Update: Legality of Cryptocurrencies as for the Beginning of the Year

Update: Legality of Cryptocurrencies as for the Beginning of the Year

We at Finrazor present list of countries and updates on the legality of cryptocurrencies, updated for the fourth quarter of 2018 (full list: https://finrazor.com/trending/country)

In 2018, the blockchain industry and the cryptocurrency sector gained a fair amount of publicity; from an all-time price high to a series of market crashes. As new forms of fundraising, enterprises, startups, and use cases built on the technology emerged governments have been working on overdrive to put order in the clamor, to standardize the industry, and to secure against fraud and other criminal acts.

Here is an updated list of how governments from different parts of the world progressed in its policies for the new industry for the last quarter of 2018.

Territories and Their Updates


Status: Legal

Bitcoin is treated 'just like money', not subject to double taxation; debating a bill to apply AML to exchanges, will prosecute exchanges without a license.

UPDATE: The Australian Securities and Investments Commission (ASIC) will monitor the crypto markets and ICOs. Will create a policy for regulation subjecting cryptocurrencies to the same scrutiny as stock exchanges.


Status: Legal

Statement concerning cryptocurrencies, but is discouraged because of operational risks.

UPDATE: Exchange operators are required to submit monthly reports to the RFB, Brazil's tax collector, on all operations related to crypto. Non-compliance will be fined.


Status: Legal

Cryptocurrencies must comply with AML and KYC requirements

the Bank of Montreal (BMO) announced that it would ban its credit and debit card customers from participating in cryptocurrency purchases with their cards. This is following another banking ban in Canada from Toronto Dominion. Canadian government postpones release of final regulations for cryptocurrencies and blockchain August 28, 2018.

UPDATE: House of Commons Standing Committee on Finance (FINA) wants to register crypto to fiat transactions and establish a licensing unit similar to BitLincense in the US.


Status: Legal

Barcelona's own cryptocurrency REC (Recurso Económico Ciudadano — Civic Economic Facility).

UPDATE: Government prospects blockchain for e-voting.


Status: Legal

Central bank considers crypto regulation. 5000 merchants can now accept crypto payments.

UPDATE: The country's Finance Minister says crypto regulation draft bill is in progress. The country’s central bank, the Ministry of Finance, and the Financial Stability Board are working together for a fair framework for the industry.


Status: Illegal

Mining firms told to orderly exit business, ICOs banned, shut down domestic exchanges, blocked 124 offshore exchanges, Baidu and WeChat restrict or ban crypto related content.

UPDATE: Security token offerings (STOs) are illegal. The MInistry of Industry and Information Technology calls for the acceleration of the development of blockchain related standards.

Cyprus, France, Greece, Italy, Malta, Portugal, and Spain

Status: Legal

UPDATE: Joined 6 other Southern European countries in signing an agreement for the advancement of DLT through promotion and legislation.


Status: Legal

E-residency program floats the idea of issuing crypto tokens but it will not be called a currency.

UPDATE: The country will revise AML laws which will tighten cryptocurrency regulation to prevent money-laundering.


Status: Legal

Regulatory framework for crypto exchanges and blockchain companies. Supporting fiat wallets may be covered by DLT provider license. Acquiring additional electronic money institution license may not be required. Exchanges in Gibraltar will be subject to 10% corporate tax.

UPDATE: Gibraltar Financial Services Commission licensed the Gibraltar Blockchain Exchange.

Hong Kong

Status: Legal

Resolve bitcoin transactions. Hong Kong Securities and Futures Commission will continue to watch over the market.

UPDATE: Securities and Futures Commission (SFC) announced draft regulations for reducing risks in crypto investing.


Status: Illegal

Indian Law Commission to recognize cryptocurrency as a payment method.

UPDATE: The Finance Minister received panel recommendations on crypto regulations. The contents are not yet revealed. And the Ministry of Finance says 'private cryptocurrencies' are banned but using DLT is encouraged. The Reserve Bank of India says Bitcoin is not recognized in the country.


Status: Legal

Central Bank of Iran will draft a framework for crypto. No final policy for legislating crypto mining yet. Preparing to start own national cryptocurrency.

UPDATE: Iran looks into blockchain to help grow their economy. Recognized mining as an industry. Will develop a national cryptocurrency.


Status: Legal

In October legislation will come into force, defining virtual currencies as “financial assets” and mandating licensing for related services.

