One of the areas of most concern to ICO investors is the current regulatory environment. Here, the Bitcoin Market Journal team takes a look at the status of ICO regulation globally. (Be sure to bookmark this page, as our team of researchers regularly updates the status of ICO regulations!)
Legality of Cryptocurrencies by Nation
|Country / Organization||Cryptocurrency Status||ICO / Security Token Status||Notes|
|Anguilla||Regulated||Regulated||The Anguilla Utility Token Offering Act (the AUTO Act) was introduced in 2017 to regulate how ICOs and security tokens should be issued.|
|Antigua and Barbuda||Not regulated||Not regulated||Antigua and Barbuda allow non-profits and charities to fundraise by selling the state-supported Antigua and Barbuda Development Coin. The Attorney General has been instructed to draft a regulatory framework on bitcoin. No clarification on the current status of the regulations is available.|
|Argentina||Not regulated/not recognized as currency||Not regulated||With the Central Bank failing to recognize altcoins as legal tender, there is ambiguity regarding whether altcoins are commodities or goods.|
|The Bahamas||Partial regulated/encouraged||Subject to securities laws||The Bahamas is currently considering legislation that would define virtual currencies. Currently, cryptocurrencies are subject to securities rules.|
|Barbados||Not regulated||Not regulated|
|Belize||Not regulated/licenses not issued to cryptocurrency businesses||Not regulated|
|Bermuda||Not regulated/currently drafting new regulationsIllegal||Not regulated|
|Bolivia||Banned||Banned||Bolivia does not recognize currencies not issued from a central bank or monetary authority.|
|Brazil||Not regulated/discouraged||Not regulated|
|British Virgin Islands||Not regulated||Not regulated|
|Canada||Regulated/partial banking ban||Subject to securities laws||While the cryptocurrency stance of Canada is like that of the United States regarding deferring regulations to existing securities rules, there are key differences. One is the banking sphere, where concerns about the speculative nature of cryptocurrency led to an unofficial banking ban.
Per the Financial Consumer Agency, only the Canadian dollar is recognized as legal tender. While altcoins are subject to income tax, purchases made with altcoins are considered barter transactions. Altcoins are also treated as commodities, as they are subject to capital gains reporting and taxes.
|Cayman Islands||Not regulated||Highly regulated/encouraged||The Cayman Islands has no specific regulations regarding cryptocurrencies. However, the nation subjects some crypto assets to its securities regulatory framework.|
|Chile||Not regulated||Not regulated|
|Colombia||Not regulated/not recognized as currency||Not regulated|
|Costa Rica||Not regulated/not recognized as currency||Not regulated|
|Dominica||Not regulated/encouraged||Not regulated|
|Dominican Republic||Not regulated/banking ban||Not regulated||Financial institutions are banned from using crypto assets in any transactions in the Dominican Republic. Individuals, however, can use crypto assets “at their own risk.”|
|Eastern Caribbean Currency Union (Anguilla, Antigua and Barbuda, the Commonwealth of Dominica, Grenada, Montserrat, Saint Kitts and Nevis, Saint Lucia, and Saint Vincent and the Grenadines)||Not regulated/encouraged||Not regulated||Several of the smaller Caribbean economies grant monetary authority through a shared central bank, the Eastern Caribbean Currency Bank. The ECCB does not ban the use of altcoins, with some of the participating members currently having agendas supporting or promoting cryptocurrency and blockchain technology.|
|Ecuador||Not regulated/not recognized as currency||Not regulated||The Central Bank of Ecuador does not recognize crypto as an authorized payment method but does not ban its use.|
|El Salvador||Not regulated/not recognized as currency||Not regulated|
|Grenada||Not regulated||Not regulated|
|Guatemala||Not regulated/not recognized as currency||Not regulated|
|Honduras||Not regulated/not recognized as currency||Not regulated|
|Jamaica||Not regulated||Not regulated|
|Mexico||Regulated/recognized as virtual asset/not recognized as legal tender||Subject to securities laws||Mexico is one of the only major American nations that have laws that specifically recognizes cryptocurrency. Businesses using cryptocurrencies must disclose the associated risks to their clients; beyond this, crypto assets are treated as securities depending on their characteristics. There are no personal restrictions against cryptocurrency use.|
|Montserrat||Not regulated||Not regulated|
|Nicaragua||Not regulated||Not regulated|
|Saint Kitts and Nevis||Not regulated/not recognized||Not regulated||Cryptocurrency is not accepted as a measure of investment for the Citizenship by Investment Unit (CIU).|
|Saint Lucia||Not regulated||Not regulated|
|Trinidad and Tobago||Not regulated/not recognized||Not regulated||Following the launch of an ICO, Trinidad and Tobago urged the public to practice extreme caution with cryptocurrencies.|
|United States||Partially regulated/recognized as virtual asset/not recognized as legal tender||Subject to securities laws and individual state regulations||Except for bitcoin, Ethereum, and other “currency-type” crypto assets, the United States treats all crypto assets as securities. Individuals are free to use and possess crypto assets if they are lawfully obtained. Crypto assets are recognized as money and – depending on the state or municipality – legal tender for non-federal debts.
