Regulations regarding crypto industry are constant debate around the world, and have a huge impact on the cryptocurrency market. Mostly crypto law regulations affect people in the country they are from, but in some instances law changes regarding crypto in other countries can impact your crypto holdings. Lets dive deeper into what is the current state with crypto laws world wide, and what we need to pay attention to.

We are going to look into crypto regulations within USA, European Union, China, United Kingdom, India, Canada, Brazil, Australia, Japan and Singapore.

USA

The US market is arguably the most important of all because it is one of the largest crypto markets in the world. The second largest crypto exchange by volume, according to CoinMarketCap, in the world is Coinbase, which is located in the US and has to obey US laws and regulations. Kraken is the 3rd crypto exchange by volume in the world, according to CoinMarketCap, and is also located in the US, and under US crypto laws and regulations. A few other important crypto exchanges located in the US are eToro, Uphold, Binance US, Crypto.com, and Robin Hood.

The US government handed jurisdiction to existing market regulators Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC) to further regulate the crypto market within the US. SEC was involved in a lawsuit against Ripple Labs, that was ruled in Ripple’s flavor as of July 2023, declaring its native token XRP sales to institutional investors as a investment contract, while XRP sales to retail investors was not considered investment contract. In recent months SEC has been targeting crypto companies Coinbase and Binance, aiming to clear up their crypto offerings and offer more robust customer protection and security according to their Chairman Gary Gansler.

THE current US government is also planning to look more closely into digital asset exchanges, and try to asses the potential risk involved with decentralized finance (DeFi) and Non Fungible Tokens (NFT’S) sometime in 2023. We can expect more government regulations towards cryptocurrencies in the US in the near future if everything continues to go in the current direction.

European Union

Individual member states have option to regulate cryptocurrencies on their own terms, but as of now cryptocurrencies are legal in most of the EU members, with main difference being the taxes ranging from 0% to 50% depending on the country.

EU 5th and 6th Anti Money Laundering Directives were passed recently, with the main focus on mandatory KYC/CFT obligations and more standardized reporting requirements. In 2022 EU agreed upon implementation of Market in Crypto Asset Regulation (MiCA), which increases consumer protection, brings new licensing requirements and sets up easy to understand crypto industry conduct.

Earlier this year, EU parliament approved licensing requirements for certain crypto service providers, with the intention to have easier access to important information that can stop money laundering and terrorist funding using crypto.

China

The People’s Bank of China (PBOC) has a ban on all crypto exchanges within the country, and sees them as a place where public financing is made possible without approval. Furthermore, China considers cryptocurrencies as property and has placed a ban on Bitcoin mining in May 2021. This ban forced large Bitcoin mining operation in China to shut down or relocate to other legal jurisdictions. In September of 2021, China completely banned all cryptocurrencies and we are to see is this going to stay for good or just for a period of time.

In the meantime China has been working on digital yuan (e-CNY), and in August 2022, the first round of the digital pilot program was tested allowing China Central Bank to settle trades with Honk Kong, UAE and Thailand.

United Kingdom

In the UK cryptocurrencies are considered property (not a legal tender), and investors are still obligated to pay taxes on their crypto gains. The amount of taxation depends on the crypto activity and the personal financial situation.

Crypto exchanges have to register with the UK Financial Conduct Authority (FCA), and have to follow certain standards such as Know Your Client (KYC), combating and financing of terrorism (CFT) and anti-money laundering (AML). Crypto exchanges and custodian wallet providers have an obligation to comply with reporting rules set up by Office of Financial Sanctions Implementation (OFSI), and have to report any suspicious person that is a subject to sanctions or has performed a financial sanctions offense.

India

Crypto laws are not so clear in India, where government did not decided on legalization or ban of cryptocurrencies. However, there is a bill proposed in 2021 that aims to ban all private use of cryptocurrencies in India, but it has not been voted on by this day and it stays up in the air. Currently India enforces 30% taxes on all crypto investments, an 1% tax deduction on crypto trades.

It is safe to say that currently crypto investors in India do not have clear laws to follow, and it is to be seen what is coming next. Indian central bank did launch pilot program for digital rupee in late 2022, and we are yet to see where this will lead in the future to come.

Canada

Canada has advanced crypto regulation in comparison the the rest of the world. All crypto investment firms operating in Canada are required to register with the Financial Transactions and Report Analysis Centre of Canada (FINTRAC). Crypto trading platforms and crypto dealers withing Canada are required to register with regional regulators as set by Canadian Securities Administrators (CSA) and Investment Industry Regulatory Organization of Canada (IIROC).

Canada also became a pioneer in approving Bitcoin exchange traded fund (ETF), available on Toronto Stock Exchange. Cryptocurrencies are treated as commodities from taxation point of view within Canada.

Brazil

Brazilian government passed a law in November 2022, that legalized cryptocurrencies as form of payment throughout the country. This in return skyrocketed the adoption on digital currencies within Brazil. This law does not make cryptocurrencies a legal tender in Brazil but it includes it in the definition of payment method. There is still work to be done regarding this, and the government is still to decide which office will be in charge of monitoring this law when in it is fully approved. Bitcoin is not considered legal tender in Brazil and all the tokens that are considered securities will be under the jurisdiction of Brazilian Securities and Exchange Commission (CVM).

Australia

Crypto exchanges are allowed to operate withing Australia after they register with Australian Transaction Reports and Analysis Center (AUSTRAC) and meet set AML/CTF obligations. Australian Securities and Investments Commission (ASIC) set up regulations regarding Initial Coin Offerings (ICO) in 2019, banning the privacy coin offerings that had options of being anonymous and hiding the money flow on their network.

Australia considers crypto as a legal property, and therefore crypto is a subject to capital gains tax. Australia hinted in 2021 that they are looking into regulating cryptocurrencies by creating licensing framework that will set up rules withing the country.

Japan

Japan has a forward thinking approach towards cryptocurrencies, recognizing them as legal property under Payment Services Act (PSA). The country classifies crypto trading gains as miscellaneous income and taxes it accordingly. All crypto exchanges operating in Japan are obligated to register with a Financial Services Agency (FSA), and follow AML/CFT obligations. All crypto exchanges withing the country are members of Japanese Virtual Currency Exchange Association (JVCEA), that was established in 2020.

Japanese government introduced plans to fight money laundering through crypto exchanges and introduced The Act of Prevention of Transfer of Criminal Proceeds which will be revised to collect customer information, with remittance rules started in May 2023.

Singapore

Singapore classifies cryptocurrencies as property. Long term capital gains in Singapore are not taxed, and many crypto traders move there in order to keep their entire gains. However, companies are not exempted of taxes on their crypto gains, and in this case it is treated as income. All exchanges within the country are regulated and licensed by Monetary Authority of Singapore (MAS)..

Conclusion

Since crypto inception in 2009, there has been ongoing debate about its regulations and legality. We can observe that, as crypto evolves, regulations do as well tryin to keep up. It is an ongoing process, that is a subject to controversy, constant debate, adjustment and efforts to understand the industry as whole while putting an end to fraudulent activities. We as users have to be aware of crypto regulations in our country of residence to stay withing the legal framework and to be able to profit in best way possible.