Blockchain technology though an emerging one, has still taken the world by storm. With the world still debating on various components of Blockchain technology- Cryptocurrency still remains the most debated one. With few countries completely banning it to some wanting to regulating and an exceptionally few making retail purchases at shops and cafes in country with Cryptocurrency unregulated.
Cryptocurrency:
Cryptocurrency is defined as “a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.”
It is a decentralised currency associated with the internet that uses cryptography- that is the process of converting legible information into an almost uncrackable code, to track purchases and transfers.
The first cryptocurrency introduced was Bitcoin in 2009 by Nakamoto and a group of enthusiastic supporters began exchanging and mining the currency. By the end of 2010, dozens of similar cryptocurrencies started popping up. The first public Bitcoin exchanges appeared around this time as well. Apart from the more popular Bitcoin, examples of other cryptocurrencies includes- Litecoin, Ripple, Ethereum, Dogecoin, etc
The reason for craze amongst general public about Blockchain and cryptocurrency is valid because they have numerous features which to their advantage-
• Cryptocurrencies often work as a reliable means of exchange outside the direct control of national banks.
• Cryptocurrencies have robust privacy protection systems in place which makes it difficult to deduce user’s identities.
• The above advantage adds to another one where it is difficult for the government to exact financial retribution - This is particularly helpful for citizens under repressive governments where the wealth distribution is controlled by the rich affluent people.
Along with the loaded features, there are certain drawbacks of this system like – facilitation of black market because of lack of regulation, potential for tax evasion, potential for financial loss due to loss of data and high volatility in market.
2017 had been an extraordinary year for cryptocurrencies. There was a tremendous amount of growth in both value and popularity of cryptocurrencies .And finally in the December of 2017; the price of Bitcoin exceeded the $10,000 mark.
But in the first quarter of 2018, heavy losses were borne by cryptocurrency industry. Bitcoin lost about 50% value in the first quarter, while Altcoin slumped over by 70%. The capitalisation of Crypto Market was at an all time high of $820 billion on January 8th and currently it is around $250 billion.
The nature of Cryptocurrency and Blockchain has resulted in greater attention towards it by the governments and other stakeholders around the world and the nations have taken various steps so as to regulate the industry.
Different countries around the world have adopted varying strategies to handle the market.
- COUNTRY: Dubai
STANCE ON BLOCKCHAIN: Dubai is pro- Blockchain as they are planning to According to Smart Dubai, which is conducting government and private organization workshops to identify services that can be best enhanced by Blockchain adoption, the strategy could save 25.1 million man hours, or $1.5 billion in savings per year for the emirate. Much of this enhanced productivity will stem from moving to paperless government to become the world’s first Blockchain-powered government. By 2020, the emirate wants all visa applications, bill payments and license renewals, which account for over 100 million documents each year, to be transacted digitally using Blockchain.
STANCE ON CRYPTOCURRENCY: Dubai supports Cryptocurrency too as they have teamed up with the city's Accelerator Initiative to create the new “encrypted digital currency” emCash with their own Blockchain and the citizens of the UAE will be able to access the emWallet app on their Smartphone and will be able to make payments, through regular dirham payment or emCash digital currency.
CURRENT LEGISLATION/LAWS: The Centre has started issuing licenses to allow firms trading in cryptocurrencies to operate from its free zone and also the country is “reviewing and considering the development of a robust, risk-appropriate regulatory framework” for crypto exchanges and intermediaries for which no timeframe has been set yet.
FUTURE: As Dubai is one of the futuristic countries and they whole heartedly want to implement technology, we can only wait for the regulations to come out, but on a whole it seems that the development will be one in a positive direction.
2)COUNTRY: USA
STANCE ON BLOCKCHAIN: The country has positively embraced Blockchain technology as the US government are awarding Blockchain contracts already. The Department of Homeland Security awarded a Blockchain contract to “Prove Integrity of Captured Data from Border Devices”. The U.S. Department of Defence Transportation Command also showed a recent interest in Blockchain centred on an innovative use of distributed ledger capabilities.
STANCE ON CRYPTOCURRENCY: In US, financial technology and the attitude towards cryptocurrency varies considerably state by state, with the friendliest regulations to date found in Tennessee, Texas, Kansas, South Carolina and Montana. Meanwhile, lawmakers in Washington remain very sceptical and warn of “financial instability” of Bitcoin. The biggest issue is that there is no general agreement as to how to classify the virtual digital crypto asset whether it should be treated as investments, and/or commodities, and how should it be taxed. One of the turning points was when SEC in July 2017 decided that sales of coins and tokens in so-called initial coin offerings (ICOs) are likely subject to securities regulation After that Commission commenced its first civil enforcement action against ICO sponsors alleged to have violated federal securities laws- the biggest case being MUNCHEE vs SEC.
