Crypto Regulation

One thing that can cause fear and doubts in the mind of cryptocurrency users is definitely government regulations and bans. The year 2018 happens to be one that is filled with such news. With countries like China outrightly placing a ban on all cryptocurrency related activities, others like India have enforced strict regulations and measures to prohibit activities and use of cryptocurrencies. Here are some of the reasons that dictate such decisions:

• They see cryptocurrencies as a threat to the economy, to their financial system and also to the stability of their local currencies;
• They see cryptocurrencies as an avenue to fund terrorist attacks. This is because they are not supervised by a central authority.;
• Tax evasion;
• Money laundering, proliferation etc.;

These are only a few of the reasons why most countries have put in overly strict regulations and why others are thinking of following suit.

While the year 2017 was the year of ICO's, 2018 is the year for cryptocurrency regulations and true to this, most countries made their stance on cryptocurrencies known, while others are still unsure. In this article, we will look at a few countries and how they have reacted to the increasing demand for cryptocurrencies.

United States

The US currently has not declared their position on cryptocurrency regulations. Although the Securities and Exchange Commission (SEC) has warned investors in the country about the various risks involved in the trading and holding such funds, the commission has also stopped the activities of several ICO’s as well as emphasized the need for greater crypto regulation. The CFTC (Commodity Futures Trading Commission) became the first regulator based in the United States to allow for crypto derivatives to be traded publicly. It went ahead and organized a meeting to discuss the possibility of changing crypto rules.

Steve Mnuchin, the secretary of the US Treasury while speaking to newsmen on January 12, 2018, stated that he preferred fiat currencies to these cryptocurrencies. Mnuchin went further to state that he and other relevant authorities are looking into the possibility of cryptocurrencies being used for money laundering activities. He also revealed that the FSOC (Financial Stability Oversight Council) had formed a group within them to explore and better understand the workings of these crypto coins. Secretary Steve Mnuchin also stated that he would have to work with the G20 to ensure that the Bitcoin token does not become in any way a digital equivalent of a Swiss bank account.

These comments made by secretary Mnuchin received a lot of negative criticisms from various crypto enthusiasts', some were of the opinion that the secretary was not as open-minded as they thought, while others clearly condemned his stance since there is no evidence that cryptocurrencies have been used for money laundering activities or any fraudulent activity in the country. In defense to his earlier remarks, Mnuchin stated at the January 25th World Economic Forum that his reason for looking into cryptocurrencies was to ensure that they are not used for any fraudulent activity.

Sigal Mandelker echoed the US Treasury's Deputy Director’s sentiments while speaking to newsmen after paying a visit to South Korea, Japan, and China. She stated that she loved the way these countries have set in place certain regulations that have helped them keep tabs on all cryptocurrency activities. Going further, Mandelker feels strongly that the United States needs to employ similar measures. Expanding on the matter, she believes that the world as a whole should put in place such restrictions to ensure that the activities of these cryptocurrencies are properly supervised.

None US investors have to pass through hurdles before they are being cleared by each state. If the United States sees these cryptocurrencies as fiat currencies, then it would mean that the actions and laws of the Federal government would supersede that of these states, if they (cryptocurrencies) are classed as securities, then they would have to be regulated and they have to act based on the laws of each state instead of the Federal government.

Japan

Contrary to popular belief, Japan is not particularly liberal with cryptos. They are simply winning the race to attract and welcome the best among the continent's crypto industry. We do not know for sure if the government of Japan would be placing strict bans on crypto related activities but when compared to other Asian countries, it is far more welcoming.

The January 26th hack of over $530 million NEM tokens prompted several backlashes from citizens and has also made the FSA (Federal Service Agency) look into cryptocurrencies.

The relevant authorities in this country have ordered that all crypto exchanges based in Japan be registered with the FSA. Those that haven’t complied with this order have faced punishments, a few of them have been given suspension notices and others are yet to receive theirs. The main reason for this recent development has not been identified, although most people have attributed it to the March 7th crypto sell-off that the country experienced.

China

China happens to one of the countries that have put up strict measures to regulate these cryptocurrencies. It started off by outrightly placing a ban on ICO's. The government of China continued by banning all cryptocurrency activities, all accounts that are associated with cryptocurrency exchanges and miners have been frozen. Also, mobile access to Internet relating to cryptocurrencies has been banned as well. China has been referred to as the country with the most stringent measures when it comes to cryptocurrencies. This strict regulation on cryptocurrencies that have been put in place by China is strange at the same time would have a negative effect on the trading of Bitcoin and other cryptocurrencies. This is because as of 2017, miners in China comprised over 50% of the total mining population in the world. Also, in that year the adoption of cryptocurrencies in China was higher than any other country.