Business requirements for use and possession for crypto assets depend on the state and local regulations. These range from no special licensing needed for crypto business money transmitters to requiring fiduciary deposits for all transactions transmitted from, to, and through a state. Crypto assets are taxed as commodities.
|Venezuela||Banned/issued national cryptocurrency||Banned||Venezuela has issued a national cryptocurrency, the petro, to get around international oil sanctions. However, the Asamblea National (National Assembly) has ruled that all cryptocurrencies, including the petro, are illegal as they were not approved by the Central Bank. However, the Government has ruled that the petro will become legal tender for all transactions involving government institutions within 120 days of April 9, 2018.|
|European Union||Not regulated||Regulated/subject to securities laws||While there is nothing that dictates that the European Union’s stance on cryptocurrencies must be shared by member nations, most have followed the Eurozone’s lead. This means that member states must impose AML/KYC rules for cryptocurrencies. Additionally, cryptocurrency transactions are ruled to be exempt from value-added taxes (VATs).|
|Albania||Not regulated||Not regulated|
|Armenia||Not regulated/discouraged||Not regulated|
|Austria||Partially regulated/recognized as virtual asset/not recognized as legal tender||Subject to securities laws||Austria recognized cryptocurrencies as “other intangible commodities,” instead of legal tender. For taxation purposes, they are treated as a business asset.|
|Azerbaijan||Not regulated/currently drafting new regulations||Not regulated|
|Belarus||Permitted||Regulated||Per a 2018 presidential decree, the buying, selling and mining of cryptocurrency is permitted. This is intended primarily for businesses operating in the High Technologies Park in Belarus. Fiat money exchange must be approved by the National Bank. There are no established rules in the decree that regulates the operation of ICOs and crypto exchanges; they can self-regulate, with the caveat that they are to be treated as high-risk clients, like casinos.|
|Belgium||Not regulated||Not regulated|
|Bosnia and Herzegovina||Not regulated||Not recognized/partial banking ban||The Central Bank of Bosnia and Herzegovina has determined that only the convertible mark is the legal tender of the country. The Central Bank has also banned the conversion of crypto into the mark and vice versa.|
|Bulgaria||Not regulated/taxed as capital gains||Not regulated|
|Croatia||Not regulated||Not regulated|
|Cyprus||Not regulated||Not regulated|
|Czech Republic||Not regulated||Not regulated|
|Denmark||Not regulated||Not regulated|
|Estonia||Regulated/not recognized as legal tender||Regulated||Per the Law Library of Congress, “On November 27, 2017, Estonia enacted amendments to its anti-money laundering legislation that define cryptocurrencies (virtual currencies) as value represented in digital form that is digitally transferable, preservable, or tradable and that natural persons or legal persons accept as a payment instrument, but that is not the legal tender of any country or funds (banknotes or coins, scriptural money held by banks, or electronic money)...Virtual currency service providers are required to have a license.”|
|Finland||Not regulated/taxed as capital gains||Not regulated|
|France||Not regulated/currently drafting new regulations||Not regulated/currently drafting new regulations|
|Georgia||Not regulated/not recognized as legal tender||Not regulated|
|Germany||Regulated/not recognized as virtual currency||Regulated||Per the Law Library of Congress, “The German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, BaFin) qualifies virtual currencies/cryptocurrencies as units of account and therefore financial instruments. Undertakings and persons that arrange the acquisition of tokens, sell or purchase tokens on a commercial basis, or carry out principal brokering services in tokens via online trading platforms, among others, are generally required to obtain authorization from BaFin in advance.”|
|Greece||Not regulated||Not regulated||Greece has adopted the position of the European Union regarding cryptocurrency.|
