As the investors across the globe become increasingly aware of the offerings provided by cryptocurrency, it seems that this blooming asset class is gaining rapid acceptance. This can be witnessed by the fact that the market welcomes myriad participants even during its bearish phase. Individuals continue to invest in cryptocurrencies, either by actively trading in these assets or availing cryptocurrency exchange development services to tap into the billion-dollar crypto market with their exchange platforms.
In the last years, while some countries have placed various legal impositions on cryptocurrencies, many others have been receptive to these digital currencies. Members of G-7 (including France, Japan, Canada, Italy, Germany, United States, and the United Kingdom) together with Singapore and Australia have embarked on the journey to create an ingenious crypto system that can assist in the collection and sharing of personal data related to regular users of cryptocurrency.
This new system will build its digital foundation by 2020 and will be operational in a few years following that. As per a recent statement put forth by G-7, once the platform is deployed, it will be managed by the companies working in the private sector.
Below, we explain the legal framework employed by varied countries to regulate the use of cryptocurrencies. This blog only talks about the regions taking up the middle ground; however, our next blog will put forth the list of a few more countries that have jumped on the cryptocurrency bandwagon.
The U.S. is indubitably one of the global leaders when it comes to cryptocurrency adoption and use. The country provides its residents with an opportunity to invest in over 45 digital assets in addition to Bitcoin. The U.S. Financial Crimes Enforcement Network, FinCEN, has categorized cryptocurrency exchange platforms as “money transmitters” which are thus bound by some niche laws. Besides, the Internal Revenue Service (IRS) has classified crypto assets as property with value, thereby making them taxable commodities.
Canada is home to many established cryptocurrency startups and business ventures. The country has two cities considered to be Bitcoin hubs, including Toronto and Vancouver. Both of these cities leverage existing Anti-Money Laundering (AML) and counter-terrorist financing laws to govern this asset class.
The U.K. is one of the countries leading the game when it comes to cryptocurrency adoption and innovation. Although the digital currency is not banned across the country, it is not deemed a legal tender. Besides, no value-added tax is applicable on the purchase of crypto assets across the region. However, a surcharge is applicable on goods or services acquired in exchange of any cryptocurrency.
The Reserve Bank of Australia seems very receptive to cryptocurrency. The regulatory body stated that it does not prevent its residents from using digital currencies. Furthermore, in 2017, the Australian government announced that Bitcoin would be treated like regular money and will not be subject to double taxation.
The regulatory status of cryptocurrency is quite murky in the region. However, the country recently passed a bill to introduce a new legal framework to govern crypto operations, like Initial Coin Offerings (ICOs), across the region.
The German Federal Financial Supervisory Authority (BaFin) categorizes cryptocurrency as “units of account” that can be utilized to make a payment. However, individuals or firms participating in token purchases for commercial purposes need to acquire prior authorization from the regulatory body. Besides, BaFin advises a case-by-case assessment for firms planning to conduct an ICO, thereby indicating that the region is open to nascent fundraising methods like these.
Countries across the globe are realizing the potential and benefits of cryptocurrencies, thereby readily adopting them. The growing adoption and acceptance of cryptocurrency will lead to an increasing demand for cryptocurrency exchange development services.
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