Around the world, cryptocurrency regulation differs widely even in neighboring countries. Cryptocurrencies are seen differently, called by different names and taxed differently. Whether seen as virtual currency, virtual assets or commodities, digital or electronic currency, payment tokens or merely cryptocurrency, most countries have acknowledged its existence in one way or another and have taken steps or are monitoring its progress. Here is how cryptocurrency is doing in 80 states around the world.
In 2018, Algerian authorities clearly prohibited the “purchase, sale, use, and possession of so-called virtual currency”. Algerian financial laws and regulations clarify that no currency used over the Internet is allowed, and any violation of these provisions is “punishable in accordance with the laws and regulations in force”.
Only the Central Bank can issue currency in Argentina. While cryptocurrencies are not considered legal currency, they are allowed and increasingly used as alternative means of payment for certain over-the-internet goods and services. Profit derived from the sale of cryptocurrencies is taxable as income.
The Australian Taxation Office (ATO) has been looking into cryptocurrencies for a few years now, and in 2015 it published a guide on the tax treatment of cryptocurrencies. While mainly concerned with bitcoin transactions, Australia is crypto-friendly. It sees cryptocurrencies and taxes them for capital gains. Any capital gain or loss made on crypto for personal use, up to AUD10,000, is disregarded by the ATO.
Businesses must record cryptocurrency transactions as part of their income. Capital gains tax applies to cryptocurrency transactions. While buying and selling cryptocurrency are not subject to goods and services tax in order to avoid double taxation, pretty much any operation involving digital currency, from businesses accepting crypto payments, exchanges trading crypto, businesses mining bitcoin or individuals accepting bitcoin from employers, everything is taxable under ATO regulations.
Since 2018, crypto exchanges are required to implement anti-money laundering and counter-terrorist financing provisions and register with the AUSTRAC.
Austrian cryptocurrency regulation classifies cryptocurrencies as intangible commodities and taxes them like other business assets. Mining is seen as the production of goods and taxed accordingly, but VAT does not apply. Cryptocurrency exchanges and ATMs are taxed as their fiat equivalents.
As an EU country, Austria exempts from VAT all crypto-to-fiat, fiat-to-crypto or crypto-to-crypto exchanges. Payment in cryptocurrency is treated as fiat payment.
A Fintech Regulation Council to regulate cryptocurrencies is in the works and more cryptocurrency regulation is likely coming, as well as support for the EU Money Laundering Directive.
The Central Bank of Bahrain has warned against all cryptocurrencies. Neither bitcoin, nor other digital currencies are recognized by any financial institution, and using cryptocurrencies in Bahrain is illegal. However, there is no cryptocurrency regulation against trading outside Bahrain.
Although Belgium is an EU country, there is very little cryptocurrency regulation in place. The Belgian National Bank and the Financial Services and Markets Authority have issued warnings about the risks involved in operating with cryptocurrencies, as many other countries’ financial regulators have, however for a long time it considered the crypto market to be too small to necessitate active intervention. The government seems to be contemplating a cryptocurrency regulation framework, however not much is happening yet.
Cryptocurrencies are prohibited in Bolivia, as the Bolivian Central Bank banned the use of any currency it does not issue itself. There are also strong warnings in place against cryptocurrencies risks.
The Central Bank of Brazil, like many other central institutions, has issued strong warnings against cryptocurrency in general, as it is not “backed in real assets of any kind”. It is not expressly prohibited, however, and the central banking authority makes it clear that it “does not regulate or supervise operations with virtual currencies”.
Earlier in 2018, Bulgaria’s National Bank issued a warning on the inherent risk of cryptocurrencies, due to price volatility and pricing bubbles. While trading crypto and paying in cryptocurrencies do not require express licensing, cryptocurrencies are similar to financial assets and individuals must pay taxes on capital gains for selling crypto.
