Cryptocurrencies have become more popular in recent years and this developing popularity led to the need for global regulation for cryptocurrencies. The regulations are not necessarily bad considering that they can further guarantee the safety of the use of cryptocurrencies, although having the same regulation for thousands of different cryptocurrency companies can be a challenge.
Regulations can provide much better conditions for both companies and regular users. There are many examples of regulations that work well in many countries, but that does not mean that regulations that work for one country can succeed in another.
Regulatory approach to cryptocurrencies in different countries
Prior to 2017, cryptocurrencies were subject to double taxation under the Australian goods and services tax. Since the regulations have been implemented, the Australian government stated that cryptocurrencies should be treated as property and subject to a capital gains tax. This progressive attitude towards cryptocurrencies creates a more egalitarian environment compared to before.
In 2018, it was announced that Australia was also working on other regulations. The new regulations require encryption companies to register as AUSTRAC. They must also identify and verify users, maintain records and comply with AML / CFT obligations.
These regulations work very well in Australia, but it is impossible to say that they would be so successful in other countries. This market is very diverse throughout the world and this makes it difficult to find a global regulation for cryptocurrencies.
For example, regulations in the United States vary from state to state. Even the description of cryptography is different in several states. So, having universal regulation here would make no sense. The Department of Justice works very hard with the SEC and the CFTC to develop regulations that can guarantee consumer safety.
Canada has an even more confusing attitude towards cryptocurrencies. It is not a legal tender, but you can still legally change the currency. Beginning June 1, all exchanges must be registered with the Financial Analysis and Report Analysis Center of Canada, FINTRAC.
In Japan, cryptocurrencies are very legal and, like Australia, they are treated as property. But keep in mind that Japan is considered one of the most progressive when it comes to cryptocurrencies. Japan is one of the largest cryptocurrency markets in the world, and in 2017 it was ruled that cryptocurrencies would be classified as miscellaneous income and the tax would amount to 15% -55%.
There is a very friendly environment for cryptocurrencies in Japan, but AML's growing concerns could lead to additional regulations in the country. In addition, after the talks between the exchanges and the FSA, an agreement was established. A self-regulatory body will be formed in Japan. The Japanese Virtual Currency Exchange Association, JVCEA, will be the first of its kind in the world. This will ensure further development of cryptocurrencies not only in the country but also in the region.
Cryptocurrencies are legal in Switzerland, and also accepted as payment methods in some contexts. Exchanging them is also legal, but is regulated by the SFTA. The Swiss Federal Tax Administration considers that cryptocurrencies are active. They are subject to the Swiss estate tax. Citizens must declare them during the annual tax return.
To operate, cryptocurrency exchanges must obtain a license from the Swiss Financial Market Supervisory Authority. For the future, the Swiss government said the country plans to continue its friendly attitude towards cryptocurrencies. The government even works hard to encourage innovations in blockchain technology.
When it comes to South Korea, cryptocurrencies are not considered a legal tender, but you can still exchange them under the closely supervised regulatory system. Currently, they are not considered currency or financial assets, so cryptocurrency transactions are tax free.
However, the Ministry of Strategy and Finance announced that they are working on a new tax system and, as of 2020, cryptocurrency transactions could be subject to taxes.
The diversity of attitudes towards cryptocurrencies in different countries makes it almost impossible to have global regulation. It is never a good idea to take a regulation or part of one country and try to adapt it to another, since you never know how it will work with specific laws.
The cryptocurrency market is still developing and changing very fast. Finding the best regulation is crucial as they can hamper development. Knowing the world market is what can help when it comes to cryptocurrencies.
Regulation for cryptocurrencies does not have to be a bad thing, and Australia is one of the best examples of that. Many countries can learn from the regulations adopted by Australia, but using their regulations for their own markets is not a rational idea. Have the same regulations for countries like Australia, Japan, USA. And many others is not logical and would not work.