Regulating Cryptocurrency Trading in SA, Europe, and The USA in 2020

Cryptocurrency has been around for quite some time now, but the legality of Bitcoin and other cryptocurrencies are still undefined. All these currencies have different definitions under distinct jurisdictions. The only assured thing is that cryptocurrencies are complicated to attribute to any existing class of assets because they are unique.

But putting aside that, here is, what the legal regimes for the cryptocurrency is in different countries, in the year 2020.

Europe

In the European Union, cryptocurrency is legal throughout, but there are specific regulations and standards that differ among the different countries. The taxes of Europe are guided by the decision of the European Court of Justice of 2015. According to this the exchange of cryptocurrencies should be let off the hook from a value-added tax.

To top it off, all the European countries have adjusted their regulatory standards to the recommendations issued by the Financial Action Task Force in June of 2019. According to this task force, any crypto site must start to comply with stringent KYC for Know Your Customer and Anti-Money Laundering standards along with sharing data with the regulator.

At the beginning of this year, in January, the fifth EU Anti-Money Laundering Directive came into force. This demanded the registration of cryptocurrency exchanges with financial regulators and the transfer of client wallet addresses to them. In general, Europe has been striving to gradually tighten its ropes when it comes to the regulations of the cryptocurrency market.

The novel Coronavirus made no exception in Europe and effected its development of the crypto industry. The global economic instability resulted in the acceleration of the adoption of cryptocurrencies in some countries.

One European country where there is no clear definition of cryptocurrency is France. A lower court called the Commercial Court of Nanterre, recognised the Bitcoin as a currency in March 2020. This made it a fungible interchangeable outside. Even though there is no case law in the country, this court ruling may have set an effective example.

The government determined to follow its neighbours and pressed the spread of cryptocurrencies with technological free zones in Portugal. By the end of April, the country permitted a nationwide plan to endorse digitisation in several areas. The Portuguese government will offer incentives and infrastructure for entrepreneurship, innovation and competition. It will also do so for the internationalisation of enterprises in the country.

This year the tiny territory of Gibraltar has become quite the real cryptocurrency hotspot, luring crypto firms with the regulatory framework that accords a formal license. This tiny territory launched a permissive regulatory regime for blockchain firms back in the year 2018. Since then it has become exceedingly attractive to leading companies and industries such as Huobi. The country also became the first in Europe to establish rules overriding the activities of initial coin offerings.

United States

The US is one of the hubs or centres of cryptocurrency regulations in the world. They basically set the pace for the adoptions for better or for worse. The laws made to govern the cryptocurrency industry differ from State to state. This means the federal authorities also interpret, infer and regulate them in different manners. An example is the Financial Crimes Enforcement Network. They evaluate transactions to flag financial crimes and do not consider cryptocurrencies as legal tender. But since the year 2013, it has been considering cryptocurrency exchanges financial as service operators and tokens as other assets that replace currency.

In the US exchanges must abide by the recommendations of the Financial Action Task Force and adhere to the Bank Secrecy Act. The Internal Revenue Service, which is the nation’s tax authority considers cryptocurrencies as property and has furnished a tax guide. Various federal regulators have also been striving to supervise cryptocurrency exchanges. The Securities and Exchange Commission recognises cryptocurrencies as securities while the Commodity Futures Trading Commission recognises Bitcoin to be a commodity and supervises the cryptocurrency derivatives market.

There was an introduction of new restrictions during the beginning of the year 2020 as the US Treasury Secretary conveyed that the office planned to introduce stricter rules regarding digital currencies to avert suspicious transactions using cryptocurrencies. But right after, approximately a month later, the Immigration and Customs Enforcement that fights cross-border crimes in the United States introduced a new method to track unlicensed cryptographic activity and proposed a Cryptocurrency Intelligence Program for 2021. This cryptocurrency intelligence programme put forward new rules and requirements for tax reporting to create a pathway for widespread adoption of blockchain technology in the country.

However, the US experienced a major economic plunge or slow down due to the COVID-19 pandemic containment efforts in March this year. Many people voiced their opinions on the fact that cryptocurrencies just might be able to help the population in these difficult times. Square which is run by Twitter CEO Jack Dorsey was allowed by the US government to participate in the federal programme to help the economy via the crypto application CashApp. The company in the United States could get low-interest loans.

There is no doubt that cryptocurrency is not prohibited in the United States, but it is still not integrated into the country’s financial structure, with the SEC striking down attempts to register a product that can be accessed by regular investors.

During the end of the month of March this year a bill was submitted to the US Congress that mentioned a digital dollar in response to The COVID-19 pandemic. But it vanished from the document quite soon and that was the end of the story.

South Africa

Regulations for cryptocurrency trading in South Africa are quite stringent. With SARB keeping investors informed about the volatility of Bitcoin and other currencies there is much awareness and there are no legal holds back in the cryptocurrency trading industry. The only important aspect is that traders who wish to trade the crypto assets need to verify, whether the broker in question extends its services to the country of South Africa.

It is a no-brainer that each country has its own attribute to words cryptocurrency. But here is to hoping that someday all countries of the world will recognize that cryptocurrency is firmly ingrained in our lives. And accepting cryptocurrency in one form or the other will only be a way of life.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes