One of the problems that most worries many users and investors of digital assets, especially for companies, is the regulation of crypto.
The regulatory regime surrounding cryptocurrencies is fragmented and extends to the extremes of outright bans in some jurisdictions, to some countries that are strong advocates.
The intentions of the various areas of the world seem to emerge more clearly with respect to the phenomenon of cryptocurrencies and their regulation and, through the “compendium of regulations on cryptocurrencies” drawn up by Thomson Reuters in June. This article aims to provide a summary by observing the provisions both in the countries that prohibit the use of these tools and in those that are favorable.
Crypto regulation in the United States
In the United States although the SEC is widely regarded as the most powerful regulatory entity, FinCEN of the Treasury, Federal Reserve Board and the Commodity Futures Trading Commission ( CFTC ) have issued their own different interpretations and guidelines. The SEC often views cryptocurrencies as securities, the CFTC considers bitcoin a commodity, and the Treasury Department calls it currency.
Some member states have regulated cryptocurrencies while others are considering different ideas on the matter.
- New York has proposed a conditional license to facilitate the operation of start-ups dealing with virtual currencies.
- The Wyoming has enabled the creation of a bank specifically designed to give the opportunity to companies to hold digital resources in a safe and legal.
- L ‘ Oklahoma introduced a bill authorizing the use and exchange of criptovalute in government agencies.
The US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has issued a bill requiring crypto traders to keep records and verify customer identity in transactions involving digital assets. Despite the slightly confusing regulatory framework, the United States is considered to be the country with the largest number of investors in cryptocurrencies, exchanges, trading platforms, mining companies and investment funds.
Read in Canada
The Canada was one of the first to adopt this system and it was always seen as a country of “crypto-friendly”. In 2018, the Canadian Securities Administrators (CSA) issued a notice clarifying that the requirements of the investment protection law would also apply to cryptocurrencies and platforms that facilitate their trading.
After June 2020, Canadian Money Laundering Law required all entities dealing with virtual currency to register with the Financial Transactions and Reports Analysis Center of Canada (FINTRAC) and implement the Anti-Money Laundering and Combating the Financing of Applicable Terrorism .
The requirements also apply to overseas-based businesses if they have Canadian customers. The Canada Revenue Authority (CRA), which regulates tax laws, generally treats cryptocurrency as a commodity for the purposes of the Income Tax Act.
In Mexico, during a press conference in July, Finance Minister Arturo Herrera made it clear that any financial institution based in Mexico is not authorized to carry out and offer transactions with virtual assets to the public , specifically mentioning Bitcoin, Ether and XRP.
The Mexican government and Banxico thus take a strong anti-crypto stance, especially after the statements of Ricardo Salinas Pliego, the third richest man in Mexico and founder of Banco Azteca, who through a tweet announced his interest in making his bank the first in the nation to accept Bitcoin.
But to fight the signs and stop the laundering by crypto, the government issued, in 2018 , a new law about monitoring the use of criptovalute by the authorities. Under this law, all registered cryptocurrency trading platforms are required to report transactions that exceed 56,000 pesos ($ 2,830).
Crypto in Latin America
In Latin America , Colombia, Chile, Uruguay, Peru and Venezuela have a permissive stance towards Bitcoin, although there is still no current legal legislation.
In Argentina , investing in cryptocurrencies is legal but they are not considered legal tender as they are not issued by the government.
In Brazil it is currently discussing a bill that would allow to issue, transfer and utilize criptovalute freely. The Brazilian Comissão de Valores Mobiliários has also previously approved two crypto ETFs.
In El Salvador, the plan to make bitcoins legal tender by this September continues, making it the first country in the world to declare Bitcoin a legal currency.
Conversely, to protect their financial system, Bolivia and Ecuador have outlawed Bitcoin. As they estimate that by not being able to control them, they will negatively affect their economic stability. Furthermore, with this regulation, they will be able to minimize the use of these resources to finance illegal activities.
Regulation in Europe
The European Commission has introduced a directive on “Cryptocurrency Markets” to regulate trade and support digital finance.
All EU states must also follow the AML 5 directive which provides strict rules to combat money laundering and terrorist financing, including cryptocurrency activities under these AML obligations.
The EU executive added that issuers of particularly significant and asset-backed cryptocurrencies, the so-called global stablecoins, will be subject to stricter requirements.
It is also important to remember that, in 2018, 23 countries of the European Union joined the European Blockchain Partnership .
In the UK , however, all companies engaged in cryptocurrency-related activities must register with the Financial Conduct Authority. Crypto platforms can apply for the “Authorized Payment Institutions” license: BCB Payments Limited has become the first digital entity to obtain this license in the UK.
The UK High Court recently recognized Bitcoin as property under the UK common law.
Control increased when FCA ruled in June that Binance, the world’s largest cryptocurrency exchange platform, must not carry out any business without prior written consent.
The FCA has also banned the trading of cryptocurrency derivatives .