Canada’s Financial Consumer Agency states any citizen can use cryptocurrency on exchanges or to buy goods and services where crypto is accepted. Tax laws apply to cryptocurrencies as commodities. “Goods purchased using digital currency must be included in the seller’s income for tax purposes”, goods and services taxes apply, and “gains or losses from selling or buying digital currencies must be reported”.
AML cryptocurrency regulation has been in place since 2014, and since mid-2017 there are guidelines on “Cryptocurrency Offerings” or ICOs. Earlier in 2018, the Ontario Securities Commission approved the country’s first blockchain fund.
The Cayman Islands does not have targeted cryptocurrency regulation, however it is generally friendly toward blockchain technology and encourages blockchain companies to set up shop in Cayman Enterprise City. The economic zone is already home to 50+ such companies.
The People’s Bank of China (PBOC) has been actively researching cryptocurrency for years. Digital currencies are not allowed for retail or banking, and cryptocurrency exchanges, as well as ICOs, were banned in 2017.
China’s financial institutions have repeatedly issued warnings against cryptocurrency, stating it “cannot and should not be circulated in the market as a currency.” No financial institutions are legally allowed to deal in cryptocurrency under any form and for any type of service provided.
In 2017, Colombia’s central financial authority stated that cryptocurrencies are not accepted as legal tender and not recognized as a security. While one step shy away from banning possession for individuals, Colombian authorities state that financial institutions are banned from brokering, managing or performing any operations with “virtual money”.
As in most European Union countries, in Croatia the main financial body issued a warning against cryptocurrencies, placed sole responsibility for crypto losses with individuals, and stated that individuals should be aware of possible taxation. Rather than banning any form of cryptocurrency operations, Croatia merely refused to issue any cryptocurrency regulation and set the ground for potentially taxing capital gains.
Much as in most other European Union countries, Cyprus has also issued a stark warning about cryptocurrency risks through insecurity and volatility. While cryptocurrency is expressly “not legal tender”, there is no actual cryptocurrency regulation in place.
Czech Republic (EU)
The Czech Central Bank decided to adopt a liberal approach to crypto. Anti-money laundering regulations are in place, but, other than that, there is no interference with the cryptocurrency market.
Denmark is one of the more liberal EU countries in what virtual currencies are concerned. Although the Danish Central Bank has compared crypto to “glass beads” that have no inherent value, and warned against high risks associated with this area, there is no cryptocurrency regulation in place. However, ICOs may fall under the provisions of “legislation on alternative investment funds, prospectuses, and money laundering”.
While it initially banned cryptocurrencies for official payments, tax deductions etc., in 2018 the Danish Tax Council admitted that losses on cryptocurrency investments are tax-deductible, and profits are covered by income taxation regulation.
Eastern Caribbean Region
The Eastern Caribbean Central Bank (ECCB) covers financial regulations for Anguilla, Antigua and Barbuda, the Commonwealth of Dominica, Grenada, Montserrat, Saint Kitts and Nevis, Saint Lucia, and Saint Vincent and the Grenadines, all eight economies operating with the Eastern Caribbean Dollar. Since 2018, several have launched a digital Eastern Caribbean Dollar using blockchain technology, in partnership with Bitt Inc.
While the secular Central Bank of Egypt warned against cryptocurrency operations, the religious authority of Dar al-Ifta has issued a haram against cryptocurrency. In other words, while no cryptocurrency regulation is in place, bitcoin and other coins are virtually banned in Egypt as a threat to the country’s financial systems and as a potential means of funding terrorism.
Estonia is among the countries with the most complex cryptocurrency regulation. Cryptocurrency is not legal tender, but it is “value represented in digital form” which can be used by natural or legal persons. Estonia also has clear anti-money laundering legislation, as well as clear definitions for cryptocurrency services, including exchanges and wallets. Cryptocurrency services providers need to be licensed by the state.
The European Union has tried to keep the pace with the cryptocurrency market and has worked to extend the Anti-Money Laundering Directive to cover crypto wallets and exchanges.
