Cryptocurrency Regulations and Speculations in Q2 of 2018 — Part 3

We have reached our third and final part of our blog on international regulations. We hope we have provided a rather complete overview of the situation in some of the biggest crypto markets. If you haven’t already, check out part one and two of this series of blogs.

Australia:

Summary of past regulatory activity

In December 2013, the governor of the Reserve Bank of Australia (RBA) referred to bitcoin legality stating, “There would be nothing to stop people in this country deciding to transact in some other currency in a shop if they wanted to. There’s no law against that, so we do have competing currencies”. This continued even during 2015 as the Australian government had been seeking a hands-off approach.

Summary of current regulatory activity

Things took a different turn by 2017 when cryptocurrency brokers in Australia refused to accept Australian dollar deposits since there were no guidelines. Implementing the money laundering act in the country was the first step toward regulations. In 2017 senators from both major parties called up the RBA to cryptocurrency recognition. On the 1st of July 2017, Australia officially confirmed that it will treat bitcoin “just like money” and it will no longer be subject to double taxation.

Russia:

Summary of past regulatory activity

Two years ago, Russian government agencies termed cryptocurrencies as “not illegal”. However, in 2017, the Governor of the Central Bank stated that the country doesn’t want to regulate cryptocurrencies as a way of payment. Crypto market sites were blocked, cryptocurrencies were considered as ‘currency surrogate’ and hence illegal.

Summary of current regulatory activity

However, the national parliament is now working on producing a regulatory framework for cryptocurrencies, with a deadline of July 1st 2018 to pass the legislation. Reportedly, a consensus emerged on ICOs, which are likely to be allowed in a regulated manner. However, it’s not clear whether regulatory framework is being formulated for general crypto trading because the central bank is wary about the risks inherent to the crypto market. Russian technology enthusiasts and entrepreneurs have made a significant mark in the development of numerous cryptocurrency projects and blockchain technology in general. We will cover further developments on the regulations here in the future.

United Kingdom:

Summary of past regulatory activity

As of 2017, the government of the United Kingdom has stated that bitcoin is unregulated and that it is treated as a ‘foreign currency’ for most purposes, including VAT/GST. Bitcoin is treated as ‘private money’. When bitcoin is exchanged for sterling or for foreign currencies, such as euro or dollar, no VAT will be due on the value of the bitcoins themselves. However, in all instances, VAT will be due in the normal way from suppliers of any goods or services sold in exchange for bitcoin or other similar cryptocurrencies. Profits and losses on cryptocurrencies are subject to capital gains tax.

An industry body called “CryptoUK” is aiming to improve the industry standards around Bitcoin. They have proposed a code of conduct that includes the provision of Anti-Money Laundering and extra security measures.

Summary of current regulatory activity

On the 25th of January 2018, U.K. Prime Minister Theresa May during the World Economic Forum at Davos, stated, “We should be looking at these very seriously — precisely because of the way they can be used, particularly by criminals.”

So far the U.K. has not announced or finalized regulations for cryptocurrencies.

United Arab Emirates:

Summary of past regulatory activity

In Oct. 2017 the Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market (ADGM) has issued a warning about the risks of ICOs and cryptocurrencies when the financial regulator started considering developing its own set of cryptocurrency regulations.

February 2018 Dubai gold trader Regal RA DMCC becomes the first company in the Middle East to get a license to trade cryptocurrencies, the Dubai Multi Commodities Centre said. DMCC was named ‘Global Free Zone of the Year’ 2017 by The Financial Times Magazine, for the third consecutive year and serves as a global marketplace for commodities to drive trade flows through Dubai. As a DMCC licensed company, Regal Assets DMCC operates in a secure regulated trading environment and offers a service to global investors to the highest standards of international compliance.

“DMCC is the only Free Zone in the Middle East to have a government-issued license to trade in crypto-commodities and offers unparalleled full market value insurance on such investments,” said Gerhard Schubert, Chairman of the Board for Regal Assets DMCC. DMCC’s Crypto-commodities license is for Proprietary Trading in Crypto-commodities only.

Summary of current regulatory activity

In the FSRA issued guidance, last month, on the regulation of Initial Coin/Token Offerings and cryptocurrencies (under its Financial Services and Market Regulations) are offered for sale to the general public. The FSRA will determine, on a case-by-case basis, whether a proposed coin token is a security to be regulated under FSMR or a commodity to remain unregulated. Further, the UAE Central Bank and the Saudi Arabian Money Authority (SAMA) are in talks currently and are yet to issue any regulatory framework to govern cryptocurrencies. It is foreseeable from the initiatives taken by the UAE and KSA, that regulators will soon issue regulations to enhance their bids to become the regional hubs for blockchain development and innovation.

Nigeria:

Summary of past regulatory activity

As of January 2017, The Central Bank of Nigeria (CBN) has passed a circular to inform all Nigerian banks that bank transactions in bitcoin and other cryptocurrencies have been banned in Nigeria.

However, during the year, the CBN (through its Deputy Director on Banking and Payments System, Musa Itopa-Jimoh) clarified the circular and its stance on bitcoin, citing that a lot of people misinterpret the central bank’s recent warning. It noted that the “Central bank cannot control or regulate bitcoin. Just the same way no one is going to control or regulate the Internet. We don’t own it”.

Later on, a committee was set up by the Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC) to look into the possibility of the country adopting the technology driving bitcoin and other digital currencies — blockchain. The committee has submitted its report but “several sub-committees are still working on the issue” according to the Director, Banking & Payments System Department at CBN, Mr. ‘Dipo Fatokun.

Summary of current regulatory activity

Solomon Adaelu, a member of the Federal House of Representatives told that the deadline for a unified cryptocurrency regulation was set for July 2018 and they very soon plan to join the group of countries who have already presented a cryptocurrency regulation framework. We’ll keep you updated on that development in the Nigerian parliament on cryptocurrency regulations here on our blog.

We hope that the information provided through this three-part blog series has helped put into perspective the past deliberations as well as some of the future expectations from the cryptocurrency market.

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