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Digital Currency Regulations by Country

Digital Currency Regulations by Country

Digital currencies are at an all-time-high popularity. As we start the new year, join the digital revolution in your country and start investing in your future. Before you make any moves, make sure you know the regulations of your country about said currencies.

A

Abu Dhabi: Issuers and intermediaries of virtual currencies and “security” tokens may be subject to regulation, depending upon the nature of the product and service.

Algeria: The purchase, sale, use or possession of any cryptocurrencies is prohibited in Algeria.

Argentina: Virtual currencies are not legal tender under the country’s National Constitution, which designates the Central Bank as the only authority that may issue legal tender. Additionally, Argentina’s securities regulator has stated in the past that ICOs aren’t per se regulated by the agency, but that certain tokens, depending on their structure, could meet the securities definition under the regulations.

Austria: Austria regulates financial services involving virtual currencies.

Australia: Digital currency exchanges have l be subject to registration and regulation in the country since mid-2018, after amendments to the Anti-Money Laundering and Counter-Terrorism Financing Act of 2006. Australia’s primary financial regulator, the Australian Securities and Investments Commission (ASIC), does not regulate ‘ICOs’ in principle, but digital assets could be regulated as ‘financial products’ or financial services’ under Australia’s existing financial services regulatory regime. To date, there has not yet been a regulated financial product ICO in Australia. Digital currency transactions are no longer subject to goods and services taxes (GST) but remain subject to incomes and capital gains taxes.

B

Bahamas: As of May 2019, the Securities Commission of the Bahamas has presented a draft of a new bill that seeking to regulate non-security token offerings.

Bangladesh: Bangladesh Bank issued warnings in 2014 and 2017 regarding conducting transactions in cryptocurrency, and reportedly stated that such use is punishable by up to 12 years in jail.

Belarus: Cryptocurrency activities have been legal in Belarus since March 28, 2018, including exchange services, ICOs, mining operations, and smart contracts. The country has a special economic zone, the Belarusian High Technologies Park (HTP), with a special tax and legal regime that has fostered blockchain innovation.

Belgium: The National Bank of Belgium has warned investors and the public of the dangers of virtual currencies and declared that they are not legal tender, and the Minister of Justice has announced his intention to impose strict regulations on virtual currency activities.

Bermuda: Government intends to begin regulating virtual currencies and ICOs in 2018. In November 2017, the government formed a Legal and Regulatory Working Group including officials from the Ministry of Economic Development and Tourism, the Ministry of Finance, and members of the private banking sector.

Bolivia: Virtual currency has been explicitly banned.

Brazil: The Central Bank of Brazil has not yet regulated virtual currencies, but has issued the now-standard warnings about their use. Brazil’s tax authority announced new regulations for cryptocurrency exchanges offering services to customers in Brazil, which will take effect in September 2019.

Bulgaria: Personal income from the sale or exchange of bitcoin is taxable, and will be treated as income from sale of financial assets.

C

Cambodia: The buying, selling, trading and settlement of cryptocurrency without a license from ‘competent authorities’ is illegal in Cambodia.

Canada: Canadian lawmakers seem to be taking a lighter approach to regulating virtual currencies, with a ‘regulate-and-embrace’ policy, focusing primarily on anti-money laundering concerns. Virtual currencies are not legal tender in Canada. No federal law exists in Canada for the regulation of certain financial transactions, including securities. Each province passes its own binding laws and provincial regulators have taken action against certain ‘ICO’ promoters, and the offering of margin or other forms of derivative products may also be a focus of regulatory interest.

Cayman Islands: While there appears to be no specific legislation geared towards regulating cryptocurrencies, there are laws that in certain circumstances may be applicable, such as AML laws, securities laws, electronic transaction laws, among others.

Chile: The Central Bank or the Chilean Monetary Authority do not appear to regulate cryptocurrencies. The Central Bank of Chile has maintained the position that cryptocurrencies cannot substitute traditional money but they are not outlawed or regulated and cryptocurrency exchanges operate in Chile.

China: Financial institutions and third-party payment providers are banned from accepting, using, or selling virtual currencies. Although its use remains legal, the People’s Bank of China has required exchanges to register with the appropriate regulatory authorities and has suggested it will closely watch the markets. The People’s Bank of China has allegedly warned banks from working with virtual currency-related businesses. China is also rumored to be exploring its own state-sponsored sovereign digital currency. Additionally, as of September 2017, ICOs are banned in China.

Colombia: Colombia’s financial regulatory body (SFC) has prohibited banks from working with virtual currency. The SFC and the Central Bank have also indicated that bitcoin is not a currency.

