With the steady growth of the demand for cryptocurrency in almost all major world economies, global market regulators are divided in their opinions on how to regulate this new but efficient financial tool. While a few economies have made cryptocurrency legal to keep up with the changing trends in the financial sector, most countries are yet to accept this change.
Since most digital currencies do not have any central authority governing them, each country has significant autonomy in framing laws and regulations to control their purchase, sale, and transactions within its market. In this article, we will discuss the laws that govern the function of cryptocurrency in the significant crypto markets of the world. To understand how these operate in further detail, check out the trade on Digital Yuan.
One of the few countries with cryptocurrency legal tender status is Japan, the largest cryptocurrency market for bitcoin. The Japanese government recognizes cryptocurrency exchanges as legal as long as they are duly registered with the Japanese Financial Services Agency. However, the cryptocurrency market in Japan has been subject to multiple breaches. Reports of several fraudulent activities have come up in the past. After such incidents, the Japanese government adopted a national system of regulating the trading of cryptocurrency.
The United States is another major market for cryptocurrencies, handling the second-largest volume of bitcoin. However, cryptocurrency has not been recognized as a legal tender in this country, going by the Financial Crimes Enforcement Network regulations. However, the country does not have any fixed laws for the policy of cryptocurrency trading. Some states have accorded legal status to the exchange of cryptocurrency in their markets, while some still refuse to grant any legality. Different regulators like the Securities and Exchange Commission, the Commodity Futures Training, and the IRS differ in their opinions on whether cryptocurrency like bitcoin should be considered a commodity, security, or money.
As you probably know already, the European Union countries do not have a currency of their own, and neither can they independently back a current as of its legal tender. Their standard currency is the Euro. As such, the European Union has not provided any legal backing to cryptocurrencies. On the contrary, the European Union regulators have an unfavorable attitude towards bitcoin trading, considering it to be a breeding ground for money laundering. Some regulators have also blacklisted many exchanges.
The United Kingdom, another major market for the exchange of cryptocurrencies, has somewhat complicated laws when it comes to regulating their exchange. The UK does not recognize cryptocurrencies as legal tender. However, the country’s laws subject the crypto ecosystem to the same regulations that are binding on all other forms of money. Transactions and exchanges have been considered legal and have to be registered with the Financial Conduct Authority. These exchanges are expected to follow all the counter-terrorism and anti-money-laundering laws that are in effect in the country.
Although the Chinese market deals with a significant proportion of cryptocurrency exchanges, the market laws of the Chinese government are completely unfavorable towards cryptocurrency. No cryptocurrency has been granted legal tender status in the country, and all exchanges are marked as illegal. The ICOs, which startups used for raising funds by selling digital currencies, have been banned by the government. As such, in the Chinese market, crypto exchanges occur through alternative channels, such as mining.
Although the Singapore dollar adds up only to 0.02 percent of global cryptocurrency trading daily, ICOs are still thriving in this country. Singapore’s authorities are rather friendly towards cryptocurrencies. They do not recognize cryptocurrency as legal tender and highlight the risks involved. However, they consider investment in cryptocurrency and mining legal and a new arena for investors.
The markets mentioned above have the largest flow of cryptocurrency exchanges in the world. These countries have been witnessing major changes in their financial systems because of the popularity of cryptocurrencies like bitcoin. These financial tools have become extremely appealing to the masses and are sure to soon dominate the global market. Even countries that have actively been trying to stop this growth would eventually have to accept this change.
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