Since 2015, buying or selling bitcoin is VAT-free in all EU Member States. However, late in 2017 and early in 2018 the main European financial authorities issued a warning for high risk against virtual currencies and ICOs.
On the other hand, throughout 2018 the European Commission and other central organisms have been attempting to fine-tune cryptocurrency regulation so as to “take advantage of the opportunities presented by technology-enabled innovation in financial services (FinTech), like blockchain, artificial intelligence, and cloud services”.
The Central European Bank offers one of the more interesting definitions of digital money: “a digital representation of value that is neither issued by a central bank or a public authority, nor necessarily attached to a fiat currency, but is accepted by natural or legal persons as a means of payment and can be transferred, stored or traded electronically.”
Finland does not have any complex cryptocurrency regulation in place. As in other EU states, the country’s Financial Supervisory Authority issued a warning against cryptocurrency as high-risk and high-volatility. The country’s Tax Authority states that, when cryptocurrency is exchanged to fiat, capital gains taxation rules apply. Payment for goods and services in cryptocurrency is a trade operation and taxable as such. The Tax Authority also requires that cryptocurrency records should be kept for six years.
Finnish authorities have monitored and strongly enforced existing regulations, and it now apparently holds an impressive amount of crypto confiscated following criminal activities.
France is a crypto- and ICO-friendly country, with specific attempts to become an ICO hub, for instance. Blockchain is also defined so as to allow for extensive use in financial institutions, while the main financial bodies warn, at the same time, that cryptocurrencies are volatile and high-risk.
Attempts have been made to place exchanges in a more regulated framework, yet so far there is very little guidance. French institutions are looking for the best way to regulate against money laundering and financial crimes, while at the same time not stifling innovation in fintech.
The German Federal Financial Supervisory Authority finds cryptocurrencies to be financial instruments. Any sustained crypto-related service should be authorized by the country’s main financial authority. ICOs are assessed on a case-by-case basis to determine whether they are financial instruments or securities.
Fiat-to-crypto, crypto-to-fiat and crypto-to-crypto operations are VAT-free, but considered taxable supply of other services. Virtual gaming, mining, crypto wallets, and crypto exchanges are each taxable according to FSA regulations.
Interestingly, Germany’s Central Bank recommends that bitcoin (and, by extension, other cryptocoins) should not be considered a virtual currency or digital money, but recommends the term “crypto token.”
Distributed Ledger Technology is regulated in Gibraltar, and ICOs are in the process of being regulated as well. DLT license holders have to pay a flat annual fee and comply with Gibraltar’s AML/anti-terrorism requirements.
Gibraltar is currently working on a wider cryptocurrency regulation package that would include DLT tokens (i.e. cryptocurrency) and token sales.
Greece does not have any cryptocurrency regulation; so far, it has been content to channel the European Union’s stance on the high-risk position of cryptocurrencies in general.
Early in 2018, Hong Kong’s Securities and Futures Commission (SFC) announced it had taken regulatory action against several cryptocurrency exchanges and ICOs. As cryptocurrencies are seen as “securities”, exchanges and ICOs should not operate without a license. ICO tokens may be seen as securities and subject to the appropriate laws.
However, these are rather general stances and there is very little in the way of specific cryptocurrency regulation other than prosecuting money laundering, fraud, cybercrime and terrorist financing.
No specific cryptocurrency regulation is in place other than general EU guidelines and the Hungarian central bank’s statements on the inherent high risk associated with volatility and the legally unregulated virtual currencies.
When Auroracoin was airdropped on Iceland, the financial regulators were quick to point out that cryptocurrency purchases were illegal under the existing regulations, which criminalized foreign currency transactions. Since then, while foreign fiat transactions are allowed, there are still strict controls in place which limit trade and investments in cryptocurrencies.
For the moment, cryptocurrencies are taxed as assets, but more regulation is likely coming in the near future.
