With the winter session of Parliament starting on November 29, the cryptocurrency bill is expected to be introduced this time, as India is moving towards regulating cryptocurrencies. Globally, different countries have reacted differently to cryptocurrencies, with some allowing them in a regulated manner and others banning them completely.
The global user base of cryptocurrencies increased by 190 per cent between 2018 and 2020 (now estimated to be in the range of 150-200 million), according to a policy research report published by Smahi Foundation, a non-profit organization based in Bengaluru.
Here is a list of countries that have a favourable approach towards cryptocurrencies and those that are close to the idea.
Countries With A Pro-Crypto Approach
El Salvador: This Central American country became the first to make Bitcoin legal tender on June 9, 2021. Although the US dollar continues to be El Salvador’s primary currency, cryptocurrencies can also be used for all financial transactions. Recently, El Salvador President Nayib Bukele announced that his government will build an oceanside “Bitcoin City” at the base of a volcano.
US And Canada: The US does not prohibit the use of cryptocurrencies but there are regulatory regimes for these digital coins that vary from state to state. New York and Wyoming have specific regimes for cryptos. In 2016 New York launched a licensing framework called ‘BitLicense’ for businesses and crypto exchanges, according to the Smahi Foundation report.
Recently, banking regulators in the US announced a plan to clarify the rules and regulations around how banks can use cryptocurrencies, reported news agency IANS.
Canada has also approved the use of cryptocurrencies. Canada Revenue Authority (CRA) generally treats cryptocurrency like a commodity for purposes of income tax, according to a report by Reuters.
UK, EU And Australia: There is no prohibition or any existing law for cryptocurrencies in European Union (EU) countries. Even in Australia, there is no specific law for crypto, except for certain taxation amendments. But there are some laws for some firms that need to register and implement KYC policies, report suspicious transactions, and comply with anti-money laundering (AML) legislation.
UK does not have any major prohibition on cryptocurrency, but certain financial norms are applicable to the crypto-related activity. However, the UK Task Force has stated that it will soon impose strict KYC/AML norms for crypto assets.
Japan, Malta And Singapore: Japan, Malta and Singapore do not have any prohibition on cryptocurrency. However, in Japan, crypto exchanges are specifically regulated under the Payment Services Act, while Malta has regulations under three acts: Malta Digital Innovation Authority Bill, Technology Arrangements and Services Bill and the Virtual Financial Assets Bill, according to the Smahi Foundation report.
The Monetary Authority of Singapore (MAS) and the Payment Services Act of 2019 regulate traditional and cryptocurrency payments and exchanges in Singapore, according to a Reuters report.
Countries With An Anti-Crypto Approach
China: The country has imposed prohibition on regulated financial institutions dealing with crypto assets or facilitating crypto-asset transactions. Chinese banks have prohibited the use of digital currencies in 2013 and moved up regulations after 2016. On September 24, 2021, China announced a ban on all cryptocurrency transactions and crypto mining, according to china.usc.edu, a US-based research firm.
The report further added that the decision was made in favour of reducing energy prices and greenhouse fuel emissions associated with crypto transactions.
Russia: Russia banned cryptocurrencies in September 2017. Russian President Vladimir Putin has repeatedly linked cryptocurrency with criminal activity, calling for closer attention to cross-border crypto transactions in particular, according to Euro news.
However, Russia may reconsider trading in cryptocurrencies in the coming future, as per some media reports.
Turkey: On April 16, 2021, the Central Bank of the Republic of Turkey issued a regulation banning the use of cryptocurrencies, including Bitcoin, directly or indirectly, to pay for goods and services by saying that it causes " irreparable" damages and there are significant risks involved in such transactions, reported Reuters.
Bangladesh: Bangladesh on December 24, 2017, banned cryptocurrencies, saying it was against their country's financial regulations (Money Laundering Prevention Act). Also, crypto traders in Bangladesh can face years of imprisonment in the Asian nation.
Others: Apart from these, countries, including Nepal, Qatar, Ecuador, Vietnam, Morocco and Bolivia, have also banned cryptocurrencies.
It remains to be seen what the way forward for cryptocurrencies in India is.