As of April 2020, Bitcoin regulations aside, the cryptocurrency was legal in the U.S., Japan, the U.K., Canada, and most other developed countries. Many countries have different cryptocurrency regulations, some even single out Bitcoin, allowing it to be used as money, to pay taxes, purchase goods, or trade like a commodity.
Even the mere possession of Bitcoin in some countries can get you sent to prison, while others have not yet regulated it at all. Bitcoin and other cryptos remain in a state of legal limbo in some places, but that is rapidly changing.
Bitcoin Regulations: INDIA
The Supreme Court of India has ruled that the banking ban on crypto made by the Reserve Bank of India (RBI) is unconstitutional.
In April 2018 the RBI issued circulars warning users, traders, and holders of India bitcoin and cryptocurrencies to cease. This represented an extreme stance in the world of Bitcoin regulations. In January the Supreme Court finished hearing arguments against and for the ban after sitting on the suit for nearly two years.
In March 2020 CoinDCX, a Mumbai-based exchange announced that India clients now can purchase crypto using the Indian rupee. CoinDCX is the first exchange in India to integrate bank account transfers for its customers.
What does this mean for the Bitcoin markets? After the announcement, the price of Bitcoin went up about 5% along with some of the more popular altcoins. Some exchanges overloaded due to the volume of new India bitcoin customers finally being able to buy crypto. ZebPay said its servers had gone down because of the overload of new users being able to sign up after the ban was lifted.
The U.K. based Cashaa banking platform jumped in right away waving deposit and withdrawal fees for its customers. India bitcoin and altcoins exchange Warzix has teamed up with Binance and is now offering India’s first initial exchange offering (IEO). Using the token WRX will cut trading fees in half. This is similar to the Binance BNB token that discounts trading fees on their exchange.
Bitcoin Regulations: USA
The Cryptocurrency Act of 2020 was introduced to the U.S. House of Representatives by Arizona Congressman Paul Gosar (R) after a joint statement from the FinCEN, SEC and the CFTC noting people who engage in digital assets and activity must abide to certain laws. The act seeks to set clear guidelines on how cryptocurrencies are categorized. It proposes three categories:
- Crypto Currencies – Any representation of currency or synthetic derivatives resting on a blockchain or decentralized cryptographic ledger (e.g. Bitcoin or Litecoin), including reserve-backed digital assets (e.g. stable coins).
- Crypto Commodities – Economic goods or services that markets treat without regard for who produced them that rest on a blockchain or decentralized cryptographic ledger (e.g. Bitcoin futures contracts).
- Crypto Securities – Debt, equity or derivative instruments that rest on a blockchain or cryptographic ledger (e.g. initial coin offerings)
If the bill were to pass, it would hand over sole authoritative power to these agencies giving them regulatory control over the assets in their jurisdiction.
These agencies are:
- The Financial Crimes Enforcement Network (FinCEN). They usually regulate banking and money service institutions. They will regulate cryptocurrencies.
- The Commodity Futures Trading Commission (CFTC). Typically regulates the commodities and futures markets and will regulate crypto commodities.
- The Securities and Exchange Commission (SEC) This group usually regulates the securities markets. They will regulate crypto securities.
Public records of all licenses, certifications, and registrations needed to create, issue or trade digital assets will be maintained by The Federal Digital Asset Regulator. FinCEN will work along with the Security of the Treasury to come up with similar rules enforced by financial institutions to trace cryptocurrency transactions, and the IRS to ensure taxation.
The drafting and publishing of their proposed regulations will be the next step. Coin Center’s executive director Jerry Brito says the bill should be opposed in principle if it shows signs of life. Brito criticized Representative Gosar for not being on any committees that will discuss his bill.
Head of operations for TokenSoft Lawson Baker stated that while the bill makes sense on the surface, a deeper look reveals the neat categorizations are possible fatal flaws.
The bill is thought to have little chance of passage. However, according to lawyers and backers in the industry, this latest in what is sure to be many bitcoin regulations provides insight into what new law governing crypto could look like in the future.