There is no strict cryptocurrency regulation in India, but there are very severe warnings against cryptocurrency risks or unlicensed operation of cryptocurrency “schemes or deals”. No financial institutions are allowed to operate with cryptocurrency; however, the central government recognizes the potential of blockchain technology. Reports on distributed ledger technology uses are expected, and laws regulating the trading of cryptocurrency are probably coming in the next few months. Following the news that in September India’s central bank has forbidden Indian banks from serving cryptocurrency exchanges, cryptocurrency regulation is likely to be highly restrictive.
In January 2018, Indonesia’s central bank warned against any trading of cryptocurrencies, since they are “not recognized as legitimate instrument of payment”. Bank Indonesia expressly forbade “all payment system operators and financial technology operators in Indonesia from processing transactions using virtual currencies”.
Iran has prohibited all financial institutions from handling any cryptocurrency operations, including trading or promoting cryptocurrency in any shape or form.
This is in an attempt, Iran claims, to toe the line with the Financial Action Task Force on Money-Laundering, which is currently attempting to impose a much clearer cryptocurrency regulation package in its signatory countries. The policy comes against previous attempts to use cryptocurrency to bypass international sanctions, and even to launch a national cryptocoin.
The Iraqi Central Bank bans all use of cryptocurrencies. The main reason invoked is compliance with anti-money laundering laws.
There is no specific cryptocurrency regulation in Ireland, though ICOs are monitored for the type of token issued to see what kind of financial legislation applies. Cryptocurrency transactions are taxed as capital gains if there is a profit.
Anyone providing services involving financial assets, including “virtual currency”, is required to hold a license from the Supervisor of Financial Services.
The Bank of Israel issued a warning against virtual currencies as early as 2014, and also stated they were not actual currency. They are instead deemed to be assets and are taxed as such. Increases in the value of bitcoin, for instance, are taxable as capital gains. Traders are seen as financial institutions and taxable an extra 17% profit tax, and miners are deemed to be dealers and are subject to VAT.
As a member of the EU, Italy has weak cryptocurrency regulation and follows the EU guidelines on no VAT for cryptocurrency buying or selling. Profits and losses on buying or selling are deemed to be corporate income or losses and are subject to the relevant taxation.
Other than these specifics, Italy has not yet issued any laws on cryptocurrencies and ICOs, and merely concerns itself with limiting money laundering.
Jamaica’s central banking authority has warned that cryptocurrency is not legal tender and is not foreign currency. No cryptocurrency platform has been authorized to operate in Jamaica, and, while not expressly forbidden, cryptocurrencies are deemed to be extremely high risk, as well as enablers for money laundering and the financing of terrorism.
Since 2016, Japan has defined cryptocurrency as “property value” that can be used either for payment for certain goods and services, or to be mutually exchangeable with other users over the internet. The National Tax Agency deems profit made on sales to be taxable as miscellaneous income. i.e. added to all other income, excluding specified capital gains.
Jordan has weak, but overall discouraging cryptocurrency regulation, with its central bank issuing a stark warning against the dangers of trading bitcoin and other virtual currencies and specifying that financial institutions are under no obligation to exchange virtual currencies. However, there is no actual ban, and taxation and other financial considerations have not been properly worked out yet.
Virtual currencies are not legal tender and are risky business, Kenya’s Central Bank stated three years ago. Since then, very little has changed on paper, but Kenya’s government seems poised to make life easier for cryptocurrency, aligning its policy with that of other African countries attempting to bypass Western-style financial practices and institutions.
Kuwait’s central bank bans the companies it supervises from trading crypto, for reasons having to do with its perceived ease of use for illegal transactions. Since December 2017, cryptocurrency in general has been banned, though it is unlikely Kuwait will move as decisively as to actively enforce this ban on individuals.
Latvia’s position is as fuzzy as most European countries’. Cryptocurrency is not legal tender, and it is only allowed in contractual transactions. Cryptocurrency service providers are required by law to allow monitoring by governmental agencies and to apply anti-money laundering requirements.
