The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, which has been listed to get introduced in the winter session of the parliament that begins on November 29, aims to “create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India”. In this respect let us have a look at the global crypto regulations and their impact on the economy.
The new crypto bill in India aims to prevent all private digital currencies in the country, however, it enables for certain exceptions to foster the underlying technology of digital currencies and their uses.
Values of digital currencies on the local exchanges crashed in one night after the news regarding the ban broke even though the numbers remained unchanged in the world market. According to industry sources, there was panic selling by the holders of crypto because of the fear of a cryptocurrency regulation in India that may arrive soon. Presently, there are no regulations or any ban on digital currency in India, however national responses on regulating or defining digital currencies differ broadly jurisdiction around the globe. Now you may wonder, who regulates cryptocurrency exchanges? Basically, it is not regulated by any authority except the company itself, but the government of the country has a say on how these exchanges will operate.
Global Crypto Regulations You Should Know
The stance of regulators and nations has ranged from the total ban on these financial assets to enable them to function with some regulations, to the other extreme of making crypto a legal tender trading in the absence of any specified guidelines. The global crypto regulations vary from country to country and their policies. All the crypto regulations 2021 is much different from where it was when it just began.
Regulators and governments are divided on how to categorize it as an asset or currency and also how to handle it from a functional point of view. The development of regulatory response and policies has been abnormally harsh, with no evident coordination in the response of the nations.
As mentioned above, the policy and regulatory response can differ from complete openness of the type that is seen in nations like El Salvador, which has permitted Bitcoin as their legal tender to the total shutdown of cryptos like China which has enacted strict regulations and ban on both digital currencies and service providers.
Nations like India are in the middle, still figuring out the best ways by which cryptos can be regulated after some regulatory and policy experimentations. The European Union and the United States have been working actively to pin down the regulatory mandate while continuing the discussion. Among the nations that have not issued any detailed regulations, there are those that have defined and identified these currencies. Let us have a look at the blockchain & cryptocurrency regulation 2021 and also all the global crypto regulations.
Let us take this nation for instance. Via its Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, defines virtual currency as:
- a digital portrayal of value that can be employed for investment or payment goals that is not a fiat currency and something that can be readily traded for funds or for another digital currency that can be easily exchanged for funds; or
- a private key of a cryptographic mechanism that allows an entity or person to get access to a digital portrayal of value which has been referred to in paragraph.
As per a recent report, Canada is among the early adopters of crypto, and the CRA (Canada Revenue Authority) generally treats digital currency like a product for the purpose of the Income Tax Act of the country.
In the supervision of the Financial Service law of this country, digital currencies are included in the definition of financial assets. The Israeli securities regulators have stated that digital currency is a security measure while according to the Israeli Tax Authority, digital currency is an asset that demands 25% on the capital gains.
In Germany, the FSA (Financial Supervisory Authority) marks digital currencies as the “unit of account” and hence, “financial instruments”. According to Bundesbank, Bitcoin is a crypto token provided that it does not complete the typical characteristics of a currency. However, legal entities and citizens can trade or purchase crypto assets as long as they are done via custodians licensed and exchanges with the GFFSA (German Federal Financial Supervisory Authority).
In this nation, Her Majesty’s Revenue & Customs, while not taking into account crypto assets to be money or currency, notes that digital currencies have a unique identity and cannot hence be directly compared to any other format of payment mechanism and investment activity.
In this country, different states define and regulate digital currencies differently. While the federal government does not identify digital currency as their legal tender, definitions that have been issued by the state identify the decentralized nature of digital currencies.
In Thailand, the business of digital currencies is required to apply for a license, keep an eye for unfair trading practices, and is thought of as the “financial institutions” for anti money laundering purposes among others as per a report. A few days back, Siam Commercial Bank, which is the oldest lender in this country, announced a shift to buying a 51% stake in the local digital currency exchange Bitkub Online.
The Bottom Line
While most of these nations do not identify digital currencies as a legal tender, they do identify the value of these assets and their future and also indicate their operation either as an exchange medium, unit of account, or a store of value. These global crypto regulations impact their economies respectively and use them in their convenient way.