|Guernsey||Not regulated/discouraged||Not regulated/unfriendly||Per the Law Library of Congress, “Virtual currencies are an area of innovation which the Commission continues to monitor closely while recognizing that there are currently significant risks associated with them. In the light of those risks, the Commission will adopt a cautious approach and may well refuse applications to register financial services business where the use of virtual currency is involved. However, this approach will be regularly reviewed in the light of international developments.’”|
|Iceland||Unclear||Unclear||Cryptocurrency was banned in Iceland. However, restrictions have loosened to permit use, although the legal status of such use remains murky.|
|Ireland||Unregulated/taxed as capital gains||Subject to securities laws when applicable|
|Isle of Man||Regulated/accepted as legal tender||Regulated|
|Italy||Regulated||Regulated||Italy recognizes that crypto transactions do not generate VAT and that cryptocurrencies used for non-corporate or non-commercial reasons do not produce taxable income.|
|Jersey||Regulated/encouraged||Regulated||Per the Law Library of Congress, “The jurisdiction issued a consultation on the regulation of cryptocurrencies in 2015, noting ‘[t]he creation of a business-friendly framework that encourages innovation, jobs and growth in both the financial services and digital sectors is a priority for the Government of Jersey.’”|
|Kosovo||Not regulated||Not regulated|
|Latvia||Regulated/not recognized as legal tender||Regulated||Latvia has established a regulatory framework that introduced monitoring requirements for virtual currency service providers.|
|Liechtenstein||Regulated||Regulated||Per the Law Library of Congress, “The Financial Market Authority of Liechtenstein (Finanzmarktaufsicht, FMA) has issued a factsheet on virtual currencies like bitcoin. It stated that virtual currencies are generally defined as a ‘digital representation of a (cash equivalent) value that is neither issued by a central bank or a public authority’ and do not constitute fiat currency (legal tender). However, it is pointed out that virtual currencies are similar to fiat currencies when they are used as a means of payment or traded on an exchange. The production and the use of virtual currencies as a means of payment are currently not subject to any licensing requirement governed by specialized legislation...Business models are assessed on a case-by-case basis. In particular, due diligence requirements according to the Due Diligence Act may apply.”|
|Luxembourg||Not regulated/recognized as currency||Not regulated/currently developing new regulations|
|Macedonia||Banned||Banned||The National Bank of Macedonia has warned that it is illegal for Macedonian residents to have foreign bank accounts, including crypto accounts.|
|Malta||Not regulated/currently developing new regulations||Not regulated/currently developing new regulations|
|Moldova||Not regulated||Partial regulated||Regulation has been passed in Transnistria toward creating a free economic zone for crypto mining.|
|Montenegro||Not regulated||Not regulated|
|The Netherlands||Not regulated||Not regulated|
|Norway||Not regulated||Not regulated||Profits from cryptocurrencies are required to be reported as capital gains for taxation purposes. Cryptocurrencies are exempt from Norway’s value-added tax.|
|Poland||Not regulated||Not regulated|
|Portugal||Not regulated||Not regulated|
|Romania||Not regulated||Not regulated|
|Russia||Partially regulated/partially banned||Banned||Per the Law Library of Congress, “A draft law on digital financial assets was published by the Ministry of Finances on January 20, 2018, and introduced in the State Duma on March 20, 2018. The bill defines ‘mining’ as activities aimed at the creation of cryptocurrency with the purpose of receiving compensation in the form of cryptocurrency. Mining is treated as an entrepreneurial activity subject to taxation if the miner exceeds the energy consumption limits established by the government for three months in a row. As to initial coin offerings (ICO), only qualified investors are allowed to participate in them, except for cases to be defined by the Central Bank, according to news reports. Tokens and coins are classified in the bill as property and are not considered legal tender. The bill does not authorize the exchange of cryptocurrency for rubles or foreign currency. The exchange of tokens for rubles and foreign currency is allowed but only through licensed operators. The bill also provides a definition of a ‘smart contract.’”
