Regulatory Wave Around Blockchain in Major Countries
Blockchain and cryptocurrency have well and truly taken the world by storm. New regulations in every country are making it hard for investors to make their moves in the market especially when it comes to cryptocurrency exchanges and trading. They have to stay updated on the stance of every major power in the world when it comes to blockchain and cryptocurrency.
Here is everything you need to know about crypto and blockchain regulations, in all parts of the world.
At the G20 summit held in Buenos Aires, Argentina, the topic of cryptocurrencies and blockchain was discussed in depth. With no global regulator existing as of now, the need of discussing such an issue at the G20 summit was paramount. The Financial Stability Board also asked countries to cooperate and ease regulatory laws when it comes to cryptocurrencies, thus going hand in hand with the International Monetary Fund’s view on the matter. Even though some people believe that cryptocurrencies could be used for malicious intent, the underlying blockchain technology has the potential to disrupt the industries. Also, IMF and FSB believe that more cooperation on the part of countries can be beneficial for the controlled growth of this sector. International agencies including United Nation are working on the effective use cases of blockchain technology.
Acceptance in Japan
Even though Japan accepts currencies such as bitcoin in the form of legal tender, recent events have dampened the spirit of Japanese investors. A reported USD 530 million worth of NEM coins was stolen from a Japanese exchange in January, which has resulted in a consideration for stricter regulation on exchanges and intervention from the Financial Services Agency.
Since Japan is the biggest market for Bitcoin, it certainly stands as one of the most liberal countries toward cryptocurrency and blockchain technology, as of now. Japan is also pushing to become a world’s blockchain capital.
Rejection in China
On the other end of the spectrum, China is one place which has not taken the bitcoin and cryptocurrency boom too well. Both currencies and exchanges are currently illegal in China, with ICOs also being banned in 2017, and domestic crypto exchanges being shut down. China, due to the aforementioned facts, appears to be the strictest place when it comes to blockchain and cryptocurrency regulations. Even though at first sight these policies may seem narrow-minded, it is perhaps in the best interests of the nation, as wiping out corruption and stemming the outflow of capital is higher on China’s priority list.
Despite this crackdown on cryptocurrency exchanges and trading, China wants to be a front runner in blockchain technology.
FINMA and the European Union
In recent news, the President of the European Central Bank, Mario Draghi, rejected Estonia’s bid to launch its own currency, estcoin. This was due to the fact that no states can establish their own currencies, and that the currency of the EU is the Euro and nothing but the Euro. The legal status of exchanges depends on the country under consideration, for instance, Estonia is one country that has adopted a very open approach towards blockchain and cryptocurrency. EU and the Swiss Financial Market Supervisory Authority have stated that they will keep track of developments in this sector on the global stage, along with other stakeholders.
Depending on the state, currency exchanges are legal in the US, but not currencies as legal tender. The IRS actually states that cryptocurrency is not a currency, but a property (this was said back in 2014). Similarly, the Commodity Futures Trading Commission reports that bitcoin is a commodity and not a currency. This view of currencies as securities can pose a bit of a problem to investors, thus, they need to be aware of state-wise policies on currencies and exchanges, in order to minimize risks of losing money and ending up on the wrong side of the government.
South Korea’s Financial Services Commission makes it mandatory for exchanges to register with it if they want to proceed with crypto trading. About 4 percent of the daily volume of bitcoin is traded in South Korea, although, it does not believe cryptocurrencies to be legal tenders.
As far as India is concerned, financial institutions are asked by Reserve Bank of India to not give any banking services to entities or individuals dealing in cryptocurrencies. It is adopting a more stringent approach, with the system looking to make use of cryptocurrencies illegal within its payment hierarchy. However, India is also one of the countries where a government is pushing for blockchain adoption. Few state governments like Telangana are already exploring blockchain solution to achieve better governance.
ICOs and SAFTs
With the emergence of blockchain and crypto, ICOs have become the most efficient methods to raise money for new projects and developments. Due to the nature of currency being described as securities in a few countries such as the US, it has become necessary to comply with various restrictions and regulations. In order to prevent the hassle, a Simple Agreement for Future Tokens (SAFT) has been announced by Protocol Labs, which will soon conduct the first token presale using the SAFT. The concept of SAFT comes into play when a company is actually raising funds with the premise of releasing their tokens at a later date, thus classifying their ICO as a token presale. This agreement aims to streamline security and regulatory restrictions to make it convenient for companies to accept investments from funders.
The article is written by Abhishek Kumar, a techie at Sodio.Tech