UPDATE: The Israel Tax Authority will go after cryptocurrency tax evaders.


Status: Legal

Mandatory AML and KYC for exchanges; an exchange study group established.

UPDATE: Published new draft report on ICO regulations, self-regulation, 'deemed dealers', security measures, and addressed the problem of hacking. The Financial Services agency does not consider stablecoins as cryptocurrencies based on the Payment Services Act. The FSA grants JVCEA the right to self-regulate.


Status: Legal

Cryptocurrency regulation under development.

UPDATE: Crypto regulations will be enforced by 2019 Q1 says finance minister.


Status: Legal with Limitations

Central bank attempted to ban bank transactions in bitcoin and other cryptocurrencies.

UPDATE: Union Bank of Nigeria tells citizens to take caution against cryptocurrency transactions and says cryptocurrencies are not legal tender in the country.


Status: Legal

Cryptocurrency legalized and exchanges regulated by central bank.

UPDATE: A draft on cryptocurrency regulations could classify cryptocurrency exchanges as traditional trading platforms.


Status: Legal

Focus on preventing scams; to increase scrutiny for token sales and mining.

UPDATE: The draft bill ‘On Digital Financial Assets’ will return to the reading stage for revisions. State Duma said current draft has no connections with crypto or digital tokens.


Status: Legal

Monetary Authority of Singapore warned of the risks associated with using bitcoin in 2013.

UPDATE: The Monetary Authority of Singapore (MAS) completes a basic regulatory bill for the country's payment services which includes cryptocurrencies.

South Korea

Status: Legal

To increase oversight over exchanges; planning joint oversight with Japan and China over cryptocurrency investment.

UPDATE: Incoming Finance Minister Hong Nam-ki wants to tax crypto. And Kwon Dae-young of the financial innovation bureau says the department is trying to institutionalize crypto but harm done to crypt investors must be resolved first.


Status: Legal

Swiss regulators friendliest in the world. Exchanges need to register with Swiss Financial Market Supervisory Authority.

UPDATE: The Swiss Federal Council will take a more relaxed approach to blockchain and crypto startups so that the country can growth with the industry and be the preferred destination for fintech and innovative startups.


Status: Legal

Taiwan government is positive towards blockchain and crypto.

UPDATE: The country will strengthen AML policies aimed at crypto exchanges. Exchanges should be able to monitor and prevent illicit transactions.


Status: Legal

The Petro is considered legal tender. President Marudo has the power to regulate the issuance and regulation of the Petro.

UPDATE: The Petro becomes legal tender in the country. Can be used to purchase goods and services.


Status: Legal

Cryptocurrency cannot be accepted as payment for goods and services. State Securities Commission forbid industry firms from engaging in crypto related activities.

UPDATE: Authorities are unsure of how to implement new crypto regulations. Banned mining rigs but the Ministry of Industry and Trade opposes the ban due to loss of business for the country.


Status: Legal

Cryptocurrency is not recognized as legal tender. Binance opens crypto-fiat exchange.

UPDATE: Planning and Finance Ministry completed a draft bill. Will present the draft to parliament for debate and approval.

United Kingdom

Status: Legal

Financial Conduct Authority warns on the risks due to the of lack of consumer protection.

UPDATE: Financial Action Task Force (FATF) recommends the UK to regulate cryptocurrency exchanges. On 19 December 2018, the UK’s HM Revenue and Customs published the tax rule Cryptoassets for Individuals for its citizens trading in or getting paid with cryptocurrency. Citizens are required to pay taxes including Income Tax, Capital Gains Tax, and Inheritance Tax.

United States

Status: Legal

Treasury classified bitcoin as a convertible decentralized virtual currency in 2013; a federal judge ruled that 'bitcoins are funds' in 2016. In June 2018, Supreme Court of the United States debated bitcoin future for the first time.

UPDATE: Two US congressmen who drafted the proposed bills released a joint statement saying the country is for the protection of consumers and crypto investors. The State of Ohio accepts BTC as tax payment. The Token Taxonomy Act, H.R. 7356 was introduced by two US Congressmen on 20 December 2018. The proposed act seeks to disconnect ‘digital tokens’ from securities and grant tax exemptions for crypto-to-crypto trade and individual retirement accounts (IRA).