Cryptocurrency market sites are currently banned for access on Russian territory, and current court decisions ruled that bitcoin is a currency surrogate that is banned in Russia.
|Serbia||Not regulated||Not regulated|
|Slovakia||Not regulated/not recognized as legal tender||Not regulated|
|Slovenia||Not regulated||Not regulated|
|Spain||Not regulated/exempt from value-added tax||Not regulated|
|Sweden||Not regulated||Not regulated|
|Switzerland||Regulated||Regulated||Per the Law Library of Congress, “Switzerland classifies virtual currencies as assets (property). It has relaxed regulatory burdens on and entry barriers for innovative Fintech companies while keeping risks associated with Initial Coin Offerings (ICOs) and cryptocurrencies related to investor protection, financial crime, and cyber threats in mind. There are currently no ICO-specific regulations, but depending on how the ICO is designed, financial market laws may be applicable. This is assessed on a case-by-case basis. Money laundering and securities regulation are the most relevant laws in this respect. Cryptocurrencies may also be subject to wealth, income, and capital gains tax.”|
|Ukraine||Not regulated/currently drafting new regulations||Not regulated/currently drafting new regulations|
|United Kingdom||Not regulated||Not regulated|
|Africa and the Middle East:|
|Bahrain||Partially banned||Partially banned||The use of bitcoin within Bahrain is forbidden, although Bahrain citizens can invest in bitcoin and bitcoin businesses outside of Bahrain.|
|Egypt||Banned||Banned||Cryptocurrency is considered haram or prohibited under Sharia in Egypt.|
|Ghana||Not regulated||Not regulated|
|Iran||Not regulated||Banking ban||Per the Legal Library of Congress, “Iran’s Central Bank announced in late April 2018 that it was prohibiting all Iranian financial institutions, including banks, credit institutions, and currency exchanges, from handling cryptocurrencies. The Central Bank’s decision was in line with Iran’s recent efforts to address deficiencies in its policies on anti-money laundering and combating the financing of terrorism—efforts undertaken to comply with the action plan of the Financial Action Task Force on Money-Laundering (FATF). The Bank’s decision was preceded by a debate between those in the country who were concerned about the risks inherent in the use of cryptocurrencies and those who believe their use is the wave of the future and essential to the country’s financial stability in light of US financial sanctions.”|
|Iraq||Banned||Banned||Cryptocurrencies are banned in Iraq as a response to the nation’s anti-money laundering legislation.|
|Israel||Not regulated||Regulated||Per the Legal Library of Congress, “In accordance with regulations issued in 2016, virtual currency is considered a ‘financial asset’ in Israel, for which the provision of financial services requires a license. As a financial asset, trade in virtual currency is subject to capital gains taxation.”
“In 2014 the Bank of Israel (Israel’s central bank), together with several regulatory agencies, issued a warning about the dangers associated with the use of virtual currency, including bitcoin. In a statement made by the Bank in January 2018, it clarified that it does not recognize virtual currencies as actual currencies, but rather as a financial asset. Although virtual currencies are not recognized as actual currency by the Bank of Israel, the Israel Tax Authority has proposed that the use of virtual currencies should be considered as a ‘means of virtual payment’ and subject to taxation.”
“The legitimacy of a bank’s refusal to provide banking services to a company that trades in bitcoin is currently under review by the Israeli Supreme Court. The Court has issued a temporary injunction against the bank’s complete blockage of the company’s activities in the account.”
