Its not news that the last two years have seen immense growth in the volumes of trade and users that have taken to cryptocurrency markets. Cambridge university conducted a study that estimates about 2.9 million to 5.8 million unique users that are currently using a cryptocurrency wallet. As the value of these transactions continues to grow, governments are rightly concerned about the anonymous nature of these transactions.
The concept of cryptocurrency emerged with Bitcoin in 2009, which was one of the first successful cryptocurrency launches. The nature of the platform that it is built on has a deep level of anonymity, and could be used for illegal trade and dark web activities such as money laundering, trafficking and arms dealing. Governments are naturally concerned about all these unregulated transactions. There are three ways in which governments have reacted to cryptocurrency markets:
They legalize cryptocurrencies and formulate regulations, they’re not sure how to respond yet, or they respond negatively and ban all cryptocurrency activity. Here is an overview of how some countries have responded:
USA: A lot of power rests with state governments in the US, so each state has dealt with the regulation of cryptocurrency differently. So far, crypto friendly states include Texas, Kansas, Tennessee, South Carolina and Montana, while New York, New Hampshire, Connecticut, Hawaii, Georgia, North Carolina, Washington and New Mexico have non - favorable regulations in place. The rest of the states currently have no set regulations that lean either way.
Canada: The Canadian government has declared that bitcoin transactions should be viewed as barter agreements, and have also extended their anti-money laundering laws and counter terrorism measures to cover the cryptocurrency market as well.
Australia: Australian officials have legalized bitcoin transactions and have removed double taxation on these transactions. They have included detailed regulations in their policies which have encouraged growth in this sector. Australia is one of the few countries to have completely legalized bitcoin and other cryptocurrency transactions.
Japan: Japan has emerged as one the biggest hubs for cryptocurrency trading. It has not only legalized bitcoin payments, and removed double taxation, but has also created a framework through its Payment Services Act to allow citizens to pay through cryptocurrencies.
Some countries are banning cryptocurrency
Venezuela: The other extreme of cryptocurrency regulations, the Venezuelan government has cracked down on all bitcoin users amidst it’s growing popularity. They have even gone to the extent of arresting and torturing cryptocurrency users. Its safe to say they made their stance on cryptocurrency trade clear.
India: The Indian government is yet to take a stance on the regulation of cryptocurrency, and while it has established a specialized committee to review the market and make recommendations to the government, the report seems to be a long time in coming. In the meanwhile, cryptocurrency trading is wildly popular in India, and continues to thrive.
Middle Eastern Countries: Some countries in the Middle East are taking a positive approach to cryptocurrency regulations such as Kazakhstan. They have planned to start selling blockchain based bonds. Some other countries are still in the grey area, and have not yet decided how to regulate the market.
Overall, the world seems to be headed towards a future that will adopt cryptocurrencies as the future and is headed increasingly toward a digital and cashless global economy. Some countries are emerging as pioneers in the field, and the rest seem to be slowly following suite.