Cryptocurrency Regulations and Speculations in Q2 of 2018
While last year was often referred to as the year of the ICO, 2018 may turn out to be the year of regulations.
There’s an easily understandable reason. The 195 countries that comprise today’s world have adjusted differently to the rapid adoption of cryptocurrencies. As a result, the security councils of many of them are adopting a variety of regulations that will become effective this year.
We’re providing, in three convenient blog posts, a summary of past and current regulatory activity by the major countries.
We’re confident you’ll find each post helpful. Our first post covers the United States, India, China, Canada and Japan.
The good news is, while increasing regulation in any new category is inevitable, especially in a category with the remarkable success cryptocurrencies have demonstrated, the future of the currencies is on a solid foundation and their importance will continue to increase.
The United States
Summary of past regulatory activity
The U.S. Treasury classified Bitcoin as a convertible decentralized virtual currency in 2013. The Commodity Futures Trading Commission, CFTC, classified Bitcoin as a commodity in September 2015. The IRS taxes Bitcoin as a property. In September 2016, a federal judge ruled that Bitcoins are funds within the usual meaning of the term “funds.”
Summary of current regulatory activity
The US Government and the Securities and Exchange Commission (SEC) have warned
investors about the risks of investing in cryptocurrency, halted or delayed several ICOs, and hinted at the need for greater regulation.
Secretary of the Treasury Steve Mnuchin has expressed concern that the growing popularity of cryptocurrency may lead to more online transactions that are unauthorized and illicit. He may announce a set of rules in the second half of 2018.
But the SEC has not yet made a final decision about cryptocurrency regulation. If the currencies are treated as securities, ICOs would still have to clear blue-sky laws on a state-by-state basis.
India
Summary of past regulatory activity
The Indian central bank, RBI, issued a number of official warnings about Bitcoin or any other cryptocurrencies in the third quarter of 2017, and the finance minister has stated that Bitcoin and any other cryptocurrency is not legal tender.
Summary of current regulatory activity
The government has yet to develop regulations that cover cryptocurrencies. RBI has, however, barred Indian financial institutions from working with cryptocurrency exchanges and related services, because the institutions still cannot exchange cryptocurrencies for Indian Rupees. As a result, they are unable to profit from participating in the cryptocurrency revolution.
Individuals, investors, and corporations are, however, allowed to exchange a particular
cryptocurrency with another existing cryptocurrency.
According to a legal report published just this month (July 2018), the Indian Supreme Court proposed legalizing the multimillion-dollar sports-betting industry — and naming cryptocurrencies as a legally acceptable payment method, similar to credit and debit cards. The next hearing about legalizing cryptocurrencies for sports betting is scheduled for about 50 days from the date of publication of the July legal report, or in September.
When the decision is made, we’ll alert you.
China
Summary of past regulatory activity
Last year China suspended order-book trading of digital assets against the Yuan on all major Bitcoin exchanges, including OKCoin, Huobi, BTC China, and ViaBTC. IFCERT, a national committee of internet financial security experts and agency similar to U.S. Securities and Exchange Commission’s (SEC) along with China’s Ministry of Industry and IT identified and published over 400 fake cryptocurrencies warning potential investors despite the ongoing ICO ban.
Summary of current regulatory activity
The country is moving toward withdrawing preferential treatment for Bitcoin miners, including tax deductions and cheaper electricity. Regardless of the tight noose, China’s top three coins are among the most valued global cryptocurrencies.
Most encouragingly, China has not banned Bitcoin or other cryptocurrencies and has insisted that it does not plan to do so.
Canada:
Summary of past regulatory activity
Back in 2014, Canada approved Bill C-31 clearly stating the world’s first national law on digital currencies and since then has been communicating about their stance on cryptocurrencies. Of late, post January 2018, as part of the North American Securities Administrators Association (NASAA); Canada joined an association-wide cautionary directive on the risks of cryptocurrencies, with all representatives from every province in the country believing there is a high risk of fraud in cryptocurrencies exchange. As of April 2018 the Bank of Montreal (BMO) announced that it would ban its credit and debit card customers from participating in cryptocurrency purchases with their cards.
Summary of current regulatory activity
The Financial Consumer Agency in Canada does not consider cryptocurrencies as being legal tender. Only the Canadian dollar is considered official currency in Canada.
However, not all hope is lost in Canada since the country’s tax authority has deemed Bitcoin transactions taxable, depending on the type of activity.
Japan:
Summary of past regulatory activity
Japan was the first ever country (along with Zimbabwe) to declare Bitcoin a legal tender in early 2017. The law that was passed by the government also brought Bitcoin exchanges under anti-money laundering and know-your-customer rules (although license applications have temporarily been suspended as the regulators deal with a hack on the Coincheck exchange in the beginning of 2018).
Summary of current regulatory activity
Recently the Financial Services Agency has been cracking down on exchanges, suspending two, and issuing furtherance orders to various exchanges and mandating better security measures in a few others. Japan recently established a cryptocurrency exchange industry study group! The aim of the group is to examine institutional issues regarding Bitcoin and other cryptocurrencies.
We will be covering the latest updates on even more countries in our next blog post on international regulations.
Originally published at blog.gath3r.io.
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