|Jordan||Not regulated/discouraged||Banking ban|
|Kenya||Not regulated/discouraged||Not regulated|
|Kuwait||Not regulated||Banking ban||In lieu of regulations, which are currently being drafted, the banking sector is banned from engaging in all cryptocurrency activities.|
|Lebanon||Not regulated/plans to launch national cryptocurrency||Not regulated|
|Lesotho||Not regulated/discouraged||Banned||Per the Law Library of Congress, “The Bank issued a follow-up statement in February 2018, where in addition to providing information that reinforced the contents of the previous statement, it noted that cryptocurrencies are neither legal tender in Lesotho nor considered foreign currency. It also barred the operation of individuals and entities that promote investment in cryptocurrency because any and all investment advisors must be licensed.”|
|Mozambique||Not regulated||Not regulated|
|Namibia||Not regulated/not recognized as legal tender||Not regulated|
|Nigeria||Not regulated||Not regulated||The Central Bank of Nigeria temporarily banned all Nigerian banks from accepting bitcoin and other cryptocurrencies before clarifying its stance. The deputy director of the Central Bank of Nigeria’s Banking and Payments System is quoted as saying, “Central bank cannot control or regulate bitcoin. Central bank cannot control or regulate blockchain. Just the same way no one is going to control or regulate the Internet. We don’t own it.”|
|Oman||Not regulated||Not regulated|
|Qatar||Not regulated||Banking ban|
|Saudi Arabia||Not regulated||Not regulated/support for interbank cryptocurrency|
|South Africa||Not regulated/not recognized as legal tender||Not regulated|
|Swaziland||Not regulated/not recognized as legal tender||Not regulated|
|Turkey||Not regulated||Not regulated|
|Uganda||Not regulated/discouraged||Not regulated|
|United Arab Emirates||Banned/contradictory stance/de facto acceptance||Banned/contradictory stance/de facto acceptance||Technically, there is an absolute ban on cryptocurrencies in the UAE. Per the Law Library of Congress, "Under article D.7.3 of the Regulatory Framework for Stored Values and an Electronic Payment System, issued by the Central Bank of the United Arab Emirates in January 2017, all transactions in ‘virtual currencies’ (encompassing cryptocurrencies in Arabic) are prohibited.”
In practice, Dubai has issued licenses to trade cryptocurrencies. The UAE also is working with Saudi Arabia to develop an interbank cryptocurrency to facilitate cross-border payments and has established a regulatory “sandbox” for new blockchain projects.
With the UAE government seeking 50 percent of all government transactions conducted on blockchain by 2021, the Regulatory Framework contradiction is likely to be resolved via repeal. However, the legal action is currently not on the legislative agenda and the governor of the UAE Central Bank has issued a statement asserting that article D.7.3 did not include cryptocurrencies or blockchain technologies. The bank asserts that a proper regulatory framework is being developed.
|Zambia||Not regulated||Not regulated|
|Zimbabwe||Not regulated/not recognized as legal tender||Not regulated|
|Asia and Oceania:|
|Australia||Regulated||Regulated||Per the Law Library of Congress, “Regulatory approaches to digital currencies have been considered in some detail in Australia in recent years. A Senate committee completed its inquiry into this issue in 2015. In line with the Senate committee’s recommendations, provisions in the goods and services tax legislation were amended to avoid a double taxation effect with regard to digital currency transactions. Guidance from the ATO also addresses the capital gains tax and fringe benefit tax consequences of utilizing digital currencies.”|
|Brunei||Not regulated/not recognized as legal tender||Not regulated|
|Cambodia||Unclear||Unclear||Per the Law Library of Congress, “The status of cryptocurrencies in Cambodia is ambiguous. The National Bank of Cambodia (NBC) ‘signed an agreement with a Japanese firm . . . to develop a blockchain-based project for its own internal use, which would track interbank lending and transactions’ in April 2017. However, it only addresses interbank transactions. The NBC has ‘asked banks in Cambodia not to allow people to conduct transactions with cryptocurrencies.’”|
|China||Not regulated/tolerated||Banned||China’s position on cryptocurrencies has been fluid and reflective of Shanghai’s calculations and future planning. Currently, there is a shutdown on crypto assets in China in reflection of the possibility of the Chinese government starting a government-sponsored and controlled coin.|
|Hong Kong||Not regulated/not recognized as legal tender||Regulated/currently developing regulations||Per China’s “One Country, Two Systems” policy, Hong Kong can establish its own financial policies and laws. Hong Kong has traditionally stood as an oasis for Chinese crypto businesses that were crippled by China’s crackdown on ICOs.
Fears that Hong Kong’s open attitude to cryptocurrencies is creating potential avenues for criminal activities – as well as pressure from mainland China – has led Hong Kong to create a regulatory framework for crypto assets. This includes registration of crypto businesses, recognition of certain classes of tokens as securities, and strengthened custodial requirements.
|India||Not regulated/not recognized as legal tender||Banking ban/currently developing regulations||Even though there is no law banning the use of cryptocurrency, the Reserve Bank of India has banned its use in the banking sector. The RBI’s influence has spread to the private sector, with some cryptocurrency businesses being shut down and operators being arrested.|
|Indonesia||Not regulated/not recognized as legal tender||Not regulated|
|Japan||Regulated||Regulated||Japan is one of the most permissive nations toward crypto assets. However, high profile exchange hacks, including the Mt Gox hack, have led the nation to embrace strong crypto regulations.
