Regulation versus ban? How do different countries treat this industry?

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The government decided to introduce the crypto bill in the winter session of Parliament

As India prepares to regulate cryptocurrency trading, fear grows about the possible fallout from developments in this booming and volatile industry. The government has decided to introduce legislation during the winter session of parliament, which is due to begin on November 29, to restrict and regulate crypto trading in the country. When the news broke earlier this week, the crypto market experienced a sharp collapse, but has since stabilized. So now is a good time to think about how this highly speculative industry is regulated around the world.

United States

The United States has a dual system of governance, like India, under which laws vary from state to state. Each state in the United States has its own laws to regulate cryptocurrencies, but mostly at the national level, sentiment is positive towards the trading community. Either way, the United States is known to support business opportunities, and therefore a ban on crypto trading is highly unlikely, unless this industry poses unmanageable risks to the existing financial system.

UK

As is the case in most countries, the UK has not formulated comprehensive legislation on the regulation of cryptocurrency. However, under the current system, it grants licenses to registered companies trading in crypto (e.g. online exchanges). It taxes the gains from these transactions like any other gain from currency trading.

China

Cryptocurrency trading in China is a difficult proposition. After initially allowing people to trade or mine crypto coins, it started cracking down on mining activities earlier this year and banned trading in June. Reports indicate that most major infrastructure miners have had to leave the country to continue their operations. China is developing a digital version of its currency, the Yuan, and testing the centrally regulated crypto coin.

The European Union

Being a grouping of 27 member countries (after the UK’s exit), forming legislation applicable to all members is complicated. While member countries have their own framework for how to deal with this emerging industry, the bloc as a whole is considering a collective approach. The European Commission released the Crypto-Assets Markets Regulation (MiCA) Bill in September 2020. When it comes into force, the legislation will treat cryptocurrency as a regulated financial instrument that will require the approval of regulators.

The Savior

In September, the South American country became the first in the world to officially launch Bitcoin as legal tender alongside the US dollar. President Nayib Bukele has positioned Bitcoin as a means of reducing poverty and attracting more people into the banking network. Its deployment of Bitcoin has been fraught with pitfalls.

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