The new "crypto" world comprises crypto-assets, cryptocurrencies, central bank digital currencies, and non-fungible tokens, each with its own set of perks, challenges, opportunities, and complexities.
Bitcoin and other digital currencies, banking, and payments or digital assets elicited suspicion and caution. In recent years, the public's interest in cryptocurrencies like Bitcoin has skyrocketed. The technology was first launched in 2008 as a disruptive alternative to existing technologies.
Much has changed in recent years, as the number of users has increased dramatically, and several traditional financial services firms have begun to test the crypto waters. Besides payment, cryptos have found there way into gaming and as there are full Bitcoin casinos with payment and settlement in Bitcoin. Also, there are now Bitcoin casinos This article includes a country-by-country breakdown and a summary of the regulatory landscape for cryptocurrencies.
Most governments have figured out how to tax their citizen's gains or income from cryptocurrency, and several have already done so. Others have more defined responsibilities than others. Many market participants want a more established regulatory environment with more clarity, which will almost certainly imply new rules, regulations, or at the very least official guidelines. Different countries are currently beginning to build such a regulatory structure. Below are some countries and how regulation of cryptocurrencies is being made there.
Investing in cryptocurrencies is allowed in Argentina, but because the government does not issue them, they are not recognized as legal cash or tender. Regardless, Profits are taxed as the government has issued cryptocurrencies regulations related to taxes and AML/CFT (anti-money laundering -AML- and combating the financing of terrorism -CFT-).
Cryptocurrency profits are normally taxed at a rate ranging from 4% to 6.5 percent of gross income each time a digital money transaction is made.
The law has been enacted, and a national legal and regulatory framework has been proposed for the Payments mechanism for crypto-asset trades as well as investments. The Argentina Securities and Exchange Commission (CNV) will be the regulatory authority in charge of oversight.
To comply with anti-money laundering regulations, it intends to keep a national registry of businesses with transactions reported to the Financial Information Unit (FIU). Argentina's Federal Public Income Administration (AFIP) and the central bank have asked for additional information from Banks and cryptocurrency exchanges in the United States.
Mexico has embraced cryptocurrencies and is often regarded as a cryptocurrency-friendly jurisdiction. The Mexican government and the country's financial regulator, CNBV, have passed new fintech regulations.
In March 2018, legislation was passed. Bitsos, the country's largest cryptocurrency exchange, has over a million users on its platform. Mexico's Federal Anti-Money Laundering Law was also updated to include "virtual asset" transactions.
The tax framework is expected to vary because there is no official policy on cryptocurrencies in Mexico. Cryptocurrencies are generally regarded as intangible assets, with gains subject to a 30% tax rate. Individuals should expect to pay companies from 2% to 35% of their income.
The Chilean government has stated that it will create a regulatory and supervisory framework for cryptocurrencies. Also, the government plan to expand the number of cryptocurrency exchanges in the country.
The Central Bank acts as a regulatory body in the absence of a legal framework. The Bank of England and the Financial Markets Commission have stated that Cryptocurrencies are subject to existing regulations.
The Chilean Internal Revenue Service (SII) is the only institution so far to have issued legislation on cryptocurrencies in Notice no 963, issued on May 14, 2018. The SII released a determination on the taxation of income obtained from buying and selling cryptocurrencies.
It said that Tax Form 22 would require the declaration “from the sale of foreign currencies of legal course or digital/virtual assets such as cryptocurrencies (for example, Bitcoins)”.
There is no explicit legislation in Colombia that governs the use of cryptocurrencies. The Banco de la Republica is the country's monetary, exchange, and financial institution.
The Superintendencia Financiera de Colombia (SFC), the Colombian government body in charge of regulating financial markets and managing financial regulation, issued statements about cryptos, stating that they are not lawful. For supervised entities, tender or legitimate investments are available, and Companies are not permitted to advise or manage them.
Transactions involving money are no entity in the world that controls, supervises, or regulates it and those who use it face a financial risk as a result of this. The Ecuadorian Central Bank advised citizens in January 2018 that Bitcoin "is not a mode of payment authorized for usage in the country."
Despite this warning, the Central Bank has stated that "the economy is in good shape, and Bitcoin is a cryptocurrency that can be bought and sold through the internet."
In Peru, there is no explicit legislation governing cryptocurrencies. Neither the Securities Market Agency (SMV), the Banking, Insurance, and Pension Fund Manager Agency (SBS), nor the Peruvian Central Bank supervises them.
According to the Reserve Bank of Australia (BCRP), because these financial assets are not legal currency and are not backed by central banks, they do not completely function money as a medium of exchange.
A medium of exchange, a unit of account, and a store of value are all terms used to describe the same thing. Because virtual currencies are not regulated by the SBS and the assets are not insured, officials in Peru have issued multiple public warnings regarding the potential for loss. It's possible that it'll be exploited for illegal purposes.
The SBS has stated that it will participate in examining the possibility of regulating the Bitcoin industry to prevent asset laundering.