The regulations, although strict, are in line with the decision of the country’s government to stomp out any form of corruption or anything that would negatively affect the growth and stability of the country's local currency.

Currently, all social media accounts that are related to any cryptocurrency related activities have been blocked by the government. Also, all crypto channels on the country's top messenger application WeChat have also been blocked along with accounts on the platform. Recently, one official of the Chinese government has revealed that this ban is temporal and that the government would in no time reinstate all crypto activities in the country.

Canada

The country's FCA (Financial Consumer Agency) has clearly stated that it does not consider cryptocurrencies to be a "legal tender". This supposed comment does not involve or affect all Canadian coins and banknotes. Canada is not entirely harsh on cryptocurrencies and happens to be one of the most transparent nations in the world when it comes to the regulations of these cryptocurrencies. On 19th June 2014, the country's parliament approved the Bill C-31 and this law became the first national law that has been signed in regard to cryptocurrencies.

For one thing, the country has been communicative when it comes to crypto regulations. Just last year, the CSA (Canadian Securities Administrators) issued a statement claiming that there could be an application of Canadian security laws to cryptocurrencies. The body went further to state that the security laws could be applied to all trading, marketplace operations as well as being able to provide all players in the market with guidance in the analysis of these requirements.

Stephen Poloz the head of the Canadian Central Bank earlier this year clearly stated that he objects to the term "cryptocurrencies". He said that they are "cryptos" and not "currencies". He went further to state that these cryptos are not assets and that for the most part, he feels they are securities. Poloz further claimed that Bitcoin and other crypto coins do not have intrinsic values, and that they could not be analyzed as assets, that they are simply speculative or even a gamble.

As mentioned earlier, there are no strict regulations that have been placed, but it is important to note that Canada being part of the NASAA (North American Securities Administrators Association), were part of the "cautionary directive" that all in the association agreed upon. Every representative at the meeting claimed that cryptocurrencies had a high risk of fraud when compared to other financial investments options.

India

India was actually one of the few countries that openly welcomed cryptocurrencies and its investors, but that has changed drastically with strict regulations being put in place. India's stance on cryptocurrencies from 2018 has been blamed on certain factors such as illegal activities, money laundering, proliferation, tax evasion, sponsoring of terrorism in the country and other societal vices.

Although these measures are in place, there are still a number of investors in the country that strongly believe that India could never outrightly place a ban on the trading and holding of cryptocurrencies like China has done.

South Korea

This country currently has the third largest crypto trading volume globally. In line with a comment that was made by a Minister, Hong Nam Ki, it is clear that the government of South Korea has not made any conclusions on how these cryptocurrencies should be regulated.

Hong Nam Ki revealed that the decision to place a ban on cryptocurrencies has been a controversial one with tons of officials speaking against it. This controversy is one reason why there has not been any regulation of these cryptocurrencies in the country.

The government of South Korea has placed a ban on all anonymous trading of cryptocurrencies, also non-South Korean investors have been banned from making use of any exchanges based in the country. Several reasons have been cited for this decision, a few of them being that the government seeks to supervise the activities of cryptocurrencies as well as know the identity of all those that are trading or holding cryptocurrencies. The government of South Korea has also stipulated all cryptocurrency exchanges based in the country to ask all users to verify their identities.

Are Crypto Regulations Entirely Bad?

Most cryptocurrency experts are of the opinion that regulations are needed if these digital tokens are to succeed. They argue that the fall in price which the Bitcoin and other cryptocurrencies have experienced since the beginning of the year is because of the lack of stringent and uniform crypto regulations.

They state that this is the reason why the market remains vulnerable and that various investors seeking to make enough profits have taken disproportionate risks. The argument is that uniform regulations would ensure the activities of all in the crypto market and ensure no fraudulent activity is carried out. They further state that these measures would encourage more people to invest their funds into cryptocurrencies, thus increasing the value of the market.

Conclusion

The issue of crypto regulations has been on for a couple of years with ever more countries discussing the matter. Some countries, on the other hand, have publicly shown their support for crypto, the most prominent one being Switzerland. Its plans are to become the “crypto nation" of the world. Furthermore, Belgium has also welcomed the technology on which cryptocurrencies were built on and have not made any plans to put in place strict regulations.