Croatia: Informal statements by the Croatian National Bank are favorable regarding the legality of bitcoin.

Cuba: Cuba is reportedly exploring a sovereign cryptocurrency.

Cyprus: Virtual currencies are not illegal in Cyprus, but Central Bank has warned about their use.

Czech Republic: Czech Ministry of Finance has indicated that virtual currency transactions are subject to anti-money-laundering laws and reporting requirements.

D

Denmark: Financial Supervisory Authority has issued warnings about the risks of virtual currencies, similar to other European nations, and has suggested there may be amendments to regulations regarding virtual currencies. Currently, it does not appear that virtual currencies are regulated, at least under money laundering or financial institution regulations.

E

Ecuador: Ecuador has banned issuance, promotion, or circulation of virtual currencies, and issued its own digital currency for use as legal tender, but later released it to a private company when it failed to gain traction.

Egypt: The Central Bank of Egypt is exploring a ban on cryptocurrency without licenses.

Estonia: Informal cautions regarding use of bitcoin in response to email inquiries; bitcoin income is treated as capital gains.

European Union: European Banking Authority issued warnings to the public about the risks associated with virtual currencies, and recently indicated it will apply anti-money laundering and anti-terrorist financing rules to virtual currencies.

F

Finland: Based on informal interviews, the best indication is that virtual currencies are treated as commodities in Finland.

France: France’s Financial Market Authority (AMF) has adopted new rules and regulations for cryptocurrency service providers and ‘ICOs,’ referred to as the Action Plan for Business Growth and Transformation (PACTE).

Financial Action Task Force: The Financial Action Task Force (“FATF”) announced on June 21 that it adopted and issued an Interpretive Note to further clarify the standards for international regulation of digital assets. These standards, though nonbinding, are intended to prevent misuse of digital assets for money laundering, terrorist financing, and financing of proliferation of weapons of mass destruction. In relevant part, the FATF states that countries should require crypto businesses to “obtain and hold . . . accurate originator information and . . . beneficiary information and submit the information to the beneficiary institutions,” which mirrors FinCEN’s existing “travel rule.” The FATF will monitor implementation of the new requirements over a one-year period.

G

G20: The Group of Twenty (G20) nations expressed commitment to align their countries’ AML regulations with the forthcoming FATF standards discussed above. A communiqué released by the G20 finance ministers and central bank governors expressed concern regarding crypto asset risks, including risks related to consumer and investor protection, AML, and countering the financing of terrorism. They expressed appreciation for the International Organization of Securities Commissions’ recent focus on investor protection and market integrity as they relate to crypto-asset trading. The communique also referenced the work the Financial Stability Board has been doing in the crypto space, calling on it and other standard setting bodies to “monitor risks and consider work on additional multilateral responses.”

Germany: Virtual currencies are financial instruments under German law and, more specifically, are a form of “private money” that can be taxed as capital. Certain uses may also require a license or permit. Earlier guidance from the German financial supervisory authority also suggested virtual currencies are commodities, and are subject to taxation both upon sale of bitcoin and sale of goods in exchange for bitcoin. Germany has not adopted laws specific to ICOs, but ICOs are subject to certain existing regulation.

Ghana: Ghana does not license digital currencies. The central bank has issued warnings to the public against transacting with digital currencies like Bitcoin.

Greece: The Bank of Greece has adopted the EBA warnings regarding virtual currencies.

H

Hong Kong: Informal guidance suggests that regulatory authorities are monitoring virtual currencies, particularly with regard to money laundering. Virtual currency considered a virtual commodity and not legal tender. Hong Kong’s The Securities and Futures Commission has announced plans to regulate virtual asset portfolio managers, virtual asset fund distributors, along with a regulatory sandbox to study virtual assets.

Hungary: The National Bank of Hungary has issued warnings similar to those of other countries.

Iceland: Regulates virtual currencies as electronic currency through the Icelandic Exchange Act, which effectively prohibits entities from engaging in the exchange of virtual currency.

I

India: A ban is currently in place under the directive of India’s central bank (RBI) for all financial institutions offering services to individuals or entities transacting with cryptocurrencies. Under the current banking Act, the Indian government does not consider cryptocurrencies to be legal tender and has made clear that it intends to eliminate the use of cryptocurrencies in payment systems within the country, especially where cryptocurrency is found to be financing illegal activities. Further legislation is under consideration by a government committee tasked with drafting a regulatory framework.

Indonesia: Virtual currencies are not legal tender, and using virtual currencies violates the country’s information and electronic transaction laws and currency laws. Under a February 2019 regulation promulgated by the Indonesian Commodity Futures Trading Regulatory Agency (Bappebti) cryptocurrency derivative transactions, and cryptocurrency exchanges that provide such transactions, may now be subject to regulatory requirements. This reportedly does not alter the general position with respect to ‘ICOs.’