After that multiple fraud Ico’s have been caught and the SEC has been closely monitoring all the Ico’s
CURRENT LEGISLATION/LAWS: Cryptocurrency is taxable in the US and there are various tax rules associated with it.
FUTURE: The future over here depends on the changing regulations and attitude of the SEC towards blockchain.
COUNTRY: Australia
STANCE ON BLOCKCHAIN: In Australia, the Blockchain technology has been whole heartedly accepted and the policymakers made the country an attractive Ico region by issuing guidance on these sorts of offerings and, in line with its seeming willingness to embrace this nascent industry.
STANCE ON CRYPTOCURRENCY: Australia's government recognises Cryptocurrency and has passed new legislation that demonstrates a commitment to taking the necessary steps to legitimize cryptocurrencies as an asset class.
CURRENT LEGISLATION/LAWS: The Australian Taxation Office (ATO) considers Bitcoin transactions barter arrangement subject to appropriate taxes depending upon the use and user and as per the latest Australian Transaction Reports and Analysis Centre (AUSTRAC), ‘digital currency exchanges’ must now register with authorities, as well as commit to various reporting and identity checking procedures.
FUTURE: With various regulations in place and whole hearted acceptance of the technology, future of Blockchain and Cryptocurrency is bright in Australia.COUNTRY: Estonia
STANCE ON BLOCKCHAIN: Estonia is hailed as the Blockchain nation. After being a victim of cyber attack in 2007, Estonia carefully planned its investment in using digital infrastructure and the result is such that they are light years ahead of most countries in terms of using Blockchain technology. They already implemented digital identities, e-residency based on Blockchain technology in their country.
STANCE ON CRYPTOCURRENCY: They are positive towards Cryptocurrency and have launched their own Cryptocurrency -: now the EST coin so that more effective implementation of Blockchain can be done.
CURRENT LEGISLATION/LAWS: Bitcoin is taxable in Estonia and as per Anti-Money Laundering Act and Terrorism Finance Act (2017) Cryptocurrency is heavily regulated .
FUTURE: As a Blockchain and Bitcoin savvy country, it is expected that more technological inventions on Blockchain will take place here.COUNTRY: Saudi Arabia
STANCE ON BLOCKCHAIN: Saudi Arabia’s central bank has signed a deal with U.S.-based Ripple to help banks in the kingdom settle payments using Blockchain software, as Gulf regulators begin to explore new forms of financial technology. They have showed keen interest in this technology.
STANCE ON CRYPTOCURRENCY: The regulatory bodies in Saudi have been following developments with cryptocurrencies with great interest which shows that a ban on Cryptocurrency is highly unlikely and also the chairman of Saudi Arabia's Capital Markets Authority- the Mohammed ElKuwaiz is being hopeful of country’s stance on it. They are even planning on an official policy on Bitcoin – some even rumouring that Saudi Arabia will for oil backed cryptocurrency. But nothing has been formally announced
CURRENT LEGISLATION/LAWS: The Capital Markets Authority of Saudi Arabia (CMA) will soon submit a draft law on the regulation of the cryptocurrency.
FUTURE: The future of Blockchain seems bright but as far as Cryptocurrency goes, we will have to wait and watch.COUNTRY: China
STANCE ON BLOCKCHAIN: China is a pro Blockchain nation with the government is still stepping up its support for turning Blockchain technology into real-life applications.
STANCE ON CRYPTOCURRENCY: China has a very clear stance on this entire technology and that is ending and banning it in their country. It all started in 2013, when Bitcoin was gaining popularity among the Chinese citizens and prices were soaring. Concerned with the price volatility and speculations, the People’s Bank of China and five other government ministries published an official notice on December 2013 titled “Notice on Preventing Financial Risk of Bitcoin.” In fact each year new set of rules are being put out so as to ban this technology. This year February, authorities were moving to “ban all crypto-related commercial business including banning and blocking both domestic and offshore crypto currency trading platform websites.” They have as of now banned bitcoins but that hasn’t stopped citizens from slyly trading as they are now buying Bitcoins cheaply in Hong Kong and then sending it to China at virtually no cost and without restrictions, where it is being be on private chat groups and public platforms .