After first warning against the dangers of cryptocurrency in 2013, in 2017 Lebanon’s Central Bank banned cryptocurrency trading altogether. While Bitcoin and other coins are considered a threat to the existing financial system, the governor of the Central Bank has stated the government was considering issuing a virtual currency of its own. So far, no other details have emerged.
Lithuania’s cryptocurrency regulation is much more advanced than in other European countries. While financial institutions in the country are banned from any services or activities having to do with cryptocurrency, policy regarding blockchain development are quite liberal and the country has become a haven for the blockchain industry. Initial Coin Offerings are allowed (and also a booming industry), but subject to existing regulation.
Luxembourg’s Financial Sector Monitoring Commission warned against cryptocurrencies (volatile, unsafe etc.) and Initial Coin Offerings, but at the same time allowed crypto to be used in various financial services, subject to express governmental authorization. The country’s top financial watchdog also offered support for blockchain technology.
In a more advanced attitude than most other countries, Luxembourg’s Minister of Finance stated that cryptocurrencies were actual currencies, and crypto transactions were to be subject to the same rules and regulations as all other legal providers of financial services, including AML and CFT.
Cryptocurrencies are not legal tender in Malaysia. They are subject to AML and CFT regulation, and digital currency exchangers are required to report transparently to governmental agencies in order to allow these agencies to both understand the market and its risks, and prevent illegal use of these platforms.
Malaysian crypto owners and ICO investors are advised to pursue these avenues at their own risk, as they both involve potential dangers without appropriate safeguards
Malta’s cryptocurrency regulation is to come into effect on November 1st, 2018. With its new laws providing a regulatory framework for DLTs, cryptocurrencies and ICOs, Malta is one of the most crypto- and ICO-friendly places on earth, also known as “blockchain island”. Technology service providers have to register and be certified, in order to both ensure innovation and protect the public. In exchange, full regulation offers a fertile ground for investors. Apart from considering its own cryptocurrency, Malta is also committed to allowing crypto owners to gamble with crypto as a form of money.
Mexico allows cryptocurrency transactions but requires financial institutions that provide crypto services to report transactions beyond certain amounts. Mexico’s Central Bank must authorize these financial institutions to operate with cryptocurrencies and requires these institutions to inform their cryptocurrency clients of the risks associated with cryptocurrency in general.
Morocco virtually banned cryptocurrency in November 2017, when the Moroccan Exchange Office stated that “transactions effectuated through virtual currencies constitute a violation of the exchange regulations and are subject to penalties and fines provided by the texts in force”. Only approved intermediaries can carry exchange operations, and only with foreign currencies listed by Morocco’s Central Bank.
The Central Bank of the Netherlands dismissed cryptocurrency’s role as money and focuses on extending AML regulations to cryptocurrency exchanges and wallets. The Dutch Authority for the Financial Markets warns against ICOs in general, however ICOs are somewhat supervised by the Authority for the Financial Markets, which assesses each ICO individually to see whether the token qualifies as a security and whether it should be authorized.
New Zealand has a complex cryptocurrency regulation package in place. While advising caution in cryptocurrency investments, New Zealand’s Financial Markets Authority explains that ICOs are regulated if there is a financial product involved, and tokens can be debt securities, equity securities, managed investment products, or derivatives.
Taxes are paid on the profit made by selling a cryptocurrency “only if that currency was bought with the intention of resale”. More regulation is coming, especially on taxation.
Cryptocurrencies are neither banned, nor explicitly encouraged in Norway. For tax purposes, cryptocurrencies are capital property, which implies deductions for losses and taxation on winnings. Taxable income includes income from capital gains from cryptocurrencies. In alignment with EU regulations, Norway too exempts cryptocurrency sale from the value-added tax.
Neither explicitly banning, nor explicitly allowing cryptocurrency, Oman merely advises against virtual currencies, with no action taken for or against it.