Related news

Russia Prepares Law to Allow Cryptocurrency Confiscation

According to local reports, Russia’s Ministry of Internal Affairs and other law enforcement agencies are developing proposals to confiscate cryptocurrencies. These proposals could evolve into Russian laws as soon as 2021. “Russia plans to develop a legal mechanism for the seizure of virtual assets for their confiscation,” according to a translated report from RBC. “The relevant proposals should be prepared by December 31, 2021 by the Ministry of Internal Affairs together with [federal financial monitoring branch] Rosfinmonitoring, the Prosecutor General’s Office, the Investigative Committee, the Justice Ministry … the Federal Customs Service and the Federal Security Service with the participation of the Supreme Court.” Decentralized, blockchain-based cryptocurrencies like bitcoin would be very difficult, if not impossible, to confiscate. The initial report did not elaborate on how, specifically, the government would seize cryptocurrency under a new regulation. Russia and Cryptocurrency Regulation Many Russians have a positive relationship with cryptocurrencies. Ironically, even the government has had its hand in blockchain- and cryptocurrency-based initiatives. President Vladimir Putin met with Ethereum co-founder Vitalik Buterin in June 2017, leading many to believe it was a signal of support for digital currencies from the Kremlin. The president also attended the St. Petersburg International Economic Forum that same month, where he claimed that enhancing the Russian economy and increasing average income could be achieved through the adoption and acceptance of “innovative technologies.” One of Putin’s aides leased an abandoned aluminum plant located in northern Russia to a Bitcoin mining company. However, regulation around cryptocurrencies in Russia has been a tad murky. In May 2019, local news medium Fontanka reported that Dmitry Medvedev, the Russian prime minister, had dismissed the issue of regulating cryptocurrency. While speaking at a legal conference in St. Petersburg, the lawmaker had explained that cryptocurrency may have lost its appeal to the masses. “Nowadays, the popularity of cryptocurrency has decreased, and regulatory issues may not be so relevant,” he argued. So, those who advocated for regulations believed that Russia would get its day when crypto prices rose again. And prices did rise. Bitcoin surged to about $13,500 in June 2019, but this didn’t move the Russian government, as many had expected, to regulate the sector. But some progress toward cryptocurrency regulation clarity in Russia was made this year. Called Russia’s “digital rights act,” it defines smart contracts and digital tokens in a legal sense. Whether it was due to the involvement of his aides or just a fascination with the technology, President Putin seemed ready to open Russia’s doors to the innovative technologies that he touted in St. Petersburg. Cryptocurrency Regulation as an Effort to Fight Crime in Russia However, any cordial relationship between cryptocurrencies and the Russian government appears to be fraying. And this may be exacerbated by the fact that some high-profile crimes in the country have been connected to cryptocurrency. On November 4, 2019, police in St. Petersburg reportedly got an anonymous letter from a man who threatened to set off explosives at several train stations across the country if he wasn’t paid 50 BTC (worth about $460,000 at press time). In October 2019, Denis Baykov, a maintenance worker at a nuclear warhead facility in the western town of Sarov, was handed a $7,000 fine after he and two of his co-workers were found trying to mine bitcoin with the facility’s supercomputer. The Sarov nuclear plant is registered as a state secret, and by connecting the supercomputer to the internet, the three men risked compromising the facility’s security to hackers and other external threats. But instead of reversing the progress that Russia has made with regulations or banning cryptocurrencies (in the way countries like China and India have), the Kremlin is now looking to ensure complete oversight and control over their use. Can Russia Really Confiscate Cryptocurrencies? Konstantin Golikov, co-owner and CEO of digital rewards platform DailyRich, explained to RBC that success in a government-led initiative to confiscate cryptocurrencies would require clear regulations on how it classifies digital assets. This may allow cryptocurrency-based businesses to operate more easily in the country. “If law enforcement agencies begin to discuss the forfeiture of cryptocurrency, then, in fact, they are launching a mechanism for legalizing cryptocurrency on the territory of Russia,” he said, adding that, while the Russian Central Bank might resist this, there are already many precedents for cryptocurrency seizure by a court decision. As for the prospect of going through with confiscation, there are still plenty of questions. As RBC noted, cryptocurrencies are generally kept on exchanges or in private wallets. These assets can’t be taken by anyone without access to the wallets, and in most cases, only the owners (and perhaps the asset custodians) have access to them. If the government wants to get its hands on these assets when it pleases, it may require the cooperation of asset holders. In any case, this effort would have to be preceded by more regulatory clarity. This article was originally published by BitcoinMagazine and written by Jimmy Aki.

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