From the Law Library of Congress, “Since April 2017, cryptocurrency exchange businesses operating in Japan have been regulated by the Payment Services Act. Cryptocurrency exchange businesses must be registered, keep records, take security measures, and take measures to protect customers, among other things. Cryptocurrency exchanges are also subject to money laundering regulations.”
|Kazakhstan||Not regulated/proposed ban||Not regulated/proposed ban|
|Kyrgyzstan||Not regulated||Not regulated|
|Macau||Not regulated||Not regulated/de facto banking ban||Per the Law Library of Congress, “The Monetary Authority of Macau (AMCM) issued a statement on September 27, 2017, warning the financial industry and the public about the risks of virtual commodities and tokens. ‘Any trading of these commodities involves considerable risks, including but not limited to those relating to money laundering and terrorism financing, against which all participants should remain vigilant,’ the statement said. According to the statement, the AMCM had issued a notice to banks and payment institutions in Macau to warn them not to participate in or provide, directly or indirectly, any relevant financial services, following a similar ban by Chinese authorities on the mainland on initial coin offerings (ICOs).”|
|Malaysia||Not regulated/not recognized as legal tender||Not regulated/currently developing regulations|
|Marshall Islands||Not regulated/issuing national cryptocurrency||Not regulated||The Marshall Islands is issuing a national cryptocurrency called the Sovereign, which would be used – along with the US dollar – as the island’s national currency.|
|New Zealand||Not regulated||Not regulated|
|Pakistan||Not regulated/not recognized as legal tender||Not regulated|
|Philippines||Not regulated/not recognized as legal tender||Regulated||Per the Law Library of Congress, “Bangko Sentral ng Pilipinas (BSP, i.e., the Philippines Central Bank) has issued guidelines concerning virtual currencies (VCs). Specifically, these Guidelines provide that since VCs are not backed by a central bank or a particular commodity and are not guaranteed by any country, they are not legal tender. However, since they are used as a conduit to provide certain financial services, such as remittances and payment transactions, entities that provide such services using VCs must register with the BSP and adopt adequate measures to mitigate and manage risks associated with such currencies. In addition, the Guidelines provide for penalties applicable to VC entities that conduct operations without the appropriate authorization from the BSP.”|
|Samoa||Not regulated||Not regulated|
|Singapore||Not regulated||Not regulated/developing new regulations|
|South Korea||Regulated||Regulated||Per the Law Library of Congress, “The South Korean government implemented a rule that allows trades in cryptocurrencies only from real-name bank accounts (‘real-name account system’) beginning January 30, 2018. Cryptocurrency dealers must have contracts with banks concerning cryptocurrency trades. The banks examine dealers’ management and cybersecurity systems before signing such contracts. In order to make a deposit into their e-wallet at a cryptocurrency dealer, a cryptocurrency trader must have an account at a bank where the cryptocurrency dealer also has an account. The bank checks the trader’s (customer’s) identity when it opens an account for the trader, and the trader reports his/her bank account to the dealer. The dealer also checks the identity of the trader and applies for registration of the trader’s account with the bank. Anonymous cryptocurrency traders may withdraw from their cryptocurrency accounts but cannot make a new deposit. Minors, as well as foreigners, regardless of their place of residence, are prohibited from trading in cryptocurrencies.”|
|Taiwan||Not regulated||Banking ban|
|Tajikistan||Not regulated/not recognized as legal tender||Not regulated|
|Thailand||Not regulated/currently developing new regulations||Banking ban||Per the Law Library of Congress,” The Bank of Thailand issued a circular on February 12, 2018, asking financial institutions to refrain from doing any business involving cryptocurrencies. Bangkok Bank halted transactions involving the trading of cryptocurrencies with a private Thai company, Thai Digital Asset Exchange (TDAX), on February 24, 2018. On February 27, 2018, Krungthai Bank, a state-owned financial institution, halted transactions related to cryptocurrencies with TDAX through the bank’s accounts. According to a news article, the ban will continue even after a new regulation (discussed below) is issued.”
