India is all set to introduce the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 in Parliament's winter session that starts on November 29. The bill seeks to ban all private cryptocurrencies and set a framework for creating an official digital currency.
While India has so far not had any regulations on crypto transactions, the digital currency has seen varying degrees of regulation in other parts of the world. El Salvador was the first nation to strongly support cryptos and even made bitcoin a legal tender, while China is among the countries that are completely against any operations relating to cryptocurrency.
Here’s a look at regulations imposed on cryptocurrencies across the world
United Kingdom: All businesses and start-ups engaging in crypto-asset activities in the UK must register with the country's Financial Conduct Authority (FCA). They can apply for an 'Authorized Payment institution license'. The businesses also need to comply with the anti-money laundering measures under UK law. The country has also recognised crypto assets like bitcoin as a property as part of the UK common law.
Singapore: The country has been a pioneer in cryptocurrency regulations. Cryptocurrency trading is legal there and is regulated by the Monetary Authority of Singapore (MAS) under Singapore's Payment Services Act. Businesses can obtain a licence to run exchanges. The Asian country’s favourable conditions for operating exchanges have attracted many Indian exchanges and start-ups to base their headquarters there.
Indonesia: Indonesia initially banned cryptocurrency transactions in 2018 but later changed its tune and legalised it in 2019. The government has allowed the trading of crypto assets as commodities under the management of the Commodity Futures Trading Regulatory Agency (CFTRA).
Canada: In 2018, the Canadian Securities Administrators (CSA) put forth a notice stating the securities law requirements that businesses needed to adhere to if they want to offer crypto coins or tokens. A Thomson Reuters Institute report released this year noted that the Canada Revenue Authority (CRA) treats cryptocurrency as a commodity. This was done under the country's Income Tax Act.
Japan: Japan has also taken a progressive stance on cryptocurrency regulation as recognises them as legal property under the Payment Services Act (PSA). Crypto exchanges need to register with Japan’s financial services agency and comply with anti-money laundering obligations. Gains made from cryptocurrency come under the category of miscellaneous income.
Australia: Australia categorises cryptocurrencies as legal property making them subject to capital gains taxes. Exchanges need to register with the Australian Transaction Reports and Analysis Centre (ATRAC) and meet the necessary anti-money laundering obligations. The Australian government also introduced regulatory requirements for Initial Coin Offerings in 2019.
South Korea: The country does not consider cryptocurrencies as financial assets, which means transactions in the digital currency are not bound to capital gains tax. The Financial Supervisory Services oversees crypto exchange regulations. Exchanges need to follow strict anti-money laundering guidelines set by the FSS. Moreover, under new rules established in 2021, exchanges and other virtual asset service providers must register with the Korean Financial Intelligence Unit (KFIU).
European Union (EU): Cryptocurrency transactions are legal in most European Union countries. However, the regulation depends on individual members. The taxation laws also vary from country to country, ranging between 0 percent to 50 percent. In 2020, the European Commission recommended a framework to the Markets in Crypto-Asset Regulation (MiCA) that would increase consumer protection and introduce new licensing requirements.
(Edited by : Kanishka Sarkar)