Last Updated on May 25, 2023 by Umer Malik
The number of crypto users went from just 5 million in 2016 to 402 million in 2022, according to Statista. While the lack of government oversight has fueled interest in blockchain and digital assets from the start, it has also left less cautious investors and traders vulnerable to a variety of malicious activities. Now, the continuously growing interest in digital assets has governments across the world anxious to put crypto regulations in place to ensure their citizens’ safety.
While some countries try to go with the flow, others come up with stricter legislation, and navigating the landscape can become much trickier than before. Check out this simple guide to stay on top of current and upcoming crypto laws worldwide.
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Countries that banned crypto
Here is a list of countries that have banned crypto outright. Overall, 13 countries have made it impossible for their citizens to use crypto. These countries include Egypt, China, Algeria, Iraq, and Ethiopia. Digital assets are also partly banned in another 40 countries, such as Saudi Arabia, Iran, Cambodia, and Nigeria. Users can still buy and sell cryptocurrency at their own risk, but apps that facilitate such services cannot operate legally in the country.
Countries where crypto is legal
While crypto is not considered legal tender in the U.S., you can still buy, trade, and exchange it. Сrypto laws vary from state to state, but the U.S. government is continuously working on developing federal legislation to unify regulation of cryptocurrency across the country.
According to the Internal Revenue Service (IRS), virtual currency is treated as property when it comes to federal tax purposes. So, general tax principles that usually apply to property transactions in the U.S. also apply to crypto transactions.
The Securities and Exchange Commission (SEC) is adamant about considering most, if not all, cryptocurrencies to be securities. As a result, under federal securities law, those tokens must be registered with the SEC.
Cryptocurrency exchanges are regulated by the Bank Secrecy Act (BSA). The platforms that want to operate in the United States must register with FinCEN and implement an AML/CFT program. They also must keep records and submit reports to the authorities regularly.
Under Australian law, cryptocurrencies that share characteristics with Bitcoin and are legal should be treated as property and be subject to Capital Gains Tax (CGT). Initial Coin Offerings and cryptocurrency trading are regulated by the Australian Securities and Investments Commission (ASIC).
Exchanges that want to operate in Australia must register with the Australian Transaction Reports and Analysis Centre (AUSTRAC) if they do not want to face criminal charges. Registered platforms are required to follow AUSTRAC protocols for user identification, verification, and record keeping, as well as comply with the AML/CFT program.
The Australian government is looking to modernize its financial system. In December 2022, the country’s Treasury announced it aims to establish a licensing and regulatory framework for crypto service providers in 2023.
Cryptocurrency remains somewhere in the gray area in South Korea. It is considered neither currency nor a financial asset, allowing users to process their transactions tax-free. However, the crypto tax is in the works and should be implemented in 2023.
The cryptocurrency investors must use the same name on the digital wallets they use for their bank accounts, meaning the exchanges must share their users’ ID data with banks for verification purposes. The cryptocurrency exchanges must also be registered with the Financial Supervisory Service (FSS), which oversees their operations.
Following the recent Terra-Luna, Celsius, and FTX collapses, the South Korean government is looking to tighten its crypto laws to ensure user security. Rather than waiting for international standards, they aim to put at least the minimum necessary regulatory standards in place as soon as possible. The Digital Asset Basic Act has been in the works since late last year, and officials hope to finish it in 2023.
While some countries in Latin America have stricter crypto regulations, with Bolivia banning both tokens and exchanges, others, like Mexico, Argentina, and Brazil, accept digital coins as a payment, even by retailers. El Salvador was the first country to accept Bitcoin as legal tender and even issued a digital wallet.
The abundance of legally operating exchanges, like Binance and XBO.com, gives Latin American crypto enthusiasts more freedom to select the best provider based on platform conditions instead of availability.
Chile, Mexico, and a few other countries in the region have already announced their plans to develop their own digital currencies in the coming years.
While there is no single worldwide entity that regulates cryptocurrencies globally, users and cryptocurrency exchanges that operate in more than one jurisdiction must try to stay up with ongoing changes in crypto regulations.