The mainstream has embraced cryptocurrencies they have seen a huge rise in popularity in recent years. As governments begin to respond to this new business various issues have emerged. Continue reading?
Crypto traders should be aware of any changes to the regulatory framework, since they can affect the coin’s value.
Governments have employed a wide range of approaches to regulate Cryptocurrency Exchange platform, even taking the time to define the assets in various ways. So far the regulation of digital currencies has mostly focused on:
1. Consumer protection
The primary goal of the government has always been to protect the interests of consumers. This is due to two reasons. First, cryptocurrencies have proved to be volatile, and, secondly because they’re created to exist in a way that is not subject to any form of central control, which means regulation can easily be disregarded by anyone with access to the internet.
2. Tax policy
Taxation is one of many concerns that arise from permitting investment and the use of cryptocurrency. In this regard, the difficulty is to categorize cryptos and the specific activities involving them for purposes of taxation. This has resulted in an unintended divergence in how cryptocurrency is classified for purpose of taxation. This means that, depending on the location and entity who is benefited by any gain in value, cryptocurrency can be subject to taxation on income or VAT, as well as corporation tax, with certain jurisdictions permitting the deduction of losses. The countries that were surveyed have classified cryptocurrencies differently for tax purposes as shown by these examples:
Israel – Taxed as a asset
Bulgaria is taxed as a financial asset
Switzerland is taxed as a Foreign Currency
Argentina and Spain are both subject to income tax
Denmark is subject to income tax and losses can be deducted
United Kingdom: – corporations pay corporate tax, unincorporated businesses pay income tax, and individuals are required to pay tax on capital gains.
The countries that have been regulated cryptocurrencies
The greatest cryptocurrency transactions are anonymous, and they can cross borders. This makes it challenging to identify the source of the money that flows into the cryptocurrency networks. It also makes it difficult to know the laws of the country that apply.
The fact that research by JPMorgan has shown that the majority of transactions go through exchanges that are registered in countries such as Malta, Belize, and Seychelles. They could easily be moved if the regulatory landscape changed in these countries, indicating these changes could have little effect. Binance, for instance, was relocated from Hong Kong to Malta in response to regulatory changes.
Since bitcoin is the most popular coin according to market cap and market cap, it will give a rough indication of the volume of transactions occurring in each region’s economy and, in turn, the areas which changes to regulations would be most likely to have the largest impact on the prices.
These are just a few countries in which cryptocurrency is legal.
In Finland, Bitcoin is treated as a commodity and not as a currency.
In Belgium, the Federal Public Service of Finance has also made Bitcoin exempt from tax on value added (VAT).
Bitcoin in Cyprus isn’t regulated, nor monitored.
In the U.K., Bitcoin is subject to certain tax rules.
The National Revenue Agency of Bulgaria (NRA), has included Bitcoin as a tax item in its current tax law.
Bitcoin in Germany is legal in Germany, but taxes are different depending upon whether you’re dealing the exchange, the authorities, miner, enterprises, or users.
In Australia, Bitcoin is considered as a currency just like other. It permits companies to trade, mine or even buy it.
Bitcoin exchanges in Canada are regarded as money service businesses. The Canada Revenue Agency (CRA) considers it a commodity.
The United States has a positive view of Bitcoin. But, a number of agencies within the government are trying to limit or stop the use of Bitcoin for illicit transactions.