Pakistan’s central bank does not recognize cryptocurrencies as legal tender and advises against individuals using them. Its Federal Board of Revenue has actively pursued cryptocurrency traders for financial crimes, and there are active attempts at penalties for individuals involved in cryptocurrency operations.
While not legal tender, cryptocurrencies can provide financial services, such as remittances and payment transactions. As such, they must register with the governmental agency and learn to manage the risks associated with cryptocurrency investments.
Cryptocurrency is allowed, though investors are warned against the high risks associated with it. Crypto-to-crypto transactions, either on a cryptocurrency exchange or individually, are VAT-free, as per EU laws. However, all “income from selling services, property, and goods will be treated like revenue for taxation purposes. Income from cryptocurrency transactions can be taxed by 18% and 32%, and selling or purchasing digital currencies “is considered a transfer of property rights, which is subject to a 1% levy on the value of the transaction”.
According to the Federal Reserve Bank of Portugal (Banco de Portugal), the activity of issuing and trading virtual currencies is neither regulated nor supervised by the Federal Reserve Bank of Portugal or any other authority of the financial system, national or European, in particular by the European Central Bank. The absence of regulations on operations with virtual currencies does not make these activities illegal or prohibited, the Bank noted. However, entities that issue and sell virtual currencies are not subject to any obligation of authorization or registration with the Federal Reserve Bank of Portugal, so their activity is not subject to any kind of prudential or behavioral supervision.
In February 2018 the Supervision and Control of Financial Institution Division at Qatar’s Central Bank issued a circular to all banks operating in Qatar warning against trading in bitcoin. The circular described bitcoin as illegal and unsupported by any central bank or government. It also stated that trade in cryptocurrencies involves high risks of price volatility and the risk of being used in financial crimes. Finally, the circular prohibited all banks operating in Qatar from dealing with cryptocurrencies, subject to penalties for violators.
Other than warning against the high risk associated with virtual currencies, Romania has fuzzy cryptocurrency regulation. A law passed in July 2018 states that legal entities can only issue electronic money if they have at least EUR 350,000, have a clean tax and legal record and by the Romanian National Bank. Cryptocurrency income is taxable.
There are ongoing debates and controversies around the proposed blockchain and cryptocurrency regulation bills waiting to be passed in the Russian Duma. There are notable advances that would make Russia a crypto-friendly ground. Mining, for instance, is taxed only “if the miner exceeds the energy consumption limits established by the government for three months in a row”. Also, only qualified investors can participate in ICOs, tokens are deemed property, and crypto-to-fiat exchanges are not allowed unless through licensed operators.
Whatever the debate, the bill has been repeatedly postponed, so it is hard to know whether the conservative or the innovative party will win the battle.
In November 2017, the Canton of Zug officially started accepting BTC and ETH as payment for administrative costs. In January 2018, the municipality of Chiasso “started accepting bitcoin as tax payments for amounts of up to CHF250 (around US$263)”.
For tax purposes, cryptocurrencies are treated like foreign currencies and subject to wealth tax.
ICO regulation is decided on a case-by-case basis, since they are all designed in a very specific way. The Swiss central financial authority FINMA differentiates between payment tokens (cryptocurrencies), utility tokens, and asset tokens. Payment tokens (cryptocurrencies) are used as a means of payment. Utility tokens provide digital access to a blockchain application or service. Asset tokens are assets analogous to equities, bonds, and derivatives.
Cryptocurrency operators are subject to authorization by FINMA, as does trading security-like ICO tokens. Payment or utility tokens are not deemed securities by FINMA, however if they have an investment purpose they are deemed securities. Asset tokens that are suitable for mass trading are also deemed securities.
