Cryptocurrencies have been around for more than 10 years, but the legal status of Bitcoin (BTC) and most other cryptocurrencies remains unclear and has different definitions in different jurisdictions. ¿Is it money, an asset, a product, a property or something else? Should they be freely traded or should they be strictly regulated? In the absence of a clear answer, the governments of the United States and Europe continue to legislate to regulate the cryptocurrency market and determine their attitudes toward them.
It was only in the first months of 2020 that the authorities in France, Germany and Australia made decisions with three different interpretations of the nature of Bitcoin: as a currency, as a financial instrument that is used as a medium of exchange between individuals or legal entities, and as value. in the legal sense.
Meanwhile, The tax system, the complexity of regulation and reporting depend on the classification of cryptocurrencies. For example, the currency works under relatively weak regulatory oversight. Instead, stocks are often subject to stricter rules when it comes to price transparency and business reporting.
Only one thing is certain: Cryptocurrencies are difficult to assign to an existing asset class because they are unique. Since cryptocurrencies differ greatly from one another, they also fit into different classes. Apart from this question, here you can see what the legal regulations for cryptocurrencies in different countries will do with cryptocurrencies in 2020.
The United States is a global center for cryptocurrency regulation, setting the pace for a large number of good and bad adoption. For starters, the laws that govern the cryptocurrency industry vary from state to state, and federal agencies interpret and regulate them differently. For example, the Financial Crimes Enforcement Network (FinCEN), which analyzes transactions to report financial crimes. does not consider cryptocurrencies to be legal tender. Since 2013, however Cryptocurrency exchange was seen as a service provider and tokens as “another property” that replaced the currency.
The exchanges must comply with the recommendations of the International Financial Action Group (FATF) and comply with the Banking Secrecy Act. In addition, the Internal Revenue Service (IRS), the country’s tax authority, provides considers cryptocurrencies to be property and has published a tax guide.
Several federal regulators also had problems monitoring cryptocurrency exchanges. The Securities and Exchange Commission (SEC) Think of cryptocurrencies as securitiesand the Commodity Futures Trading Commission is considering Bitcoin as a commodity and monitors the market for crypto derivatives.
The year 2020 began with news of new restrictions being introduced, the U.S. Treasury Secretary said Stricter rules for digital currencies to avoid suspicious transactions with cryptocurrencies. A month later, the Immigration and Customs Agency (ICE), which combats cross-border crime in the U.S., developed a new way to track unlicensed crypto activity and proposed a cryptocurrency intelligence program for 2021. The intelligence program would offer new rules and requirements for tax reporting to pave the way for the widespread adoption of blockchain technology in the country.
In March of this year, however The U.S. has seen a significant economic slowdown due to efforts to curb COVID-19, and many have suggested that cryptocurrencies could help people in difficult times. The U.S. government allowed Square, led by Twitter CEO Jack Dorsey, to participate in the federal program to help the economy through the CashApp cryptocurrency app. The company in the US was able to get low-interest loans.
Cryptocurrencies are not prohibited in the United States, but are not yet integrated into the country’s financial structure. The SEC negates attempts to register a product that regular investors can access. Some of these examples range from the delay in launching the Libra Facebook idea until the rejection of numerous Bitcoin ETF applications or the abrupt procedure between the SEC and Telegram regarding the SEC’s gram tokens.
End of March 2020 A bill was submitted to Congress that mentioned a digital dollar in response to the COVID-19 pandemic, which soon disappeared from the document, and that was it. Glen Goodman, author of The Crypto Trader, shared Cointelegraph’s view of the U.S. government’s stance on a national cryptocurrency. According to him, the US has everything to lose when it comes to cryptocurrencies:
“The US establishment is therefore very nervous about promoting cryptocurrency that could jeopardize the dominant position of the dollar in world finance. The US is enjoying what has long been called an exorbitant privilege.” “to be able to print seemingly endless dollars and borrow unprecedented amounts without the dollar collapsing. All of this is because almost all other countries use the dollar as the standard for international trade and finance. The US prints and borrows free without collapsing their currency. “
In Russia, where people are more friends with cryptocurrencies, The government has yet to decide what Bitcoin and cryptocurrencies are, but it appears to be largely hostile to technology. However, it hasn’t issued a ban, at least not yet. So far, it has been possible to understand what Russia is doing with cryptocurrencies through its court decisions.
