Crypto and regulations

The status of cryptocurrencies and crypto-mining varies by country and legislation. From the legal perspective, some countries are relatively friendly (Australia, Brazil, Canada, France, Germany, Italy, Japan, South Africa, Turkey, UK, US, Chile, Netherlands, Singapore, Spain), others are neutral (e.g., Argentina, Jamaica, Rwanda, Senegal), and about a dozen countries are unfriendly to crypto (e.g., Morocco).

Although many governments attempted to regulate the use of cryptocurrency, there’s still plenty of legal uncertainties so far unaddressed. At first, governments of Nepal, Bolivia, Kyrgyzstan, Lebanon, Iceland, and Ecuador have shown strong opposition to bitcoin. Indonesia, Pakistan, Algeria, Afghanistan, and Bangladesh have banned crypto for religious reasons. In China, individual use (buying and selling) and mining of crypto are legal while its use by financial institutions is prohibited. The Chinese government has recently prohibited crypto trading and ICOs. In Venezuela, crypto-mining is considered a criminal activity. Taiwan allows crypto but has banned the use of Bitcoin-ATMs a couple of years back. In countries like Mexico, Saudi Arabia, Vietnam, Thailand, and South Korea cryptocurrency use or some aspects of it are restricted.

According to various sources, cryptocurrencies are currently banned in Ecuador, Kyrgyzstan, Bangladesh, Bolivia. Many countries including Canada, Finland, France, Germany, Japan, South Korea, Jordan, Luxembourg, Mexico, Spain, Sweden, Switzerland have issued or are planning to release regulations for crypto use alongside with tax obligations. Cryptocurrencies are unregulated in most of the countries (including Argentina, Italy, Japan, South Africa, Turkey, UK) and are therefore legal.

Crypto-laws in the EU

In the EU, bitcoin is treated as a means of payment, and a currency. In Germany, for instance, it is taxable. Conversion between fiat and bitcoin is exempt from VAT/GST tax. The tax is only applied when you shop for bitcoin in the EU which makes it convenient for individuals and businesses. In countries where crypto-mining is not sufficiently regulated, various taxes can apply, e.g., income tax deducted from miners and traders. Miners’ energy bills can be taxed too.

European banks, except for just a few, generally keep away from crypto and are more interested in the blockchain technology and its implementation for data collection and storage.

In 2016 the EU Parliament realized that cryptocurrencies could be used as a remedy for money laundering, terrorist financing, and tax evasion which led to the dissemination of crypto-exchanges with compulsory KYC and AML procedures such as scanning user accounts for suspicious, and criminal activities. From the user’s perspective, the focus of crypto-exchanges on legal compliance added an extra layer of security, and at the same time, has put an end to anonymity. That applies to a growing number of countries such as USA, India, etc.

Maria Popova
Maria Popova is a freelancer and entrepreneur who started following the crypto-agenda in 2014 when she was asked to write about bitcoin for a news website. As a non-techie person, she was fascinated by the chain reaction of disruptive inventions initiated by cryptocurrencies, and the rise of new market opportunities. For this course, Maria has blended her personal user experience and expertise with the most up-to-date research and study materials into a comprehensible narration.

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