How Is Cryptocurrency Regulated in Different Countries?

How Is Cryptocurrency Regulated in Different Countries?

All over the world, there are several confusions regarding the status and usage of the cryptocurrency, therefore, the countries have implemented certain regulations to monitor the activities regarding cryptocurrency transactions.

A cryptocurrency is a virtual or digital currency that is secured for cryptography in order to secure financial transactions. Cryptocurrencies work on blockchain technology – a decentralized technology that is spread across a network of computers that manage and record the transactions. A distinguishing characteristic of cryptocurrencies is that central authority generally does not issue them thus, making them theoretically immune to government manipulation or interference.

Cryptocurrencies are a common topic in the legislature of countries all over the world, some has given it legal validity and some refused to validate it. However, for both groups, it is still a matter of discussion either for enforcing a specific codified law or for validation of the cryptocurrencies.

Countries that have regulated cryptocurrency are United Kingdom, Singapore, Indonesia, Canada, Philippines, Switzerland, Germany, Australia, Netherlands, Thailand and South Korea.The list of countries that propose to regulate cryptocurrencies include the USA, Pakistan, Brazil and South Africa,

Countries such as China, Bangladesh and Algeria have banned cryptocurrencies.

Position of cryptocurrency in India

The Reserve Bank of India, through a circular in 2018, had advised all the entities regulated by it not to deal with virtual currencies or provide services for facilitating any person or entity in dealing with settling them. However, the Supreme Court set aside the RBI circular on March 4, 2020. Since then, cryptocurrency has been one of the most talked-about investment options.

When RBI banned crypto purchases through Indian banking channels, the Supreme Court struck it down, stating that while RBI was empowered to regulate cryptocurrencies, such power must be exercised with proportionality, backed by adequate empirical evidence. need a well-conceived regulatory framework that facilitates transparency, and the responsible democratization of market participants could guard against digital invasion and coercive behaviour. Pre-emptive regulation can monitor and prevent such undesirable outcomes.

Experts feel that a virtual ban without a market-linked regulatory architecture may lead to unintended consequences and prove counterproductive. Research has also demonstrated that outright bans tend to push an activity underground/illegal.

Considering cross-border flows, what is needed is a multilateral platform for regulation, even as countries protect their own jurisdictions. According to the International Monetary Fund (IMF), regulators need to continuously monitor the crypto-asset landscape to understand the direction of industry developments. The IMF also says that international cooperation in the crypto-asset space will be crucial to ensure risks are appropriately monitored and contained. Authorities would continue to use cooperation networks and standard-setter initiatives to exchange information on developments in the crypto-assets space. Active engagement is needed to identify cross-border considerations and tckle potential regulatory arbitrage. International cooperation in enforcement will, of course, continue to be key for sanctioning and prosecuting crypto-asset-related cases. Regulation needs to be risk

Till now, there is no crypto regulation in India. However, buying Bitcoin is absolutely legal in India. There is no law prohibiting Indians from buying/selling cryptocurrencies in India.

Cryptocurrency and blockchain technology is yet a mystery to a huge extent. Unless there is a clear and specific understanding of the concept, it is difficult to implement any law. As this involves, finances, the legislature is being extra careful before concluding any specific and codified law and regulation.

In March 2021, the Indian Government made it mandatory for companies to disclose investments made in cryptocurrencies.