal / Indecisive
South and Central Africa: Legal / Unregulated
Australia: Legal / Regulated
Africa
Africa is one of the least developed regions. It's not a surprise that the governments monitor and track blockchain and cryptocurrencies but are not ready to implement them into their financial systems. Simultaneously, Africa is one of the most promising continents as countries with limited access to banking and financial services, high foreign exchange rates, and a high level of remittances from families working abroad are the best markets for crypto assets.
If we talk about Southern Africa, crypto assets are not regulated there yet. Still, it's possible to operate cryptocurrencies.
Among the region's countries, Mauritius and South Africa have moved forward in accepting cryptos. South Africa considers Bitcoin legal, so it's possible to buy and sell it. Trading is subject to taxation. The South African Reserve Bank issued a paper regarding the risks of Bitcoin trading. Still, no cryptos are banned.
Mauritius welcomes Bitcoin and other cryptos within its borders. However, there are only a few exchanges available for citizens.
There are stricter jurisdictions that have banned crypto assets altogether. For instance, Morocco, Algeria, and Libya don't allow any crypto operations. It's worth mentioning that Bitcoin mining operations exist in Libya. However, they are illegal.
Still, cryptocurrency's growing popularity pushes central banks and legitimate financial organizations to explore the issue faster. Companies that provide financial services in South Africa get lots of requests from customers about cryptocurrency products.
According to Statista, Nigeria takes the first place of countries that are familiar with cryptocurrencies as for 2020. In February 2021, the Central Bank of Nigeria issued a paper that prohibited financial institutions from cooperating with local cryptocurrency exchanges and required blocking crypto traders' accounts. However, in June already, the central bank announced a possibility to launch a central bank digital currency by the end of 2021.
Top 15 Countries: Share of Respondents Who Indicated They Either Owned or Used Cryptocurrencies in 2020 (Statista)
America
Although cryptocurrencies haven't gained an entire legacy in the USA and Canada, these countries are working on their implementation.
The regulation and legal status of cryptocurrencies differ not only between countries but between states and government agencies. The USA is an example.
If we talk about financial institutions, the Ministry of Treasury considers cryptocurrencies a decentralized virtual currency available for exchange. At the same time, the Securities Exchange Commission includes cryptos in the commodity class when certain conditions are met.
At the same time, Mexico delivered a statement deeming cryptocurrencies an illegal tender. Cryptos are banned for usage in Mexico's financial system.
The situation is the same in the other part of the continent. Most South American countries ban cryptocurrency usage. For instance, in Bolivia, people can be fined or even put in prison for using cryptocurrencies. Still, not all countries are so strict about crypto assets.
In 2017, Venezuela announced the launch of the state-backed Petro cryptocurrency. The government applied Petro in 2019 to make small payments to retirees; it's also used as a unit of value to price services or fines that are paid in bolivars.
El Salvador, a Central American country, in June 2021, gave Bitcoin the status of legal tender. There are still many doubts about how it will affect the country's financial system and acceptance of cryptos in the region. However, steps to the further implementation of cryptocurrencies are a good sign for the whole world.
Asia
The situation in Asia varies. It's not news that China has the strictest regulation that greatly affects the direction of the cryptocurrency market. Although China doesn't treat cryptos as legal tender and the banking system doesn't accept them, the country launched e-CNY, digital renminbi, or Digital Currency Electronic Payment. It's a digital currency of the People's Bank of China. E-CNY became the first digital currency that was launched by one of the world's leading economies.
In South Korea, cryptocurrencies aren't banned. However, in March 2021, the country passed a new rule aimed at strengthening the supervision of virtual assets. New legislation raised worries that the favorable environment for altcoins and cryptocurrency exchanges will turn negative.
At the same time, crypto assets are legal in Japan. Cryptocurrencies can be used as a means of payment when performing transactions with unspecified persons. Also, it's possible to exchange them with fiat currencies.
Singapore is one of the most popular legislations for ICO activities. The Monetary Authority of Singapore calls a digital asset a capital market instrument. Also, the MAS regulates clearing and ICO.
Malaysia also doesn't consider cryptocurrencies illegal. The country permanently works on crypto regulation.
Thailand was one of the first Asian countries that issued legislation addressing cryptocurrencies and digital assets. The legislation became effective in May 2018. The Digital Asset Act is the primary legislation that regulates the offering of digital assets and business activities that involve them. Thailand is also constantly working on legislation. In the country, digital assets and cryptocurrencies are regulated separately. In May 2021, the government took into force new regulations that require physical registration for anybody who opens a cryptocurrency account and forbids online setup.
Europe
Bitcoin is legal almost in all European countries. In October 2015, the European Court of Justice claimed buying and selling digital currencies is classified as a supply of services. The operations are excluded from value-added tax (VAT) in all European Union member states. In September 2020, the European Commission released a regulatory proposal, "Markets in Crypto-Assets," or MiCA. The regulation is anticipated to spread for all EU countries without implementing it in national laws additionally.
The governor of the Bank of France, Francois Villeroy de Galhau, said that the European Union should prioritize crypto regulation. According to the governor, the EU has only 1-2 years to settle crypto regulation. If the Union fails to do that, risky digital assets may undermine European countries' monetary sovereignty and weaken the Euro.
France started regulating cryptocurrencies in 2019. In June 2021, the country settled new crypto regulations that affect both French firms and international crypto companies that want to operate in France. Since June, crypto-to-crypto firms must be registered, while KYC requirements have become stricter. As a result, the new law takes crypto-to-crypto services and trading platforms doing business in the country out of a grey area.
Switzerland and Malta are the countries that mainly support cryptocurrencies. For instance, cryptocurrency exchanges can operate in Switzerland if they have a license, thus, regulated by FINMA. In the country, cryptocurrencies are considered assets or property. In Malta, cryptocurrencies are not classified as legal tender. Still, they are considered by the government as "a medium of exchange, a unit of account, or a store of value."
The German Federal Central Tax Office classifies cryptocurrencies as private money for taxation. Crypto assets aren't considered a foreign currency, legal tender, or property. On July 1, Germany's Fund Location Act came into force. It allows special funds to invest 20% of their portfolios in crypto. Special funds are the primary institutional investment tool in the country. Such a step could push other European countries to increase crypto acceptance.
The United Kingdom is loyal to Bitcoin. The Financial Conduct Authority works on supportive regulation. Bitcoin is under specific tax regulations in the Kingdom.
Australia
In Australia, cryptocurrencies, digital currencies, and crypto exchanges are legal. Moreover, the country has one of the most progressive crypto jurisdictions.
According to Australian regulation, service providers can exchange cryptocurrencies for one another, for other currencies, including fiat money. But cryptocurrency issuers shouldn't mislead customers.
Middle East
Regulation in the Middle East varies. In the United Arab Emirates, all transactions in "virtual currencies" are prohibited, according to the Regulatory Framework for Stored Values and an Electronic Payment System.
At the same time, in Saudi Arabia, Bitcoin is legal. Also, there are no limits on purchasing or spending BTC. However, banks are prohibited from dealing with cryptocurrencies.
Countries that have banned cryptocurrencies (as of July 2021)
- China
- Bangladesh
- Qatar
- Morocco
- Algeria
- Bolivia
- Egypt
- Turkey
Takeaway
Cryptocurrencies are gaining popularity. Although some countries are still against their implementation, they won’t be able to avoid cryptos in the future. The best strategy is to create the right regulation that will work both for fiat and cryptocurrencies.
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