“Though the government expects new laws regarding cryptocurrencies will be enacted in the future, it decided to implement temporary measures to protect cryptocurrency investors. According to news articles, on March 13, 2018, the Cabinet approved the principles of the drafts of two Royal Decrees, one to regulate digital currencies, including cryptocurrencies, transactions, and initial coin offerings (ICOs), and the other to amend the Revenue Code to collect capital gains taxes on cryptocurrencies. The Decrees would require all digital asset transactions, including those of digital asset exchanges, brokers, and dealers, to be registered with the relevant authorities.”
|Uzbekistan||Not regulated||Not regulated/currently developing regulations|
Since the last time we updated this list of international cryptocurrency regulations, a lot has changed. While international policy toward altcoins remains a labyrinth, the implication of a nation’s policies may have a significant impact on international politics and commerce. (Consider Venezuela’s experience with the petro as a prime example.)
More than any other time in history, understanding international cryptocurrency law is essential. Not only is it needed to help investors make sound decisions when investing abroad, but with cryptocurrencies being the focus of military actions today, knowing the law may be the difference between prison and freedom.
Three Reasons for the Murky Regulatory Environment
We should begin by clarifying a point. Most nations do not have an active or specific position on cryptocurrency legislation. There are three reasons why this is so.
First, cryptocurrencies are fringe issues. While several major nations like the United States and France are actively considering crypto regulations, these laws are low priority and tend to be pushed back or ignored for bigger bills or proposals, such as Brexit in the UK and France or the New Green Deal in the U.S. Typically, cryptocurrency bills must go through several rounds of proposal and consideration before they are finally approved.
Second, many of the smaller nations are waiting for the big nations to make up their minds or for mass adoption of blockchain technology to force their hands. This, while frustrating, seems to be prudent. With technology advancement being a moving target, “watch and wait” may be the best option for nations where legislative changes are difficult or time-consuming or where disagreements on monetary policies with the United States, China, or the European Union may be disruptive.
Finally, there are nations that feel that cryptocurrencies should not be legislated under any circumstance. Recognizing cryptocurrencies as foreign currencies, regulating them would effectively impose a hardship on the nations’ citizens. As it is difficult or even impossible to stop or monitor cryptocurrency transaction proactively without a firewall or some other means of Internet control, many nations feel that cryptocurrency regulations are simply symbolic legislation at best.
Despite this, there may be many reasons to regulate. In Japan, for example, the increase in exchange hacks created a financial crisis. In the first six months of 2018, Japanese authorities estimated that $540 million was stolen from Japanese crypto exchanges. In October, South Korea estimated that crypto exchanges were hacked seven times and there were 158 cases of wallet hacks in the last three years in the country. Most of the hacks were thought to originate in North Korea, which is technically still at war with South Korea.
International Politics and Cryptocurrency
The ambiguity that comes from contrasting laws, however, may be soon a thing of the past. In December at their summit in Argentina, the G20 countries pledged to establish international rules for cryptocurrency in line with the Financial Action Task Force (FATF) standards. These rules will create a comprehensive framework for combatting money laundering and the financing of terrorism.
FATF is a program created by the Organization for Economic Cooperation and Development. The program is meant to coordinate international efforts to fight money laundering and terrorism financing. One proposed option is the global monitoring and governing of cryptocurrency exchanges. These rules would also create more channels for the United States and other nations to push back against nations such as Iran and Venezuela using cryptocurrencies to dodge sanctions.
The Takeaway for Investors
For now, it is imperative to track changes to international cryptocurrency law. Taking the temperature of the regulatory environment for ICOs is a wise course for any investor wading into the space. Understanding the ever-changing nature of regulation serves an investor well because keeping an eye on regulatory trends will enable investors to avoid running afoul of the legal requirements that come with investment.
It is the responsibility of the investor to do his or her due diligence before investing in any ICO. While regulations can help to reduce the investment risk, the best risk reduction practice is extensive research and preparation.
The Bitcoin Market Journal can help with that. Our team of investment analysts conducts deep research and analysis of pre-ICOs, ICOs, and altcoins. Join our community of investors today by subscribing to the Bitcoin Market Journal newsletter today!