Since 2018 there have been two cases where cryptocurrencies were recognized as “other property”. In May 2018, the court came to such a judgment and ordered the debtor to transfer access to his wallet. The second case happened in February 2020, where the court also made a similar decision and recognized Bitcoin as another property.
The most interesting thing about Russia’s relationship with cryptocurrencies, however, is the long late adoption of the relevant law, which is supposed to help develop a new type of financial asset in the country, but has been pending since then in 2018. This year The Russian government has drawn up this law several times to postpone its application every time.
At the beginning of this year It was learned that the Russian government has decided to update the law on bribery and the fight against money laundering in relation to cryptocurrencies. In addition, the law classifies every cryptocurrency transaction as a possible money laundering risk. Later the country’s central bank He tried to ban the use of cryptocurrencies as a payment method.
But everywhere It seems that Russian financial regulators can’t find a compromise between allowing or banning cryptocurrencies. The latest version of the law, entitled “On Digital Financial Assets”, appeared in early July and defines Bitcoin as ownership, but not as legal tender. Many experts doubt that this law will ever be passed.
Europe: Small countries – big vision
Cryptocurrencies are legal across the European Union, but specific regulations and standards vary from country to country. In tax matters, Most countries in the European Union are subject to the decision of the Court of Justice of the European Union in 2015, according to which the exchange of cryptocurrencies must be exempt from VAT.
In addition, all European countries have adapted their regulatory standards to the recommendations of the International Financial Action Task Force in June 2019. According to the FATF Every cryptocurrency website must adhere to the strict rules of “Know Your Customer” and anti-money laundering as well as the data exchange with the supervisory authority.
The fifth EU Money Laundering Directive came into force in January 2020, which requires the registration of cryptocurrency exchanges with the financial supervisory authorities and the transmission of the addresses of customers’ wallets to them. GeneralThe EU has gradually tightened its regulation of the cryptocurrency market.
The global economic instability caused by the new corona virus has influenced the development of the crypto industry in Europe and accelerated the introduction of cryptocurrencies in some countries.
France is one of the few countries in the European Union where there is still no clear definition of cryptocurrencies. In March of this year A lawsuit called Nanterre Commercial Court recognized BTC as a currency and made it a fungible, interchangeable asset. Although there is no jurisdiction in the country, this court ruling could have set an effective precedent.
In Portugal, The government decided to follow its neighbors and drive the spread of cryptocurrencies with technology-free zones. At the end of April, the country approved a national plan to promote digitization in various areas. The Portuguese government will provide infrastructure and incentives for innovation, entrepreneurship and competition, as well as for the internationalization of companies in the country.
The small area of Gibraltar It appears to be positioning itself as a real attraction for cryptocurrencies this year, attracting crypto companies with a legal framework that grants a formal license. Gibraltar introduced a legal regulatory system for blockchain companies in 2018 and has since become very attractive to industry leaders like Huobi. In addition, the country was the first in Europe to develop rules for the activities of ICOs.
Of course, each country has its own stance on cryptocurrencies; Some countries do not want to accept the asset as it is, marking it as illegal, while others create the legal framework and benefit from the fact that the cryptocurrency market is making profits. One can only hope that sooner or later all countries in the world will understand that cryptocurrencies are deeply rooted in our lives and that we have to accept them in one way or another. Dave Hodgson, chief investment officer and CEO of NEM Ventures, believes the legalization will be gradual:
“We will continue to see advanced governments promoting their regulations and mechanisms so that citizens can use blockchain payment and non-payment solutions in general. The countries that have been the slowest to formalize and formalize these regulations will continue to lose businesses and citizens in favor of them Jurisdictions that take a more progressive approach. I think these economic factors will continue to encourage the slower ones to catch up. “