Getting your head around cryptocurrencies was hard enough before
governments got involved. But now that policy makers around the world
are drawing up fresh regulations on everything from exchanges to initial
coin offerings, keeping track of what’s legal has become just as
daunting as figuring out which newfangled token might turn into the next
Bitcoin.
The
rules can vary wildly by country, given a lack of global coordination
among authorities. And while that may change after finance chiefs discuss
digital assets at the Group of 20 meeting in Buenos Aires this week,
for the time being there’s a wide range of opinions on how best to
regulate the space. Below is a rundown of what major countries are doing
now.
Asia
Most
of the world’s cryptocurrency trading takes place in this tech-savvy
region, with Japan playing a dominant role after it introduced a licensing system for digital-asset exchanges last year. In Hong Kong, regulators have adopted a more hands-off approach while at the same time warning
crypto platforms to refrain from trading anything that qualifies as a
security without permission. Singapore’s deputy prime minister has called cryptocurrencies an “experiment,” adding that he doesn’t see a strong case to ban trading. Taiwan authorities are taking a wait-and-see approach, while the Philippines plans to roll out rules for ICOs by year-end.
China, once a global hub for cryptocurrency trading, now leads the world in cracking down.
It has outlawed digital-asset exchanges and ICOs, blocked online access
to overseas trading platforms and cut off power to Bitcoin miners.
South Korea, which became a hotbed of cryptocurrency activity last year,
is also tightening oversight as it works on a comprehensive
set of regulations, though it has allowed exchanges to keep operating
for now. In India, where crypto-mania has been relatively subdued, the
government has said it doesn’t consider digital currencies to be legal tender and will take measures to curb their use.
Americas
Most cryptocurrency trading in the U.S. takes place in a legal gray area, a point highlighted
by the nation’s two top market watchdogs in testimony to Congress in
February. Still, the Securities and Exchange Commission has been
scrutinizing everything from ICOs to cryptocurrency hedge funds and trading venues. How exactly it plans to crack down on the industry remains to be seen. In
Canada, regulators have said that ICOs may be treated as securities and
that products linked to cryptocurrencies should be considered high-risk.
At the same time, the country’s stock exchanges have become popular
destinations for crypto-related stocks and exchange-traded funds.
Brazil’s market regulator, meanwhile, has barred funds from investing in
cryptocurrencies because they aren’t classified as financial assets.
Europe, Middle East and Africa
The
European Commission is still reviewing the bloc’s regulatory framework
for cryptocurrencies. The European Securities and Markets Authority,
which coordinates standards across member states, has proposed
restrictions on derivatives tied to virtual currencies for retail
investors, and is also assessing how the EU’s new MiFID II rules apply
to digital assets. One regulation that’s already in the pipeline:
platforms that exchange virtual currencies for conventional money will
soon have to verify the identity of their customers. At the national level, Germany has cracked down
on trading venues that lack permission to offer brokerage services and
French authorities have said that online platforms for
crypto-derivatives should face tough reporting and business conduct standards. In the U.K., a parliamentary committee is looking at how to police digital currencies. Russia’s finance ministry unveiled draft legislation
in January that would ban cryptocurrency payments while allowing ICOs
and the exchange of virtual currencies into the traditional sort. To
make the rules permanent, the ministry may have to overcome opposition
from the nation’s central bank.
It’s
mostly a gray area for cryptocurrency regulation in major African
economies. South Africa’s markets regulator doesn’t oversee virtual
currencies or digital-asset exchanges, though the central bank has said
it will investigate an “appropriate policy framework and regulatory
regime.” In Zimbabwe, where digital currencies are traded on exchanges
and used
for remittance payments, the monetary authority has warned about the
risk of “money laundering, terrorism financing, tax evasion and fraud.” It’s a similar story in Kenya, one of Africa’s most tech-savvy nations. There, Bitcoin and other cryptocurrencies have grown in popularity even as officials have warned
against trading them. In Nigeria, cryptocurrency markets aren’t
regulated, but the central bank, which likens Bitcoin trading to gambling, has said that will probably change. (Via Bloomberg)
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