As India tightens regulation of cryptocurrency trade, there is growing concern that this emerging and turbulent industry may have an impact. The government has decided to introduce legislation at the parliamentary winter meeting scheduled to begin on November 29 to restrict and regulate cryptocurrency transactions in the country. When the news came out, there was a sharp crash in the crypto market earlier this week, but it has since stabilized. Therefore, now is a good time to reflect on how this highly speculative industry is regulated worldwide.
The United States has a dual governance system, such as India, whose laws vary from state to state. Each state in the United States has its own laws to regulate cryptocurrencies, but mainly at the national level, sentiment towards the trading community is positive. In any case, it is well known that the United States supports business opportunities, so unless the industry poses uncontrollable risks to the existing financial system, it is unlikely that crypto trading will be banned.
Like most countries, the UK has not yet enacted comprehensive cryptocurrency regulatory legislation. However, under the current system, it grants licenses to registered companies engaged in crypto transactions (such as online exchanges). It levies taxes on the proceeds of these transactions, just like any other proceeds from currency transactions.
China’s cryptocurrency trade is a difficult proposition. After initially allowing people to trade or mine cryptocurrency, it began cracking down on mining activities earlier this year and banned the transaction in June. According to reports, most of the miners of important infrastructure have to move out of the country to continue operations. China is developing a digital version of its currency, the renminbi, and is testing a centrally regulated cryptocurrency.
As a group of 27 member states (after the UK withdraws), it is complicated to formulate legislation applicable to all member states. Although member states have their own framework on how to deal with this emerging industry, the entire block is considering a collective approach. The European Commission released a draft legislation for the regulation of the crypto asset market (MiCA) in September 2020. After the legislation comes into effect, the legislation will treat cryptocurrency as a regulated financial instrument, which requires the approval of regulatory agencies.
In September, this South American country became the first country in the world to officially launch Bitcoin as a legal tender along with the U.S. dollar. President Nayib Bukele positioned Bitcoin as a way to reduce poverty and get more people into the banking network. The Bitcoin it launched is full of problems.