Iran: Iran intends to implement strict regulations for digital currencies. The country is also working on their own domestically-developed cryptocurrency.

Ireland: The Central Bank of Ireland does not regulate bitcoin. Ireland’s Revenue Commissioners have released tax-related guidance, and an inter-departmental government working group has been formed.

Isle of Man: The government intends to put economic infrastructure in place promoting virtual currency businesses, subject to anti-money-laundering requirements.

Israel: The Israeli central bank and Finance Ministry has issued warnings to the public about the risks associated with virtual currencies. Israel’s central bank has said it would view virtual currencies like bitcoin as a financial asset, not a currency.

Italy: Laws requiring identification of parties in bitcoin transactions and granting legal effect to blockchain-based registers have been proposed in the Italian Parliament, but no regulation yet. Virtual currency is not legal tender.

J

Japan: Japan approved a law regulating Virtual Currencies on May 25, 2016 which was promulgated on June 3, 2016. The law was enacted and came into effect on April 1, 2017.

Jersey: Virtual Currencies under threshold amount are subject to “light touch” regulatory scheme.

Jordan: Virtual currencies are not legal tender in Jordan and the Central Bank has warned against their use. Banks, currency exchanges, financial companies, and payment service providers operating in Jordan are prohibited from dealing in virtual currencies.

K

Kenya: Despite issuing public warnings about ICOs, Kenya’s Central Bank (CBK) and the Kenyan Capital Markets Authority (CMA) have not issued bans or regulations on ICOs or cryptocurrency. Kenya appears to be shifting to regulate-not-ban position.

Kyrgyzstan: Kyrgyzstan’s central bank has stated that the use of virtual currency is illegal.

L

Lebanon: Bank of Lebanon has issued warnings to the public about the risks associated with virtual currencies, and has said that financial institutions and exchanges cannot, be decree, deal in virtual currencies as e-money.

Liechtenstein: In 2019, Liechtenstein passed the Token and VT Service Providers Act to regulate blockchain activities within the country. Because of its lack of specific rules on digital assets, coupled with permissive tax laws, Liechtenstein is among the most “crypto-friendly” countries in the world.

Lithuania: Central Bank of Lithuania has issued the standard EBA warnings but is holding off on further regulations for now.

Luxembourg: The issuance of virtual currency is not regulated “from a monetary point of view.” Financial services providers, which could include virtual currency businesses, must receive authorization from the Minister of Finance.

M

Malaysia: Virtual currencies were previously not legal tender in Malaysia, but the government will enforce new cryptocurrency regulation soon.

Malta: Malta’s parliament passed a law that adopts a regulatory framework intended to promote and adopt blockchain, cryptocurrency and DLT.

Mexico: Virtual currencies are not legal tender currency, and the Bank of Mexico has warned of risks of using virtual currencies and is considering regulations that could ban crypto exchanges.

Morocco: The use of cryptocurrencies is outlawed in Morocco.

N

Nepal: Nepal’s Central Bank issued a notice in August 2017 stating that “all transactions related to or regarding bitcoins are illegal.” Potential penalties can include civil fines of up to three times the transaction amount, and a jail term of up to three years.

Netherlands: The Netherlands do not regulate bitcoin under its Act on Financial Supervision, but its national bank has released consumer warnings regarding the use of virtual currency. One court has ruled that it is a “medium of exchange” but not electronic money and another court has classified virtual currency as an “object” subject to seizure.

New Zealand: Informal warnings about the risks associated with virtual currencies; suggestion from Commerce Commission that virtual currency may be regulated.

Nigeria: Nigeria does not regulate or recognize cryptocurrency as legal currency. The Central Bank of Nigeria (CBN) has not approved the use of cryptocurrency for any transactions in the country. Various government agencies have issued warnings about cryptocurrencies and ICOs.

Norway: Indications are that virtual currencies are not “money” or “currency” but are assets subject to capital gains taxes.

P

Pakistan: Cryptocurrencies are illegal in Pakistan and the government has issued harsh warnings to banks and other financial institutions against transacting in cryptocurrencies.

Philippines: Exchanges are not regulated by the Philippines Central Bank or other regulatory authorities in the country, but The Philippines Securities and Exchange Commission has proposed draft rules for Initial Coin Offerings.

Poland: Virtual currencies are not illegal, but are also not legal tender. They are subject to capital gains taxes and value-added tax.

Portugal: Warnings from the Bank of Portugal about the risks of virtual currency, while clarifying that the Bank does not regulate bitcoin.

