How are Digital Currencies Regulated Around the World?

11 Jun 2018
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All around the world, regulators and financial influencers are having dialogues about digital currency. What does it classify as—an asset, a security, something else? Is it legal? Is it taxed? Who controls it, and how can their citizens interact with it? These are just a few of the many questions governments are tasked to answer as the proliferation of digital currency gains momentum.

Divides surrounding digital currency are quickly beginning to surface, with some countries positioning themselves as safe havens while other decry risks from which their citizens must be protected. Others lie somewhere in the middle of the spectrum. This is how digital currencies are regulated in some countries across the world:


China has thrown users of digital currency for loop after loop as they settle into a regulatory process. In February 2018, the Chinese Communist Party published a full-page spread explaining the government’s commitment to supporting blockchain, but also explaining that it needs regulation to grow.

China has certainly been a major force in blockchain regulation to date and is among the most stringent in the world. They formally banned ICOs. They also targeted foreign and domestic exchanges that offered digital currency trading services to Chinese citizens for the reason of the “systemic risks” they carry. Although blockchain extends well beyond digital currencies, it is important to note that China filed the most blockchain-related patents with WIPO out of all the countries in the world during 2017.


Japan has made the headlines alongside digital currency several times since the beginning of 2018. In January, the Japanese exchange Coincheck lost $530 million in a heist, resulting in scrutiny from the Financial Services Agency—but the major loss turned toward the positive. In an announcement on April 24, 2018, Japan will be the world’s first to have a self-regulatory body for its digital currency exchange industry which will develop best practices and compliance standards that must be upheld by all participating members. This is not the only first for Japan—they were the first Asian country to recognize bitcoin as legal tender.


Vladimir Putin demanded digital currency regulatory laws be in place by July 1, 2018, a deadline which has spurred many conversations among regulatory bodies in the country in an attempt to reach agreements.  As with many countries, digital currency exchanges remain a source of tension. The Ministry of Finance and Central Bank of Russia each seem to have differing comfort levels for sparking innovation and protecting citizens.

The first round of proposed laws to be enacted by the deadline was returned with a demand by the Russian government for alterations, especially regarding taxation and collection. Only time will tell which changes will occur before the laws must come into play.


Germany does not have heavy regulations on digital currency to date. The VPE, a German securities trader, announced in late April 2018 that it would add digital currencies to its brokerage offerings for institutional investors. Conversely, Deutsche Bank called for a crackdown on digital currency in order to help prevent money laundering and financial crime.

Overall, Germany has made it clear that they are at least reasonably friendly to digital currencies that are used in upstanding ways. The German National Tourist Board accepts digital currency for its services, and the Ministry of Finance stated that, in general, they will not tax digital currency used for payments in any way different from fiat currency.


Iceland has become a hotbed of blockchain and digital currency activity thanks in no small part to cheap, renewable energy sources. Regulators here have discussed imposing a tax to miners who utilize the country’s many bountiful resources, because it is the home to many large-scale mining operations including those belong to HIVE and our partner, Genesis Mining. 


Switzerland aims to be a major supporter of digital currencies, and its regulatory frameworks so far support its stance. The Swiss government sees business opportunities available in becoming a highly crypto-friendly nation, and this his garnered major attraction from entrepreneurs in the field. The financial authority in the country has shown support for the ICO market and hopes to continue to do so by offering clarity surrounding anti-money laundering and securities laws.


Canada has taken a middle-ground stance on digital currencies in hopes to facilitate innovation within its borders while upholding its responsibility to protect its citizens. So far, Canada has been clear in its expectations surrounding digital currency as their regulations involve, painting a transparent picture of tax requirements and KYC/AML laws. However, financial crime has become an increasing issue with digital currency in Canada, and regulatory bodies will be paying close attention to exchanges and ICOs in the coming year. For more information surrounding digital currency regulations in Canada, please read this article. 


The United States is murky on their digital currency laws on a federal level, but several states have show apparent support for the technology. Nationally, the Securities Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are in disagreement as to whether digital currencies classify as securities or commodities, a decision which will solidify which laws apply to them. Some states, however, have opted to create tax laws surrounding digital currency, exempt blockchain-based businesses from tax, and even allow citizens to pay state taxes using popular digital currencies such as bitcoin.  


Venezuela is one of very few countries in the world to have a nationally-backed digital currency, although the struggle thus far has been very real. Venezuelan digital currency petro, reportedly backed by oil reserves, was at one-time shot down by an opposing lawmakers as illegal. However, under President Nicolás Maduro’s proclamation on April 9, 2018, Petro is now a legal tender in the country all government bodies must comply with its acceptance within 120 days. The country, which is in economic crisis and enduring hyperinflation, hopes this move to support digital currencies will help resolve their issues. However, President Trump of the United States has banned Americans from purchasing or trading the petro.


Nigerian citizens turned to unregulated digital currencies during an economic recession in 2017, and at the time lawmakers opted away from regulation. However, Nigerian lawmakers are urging the central bank and NDIC to help establish laws and regulations for digital currency within the country.  The NDIC made it clear that they believed opting into digital currency was akin to gambling, but lawmakers have so far spoken in favor of the motion to create stricter protective measures in the country.