Saudi Arabia has banned all virtual currencies from all types of operations on its territory. Initially just issuing a warning statement against high risk of fraud, volatility etc., the Saudi Arabian Monetary Agency stated that “no parties or individuals are licensed for such practices by regulators in the kingdom. The committee warns all citizens and residents about drifting after such illusion and get-rich scheme due to the high regulatory, security and market risks involved, not to mention signing of fictitious contracts and the transfer of funds to unknown (sic)”.
Singapore’s central Monetary Authority regulates all securities, including ICO-issued tokens that fall under the definition of security.
While there is no cryptocurrency regulation per se, the use of cryptocurrencies is theoretically are monitored and regulated for compliance to legislation against money laundering and terrorism financing. While Singapore has stated that exchanges might require a license in the near future, so far, its approach has been very much hands-off in what crypto is concerned.
In accordance to an EU policy, Slovakia, too, has warned against the high risks associated with crypto; however, its cryptocurrency regulation is less vague than in other countries. Cryptocurrency revenues are taxed in Slovakia, as are exchanges. Cryptocurrencies are deemed to be “short-term financial assets other than money”, taxable at the market value of the time of transaction. Crypto obtained from mining is only taxed if sold or traded.
Other than the standard EU warning that cryptocurrencies are not legal tender, not regulated and represent a high risk, Slovenia does not have any specific cryptocurrency regulation. There is no tax on virtual currencies and no framework coming in the near future, despite the fact that the Slovenian government had declared its interest in blockchain technology.
As early as 2014, the South African central bank stated it was the only body that could issue legal tender, therefore virtual currencies were not legal tender and could only be used between willing parties. In April 2018, the South African Revenue Service stated that it “will continue to apply normal income tax rules to cryptocurrencies and will expect affected taxpayers to declare cryptocurrency gains or losses as part of their taxable income”, as revenue account under gross income, or as capital gains. Other than these non-specific provisions, there is no cryptocurrency regulation.
After several hacks had initially led authorities to consider a ban on ICOs and crypto, beginning early in 2018, South Korea has had very strict, but permissive cryptocurrency regulation in place. Trades in cryptocurrency are only allowed within a real-name account system, and cryptocurrency operators must have contracts with banks that perform due diligence on company management and cyber security. Traders need accounts with these same banks in order to make deposits into an e-wallet, and traders’ identity is checked by the bank. Cryptocurrency operators (or dealers) must also apply for registration of the trader’s account with the bank. Minors and foreigners are prohibited from trading in cryptocurrencies.
South Korea also has very strict AML regulations and requires institutions to report suspicious activity, with clear thresholds of interest.
A framework for cryptocurrency regulation is in the works, providing taxation guidelines that apparently find cryptocurrencies to be capital gains or miscellaneous income.
Spain, despite cautionary statements from its National Securities Commission and Central Bank, is on the friendly side in cryptocurrency regulation and is actively considering improving its cryptocurrency regulation framework to become a blockchain hub. At the moment, profits on cryptocurrency transactions are taxable under the Law on Income Tax of Individuals. In accordance with EU policy, Bitcoin transactions are VAT-free.
No specific cryptocurrency regulation is in place, but Sweden’s Financial Supervisory Authority sees cryptocurrency operations as a financial service that falls within its gambit. It referred to the European Securities and Market Authority for its interpretation that ICOs may be regulated by various European Union directives and guidelines.
Cryptocurrencies are not legal tender, and there are very fuzzy taxation laws, in essence dealing with cryptocurrency income as subject to capital gains taxation. Mining is seen as a hobby, with tax incentives or exemptions. As in any European Union country, cryptocurrencies are exempt from VAT.
Sweden was thought to be considering a national e-currency, however the reports seem to have winded down.
In Taiwan, virtual currencies are considered highly speculative virtual commodities and the Financial Supervisory Commission analyses ICO-issued tokens on a case-by-case basis to determine whether they are securities. Illegal fundraising is severely sanctioned.
Banks and financial institutions are forbidden from accepting or exchanging bitcoin or providing bitcoin-related services.