R

Russia: Digital currencies were previously banned as money surrogates under federal law, however, 2017 has seen a softening of Russia’s regulation of cryptocurrency. Plans to regulate cryptocurrency have made headway, and procedures for buying cryptocurrency are scheduled to be announced by the end of 2017.

S

Saudi Arabia: Unauthorized virtual currencies have been declared illegal in Saudi Arabia.

Senegal: Senegal is a member if the West African Economic Monetary Union (WAEMU). The Banque Centrale des Etats de l’Afrique de l’Ouest (BCEAO), is the Central Bank of the WAEMU. The countries that are members of this union are Benin, Burkina, Fasco, Cote d’lvoire, Guinea-Bissau, Mali, Niger, Senegal and Togo.

Serbia: Warning from the National Bank of Serbia that Bitcoin is not legal tender and cannot be subject to sale and purchase by banks and licensed exchange dealers. Warning that lack of legal protections over Bitcoin constitutes a risk and may result in financial losses.

Singapore: Virtual currencies are not money or currency. However, virtual currency businesses may be subject to anti-money-laundering regulations. Informal reporting suggests that virtual currency sales are taxed as income, investments are taxed as capital gains, and may be subject to goods and services tax.

Slovenia: Bank of Slovenia has issued warnings to the public about the risks associated with virtual currencies. Slovenia has also indicated that certain activities, including mining, would be subject to taxation.

South Africa: South African Reserve Bank has warned that virtual currencies have no legal status and are subject to lack of security, may lose value, and may not be convertible to legal tender.

South Korea: South Korean regulators appear to be taking a cautious approach to cryptocurrency regulation, and have sought to ensure cryptocurrency companies, including exchanges, are subject to equivalent anti-money laundering measures and tax obligations as other forms of financial intermediaries.

Spain: Virtual currencies are reportedly taxable as an electronic payment system under gambling law, but its treatment under other areas of law is unclear.

Sweden: Informal statement from a tax official suggests that virtual currencies are not currencies in Sweden but instead will be treated as assets.

Switzerland: Swiss financial regulator has defined licensing requirements for bitcoin kiosk operators and created special requirements for blockchain companies applying for licenses in the country. The country has also said that virtual currency platforms are subject to anti-money laundering rules.

T

Taiwan: Central Bank and Financial Supervisory Commission warned that virtual currencies are not currencies, but commodities and have no legal protection. Both plan to regulate virtual currencies. It is illegal to publicly solicit money through the sale of digital tokens, but some cryptocurrency platforms are allowed to trade in cryptocurrency. In 2018, the Taiwan government has taken a more measured tone regarding cryptocurrency generally and has suggested that it is considering a more open regulatory approach.

Thailand: Thailand does not regulate cryptocurrency transactions, but the position of the SEC in Thailand is that bitcoin is an asset that can be traded. The SEC does not endorse the status of bitcoin, and bitcoin is not recognized as legal tender to pay off debt, but the Bank of Thailand has started to allow banks to open subsidiaries for crypto dealings but are still banned from directly dealing with cryptocurrencies.

Tunisia: The Central Bank of Tunisia exerts, on the State’s behalf, the exclusive privilege of issuing on the territory of the Republic bearer banknotes and metal coins which are the only legal tender in the country. It is illegal to import or export Tunisian dinars. As a result, many converting ATMs exist throughout the country for tourists. The currency for Tunisia is the Dinar. The Dinar is the official currency of several countries including Libya, Algeria, Iraq, Jordan, and Tunisia. The common currency symbol for the Tunisian Dinar is TD.

Turkey: Turkey’s recently enacted law on payment services and electronic money does not apply to bitcoin.

U

United Arab Emirates: The UAE’s regulatory framework on Stored Values and Electronic Payment Systems does not apply to bitcoin. The UAE does not currently regulate ICOs. However, it is working on draft rules that will govern token sales. The relevant regulatory authorities for ICO guidance are the Dubai International Financial Centre (DIFC), the Securities and Commodities Authority (SCA) and the Abu Dhabi Global Markets (ADGM).

United Kingdom: The FCA recently issued final guidance, providing a reframe taxonomy of cryptoassets to provide clarity to market participants.

V

Venezuela: Venezuela has a government-run cryptocurrency backed by oil assets called the Petro.

Vietnam: Virtual currencies are neither money nor legal tender in Vietnam; and the State Bank of Vietnam has issued a ban on cryptocurrencies and conducting most virtual currency business activities.

Z

Zimbabwe: Banks in Zimbabwe are banned from providing banking services to anyone dealing with or settling virtual currencies.

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