As the number of people who use cryptocurrencies grows, so make the rules to govern them worldwide. Keeping up with the regulations governing cryptography in various jurisdictions is daunting.
Despite the difficulty in locating a unified legal stance among the various states, the United States continues to make headway in passing federal regulations regarding cryptocurrencies. The Financial Crimes Enforcement Network (FinCEN) doesn’t accept cryptocurrencies as legal currencies. Therefore, these virtual currencies are “other value that substitutes for currency,” doing transactions with cryptocurrencies are considered money transmitters. Cryptocurrencies are not recognized as legal cash by the IRS too.
While cryptocurrencies are not recognized as legal tender in Canada, they can be used to make purchases at websites and businesses that cater to this niche. Canada’s cryptocurrency policies are among the most progressive in the world. Provincial securities laws provide the majority of the applicable regulations. British Columbia’s Securities Commission approved the first cryptocurrency-only investment fund that same year (2017). In August 2017, the Canadian Securities Administrators (CSA) issued guidance on whether or not cryptocurrencies fall under existing securities laws. Bitcoin and other cryptocurrencies were called “technically” securities by the governor of Canada’s central bank back in January of this year. All bitcoin transactions in Canada are subject to taxation by the Canada Revenue Agency as of 2013.
Singapore has a more liberal approach to cryptocurrency exchanges and trading than its neighbors. Singapore’s tax authority views Bitcoins as “goods” even though they are not recognized as legal money. Hence, they are subject to Goods and Services Tax. That’s the Singaporean equivalent of the VAT. In 2017, Singapore’s monetary authority, the Monetary Authority of Singapore (MAS), made it plain that it did not intend to regulate virtual currencies but would regulate the issuance of digital tokens if they were deemed “securities.”
In 2020, the MAS warned the public about the risks associated with investing in cryptocurrency products, even though it had been fair. In 2022, the MAS reissued the same warning, issuing regulations prohibiting crypto service providers from disclosing their existence to the general public.
As a progressive nation, Australia has legalized cryptocurrency use and exchanges. In 2017, the Australian government declared cryptocurrencies lawful and suggested that Bitcoin and similar tokens be taxed as property for capital gains (CGT). Previously, cryptocurrencies were subject to double taxation under Australia’s goods and services tax (GST). This new tax policy reflects the progressive attitude being taken by the Australian government on the cryptocurrency issue.
Regarding cryptocurrency regulation, Japan is far ahead of the rest of the globe. The Payment Services Act (PSA) treats Bitcoin and other virtual currencies as property. The National Tax Agency stated in December 2017 that cryptocurrency gains should be taxed as “other income.”
The Public Safety Act and the Financial Instruments and Exchange Act (FIEA) have been updated with new regulations that became effective in May 2020. These modifications include adopting the name “crypto-asset” instead of the more generic “virtual currency,” more controls over users’ ability to handle virtual funds, and simplified trading of crypto derivatives. Businesses that provide cryptocurrency custody services (but do not engage in the sale or purchase of cryptocurrency) fall under the purview of the PSA. In contrast, those that deal in cryptocurrency derivatives fall under the ambit of the FIEA.
Cryptocurrencies are not considered legal tender in South Korea, and although cryptocurrency exchanges are permitted, they are subject to stringent oversight. The taxation of virtual currency is unclear in South Korea. Currently, cryptocurrency transactions are not taxed because cryptocurrencies are neither money nor financial assets. On the other hand, the Ministry of Strategy and Finance has indicated that it is considering taxing crypto-transaction income and plans to unveil a taxation framework in 2022.
Although new regulations are being considered, the legality of cryptocurrency exchanges is not recognized in India. A 30% tax on bitcoin transactions was proposed by Finance Minister Bhagwat Karad in February 2022, while it is unclear how cryptocurrencies are taxed now.