The Thai Securities and Exchange Commission issued new cryptocurrency regulation in mid-2018, allowing only Bitcoin, Ethereum, Bitcoin Cash, Ethereum Classic, Litecoin, Ripple and Stellar as part of trading pairs, including in in ICOs.
All digital asset transactions operators, including ICO companies, exchanges, brokers etc., need to be registered with the Thai SEC. Only Thai-based companies can apply.
ICO companies must have a capital of at least 5 million baht to be allowed to register and are required to monitor ICOs for a minimum of one year.
Ugandan financial and banking authorities have issued dire warning against cryptocurrency in the past. However, with Binance’s local involvement, the government seems to be leaning toward a friendlier blockchain and cryptocurrency regulation package. So far, the cryptocurrency ban stays in place.
Ukraine’s Financial Stability Council has agreed on a framework for recognizing cryptocurrencies and tokens as financial instruments. In response to years of unwittingly hosting money laundering operations, the new cryptocurrency regulation package aims to define AML and KYC requirements, license cryptocurrency operators, define responsible bodies etc.
Cryptocurrency taxation is under heated debate, with one bill proposing an initial 5% tax for natural and legal entities, to increase to 18% in 2024 for business revenues. Another bill asks to cut crypto taxes until 2030.
United Arab Emirates
All transactions in “virtual currencies” are prohibited, mainly for their susceptibility in being used to launder money or finance terrorism.
United Kingdom (EU)
No specific cryptocurrency regulation is in place, although regulation is necessary to make sense of the market. So far, the market was not considered to be large enough to warrant regulation. VAT is extracted from suppliers for “goods or services sold in the UK in exchange for cryptocurrency”.
“For the tax treatment of virtual currencies, the general rules on foreign exchange and loan relationships apply”, which means that cryptocurrency transactions are deemed equivalent to regular transactions under the current corporate tax rules. For unincorporated businesses, profits and losses from cryptocurrency transactions fall under the income tax.
In December 2017, near peak bull craze, Venezuela decided to create its own cryptocurrency, despite opposition from its central financial institutions. The petro is supposedly backed by five billion barrels of oil and is touted as the savior of Venezuela’s hard-hit economy, crippled by international sanctions and generalized poverty. After a $700+ pre-sale, president Maduro claims $5 billion were raised during the ICO. Almost everyone else is highly skeptical of these claims. However, all that means cryptocurrencies have found fertile ground in Venezuela.
Vietnam’s State Bank has made cryptocurrencies virtually illegal. You can own it, but you cannot use it. Anyone in violation of Vietnam’s cryptocurrency regulation will be fined. Contradictory reports state that the government is considering allowing cryptocurrencies as an investment asset.
United States of America
There is, at the moment, no coherent cryptocurrency regulation framework. SEC Chairman Jay Clayton has repeatedly stated that he believes ICOs should be seen as securities offers, however many ICO companies are wary of tokens seen as securities. An office to advise ICO companies was recently set up.
Cryptocurrency regulation differs or is contradictory not only by state, but also on a federal level. The Financial Crimes Enforcement Network sees exchanges as money transmitters and tokens as “other value that substitutes for currency”. On the other hand, the IRS taxes cryptocurrencies as property.
Anti-Money Laundering and Combatting the Financing of Terrorism are covered under the Bank Secrecy Act. The four points of the Howey test determine whether cryptocurrencies are securities and fall under the SEC’s jurisdiction. Depending on circumstances, cryptocurrencies can also be deemed commodities and fall under the CFTC’s gambit.
Zambia’s Securities and Exchange Commission has recently issued a strong warning against cryptocurrencies, but stopped short of banning them. It merely requires individuals to exercise cautions and exchanges to stay within the law. If cryptocurrencies meet the criteria for securities, they should register with the Commission.
There is no cryptocurrency regulation in Zimbabwe. As in most countries with fuzzy regulations, there are strong cautions against virtual currencies as being at high risk for money laundering, terrorism financing, tax evasion and fraud.