CURRENT LEGISLATION/LAWS: In early 2018 the People's Bank of China announced the State Administration of Foreign Exchange led by Pan Gongsheng would crack down on Bitcoin mining
FUTURE: The future of both Blockchain and cryptocurrency is highly doubtful and depends on the next set of laws that will be passed by the government.COUNTRY: Singapore
STANCE ON BLOCKCHAIN: The Singapore Central Bank and related authorities are looking to the potential of Blockchain and cryptocurrencies, rather than shunning and running from it. In fact in Nov.16 2016, Monetary Authority of Singapore announced it would be partnering with R3, a Blockchain technology company, and a consortium of financial institutions on a proof-of-concept project to conduct inter-bank payments using Blockchain technology. As of March 2018 the country has announced Blockchain related competitions.
STANCE ON CRYPTOCURRENCY: Singapore’s central bank along with Monetary Authority of Singapore has been studying the potential risks posed by cryptocurrencies but nothing has been decided yet.
CURRENT LEGISLATION/LAWS: As of January 2018 The Monetary Authority of Singapore advises the public to act with extreme caution and understand the significant risks they take on if they choose to invest in cryptocurrencies
FUTURE: The future of Blockchain and Cryptocurrency seems poisitve but depends further on laws that will be passed.COUNTRY: UK
STANCE ON BLOCKCHAIN: The U.K. government has largely proved amenable to Blockchain technology broadly. The UK Government is also undertaking research to evaluate the further actions that they should take to welcome the technology.
STANCE ON CRYPTOCURRENCY: The country has shown lesser enthusiasm for cryptocurrency. They are even expected to announce a “crypto assets task force” which will help in regulate the crypto currency and Blockchain scenery in country.
CURRENT LEGISLATION/LAWS: The government of the United Kingdom has stated that Bitcoin is unregulated and that it is treated as a 'foreign currency' for most purposes, including VAT/GST
FUTURE: The future depends on the regulations on cryptocurrency that will be passed soon by UK government.COUNTRY: Japan
STANCE ON BLOCKCHAIN: This country was an early adapter of Blockchain technology.
STANCE ON CRYPTOCURRENCY: In Japan, Bitcoin has been recognized as legal tender since April 2017.
CURRENT LEGISLATION/LAWS: In April 2017, Japan took steps like - The Financial Service Agency (FSA) approving of 11 exchange operators to enter the Japanese markets, as well as cryptocurrencies which can be traded on these platforms and officially recognizing 11 companies as registered cryptocurrency exchange operators. They also passed a law recognizing Bitcoin as legal tender.
FUTURE: The future of both Blockchain and Cryptocurrency seems positive in this country which is eager to implement and regulate it. As it is Japan accounts for about half of all Bitcoin transactions worldwide.COUNTRY: India
STANCE ON BLOCKCHAIN: The Prime Minister Narendra Modi recently hailed blockchain’s transformative potential and emphasized the need for "rapid adaptation,” and Andhra Pradesh has become the first state in India to adopt Blockchain for governance. It has piloted two key projects: managing land records and streamlining vehicle registrations. Blockchain helps to protect the state’s digital assets and transactions, preventing tampering by outsiders or even government insiders
STANCE ON CRYPTOCURRENCY: In India the government wants to kill bitcoin but love the Blockchain technology. The RBI recently announced that – “Come July 2018, India’s banks and lenders will no longer be able to transact or facilitate transactions with companies or individuals that trade in cryptocurrencies” They have a negative approach towards Cryptocurrency as whole.
CURRENT LEGISLATION/LAWS: The government had recently announced that cryptocurrencies such as Bitcoin are not legal tender in India, but have not banned its trade.
FUTURE: As of now Cryptocurrency start-up Kali digital eco system has filed a petition against RBI for violating Article 301 of Indian constitution (Freedom of Expression). The main reason as to why the case has been filed is because .The circular passed by appears to be arbitrary and unconstitutional since it does not give strong facts as to why RBI is against the business of cryptocurrencies. A logical and well thought arguments backed by solid facts are the primary requirements under the Constitution to put a stop to any business in India. The result of the case might change the course of Cryptocurrency acceptance in the country.COUNTRY: Canada
STANCE ON BLOCKCHAIN: The Government of Canada is experimenting with the Ethereum Blockchain and is extremely positive towards the technology and a number of Bitcoin Start-ups in the country as well as numerous Bitcoin ATMs.
STANCE ON CRYPTOCURRENCY: There has been an evolution in the attitude of the Canadian government towards cryptocurrencies – from not favouring it to approving the Impak Coin which becomes the first Canadian approved cryptocurrency. On the whole, Canada is a friendly environment for cryptocurrency entrepreneurs as there are a number of Bitcoin Start-ups in the country as well as numerous Bitcoin ATMs. Not many countries have more than one city that can be classified as a virtual currency hub but Canada has two; Toronto and Vancouver.
CURRENT LEGISLATION/LAWS: In Canada, amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTF) that passed in 2014—but are still not in force—will require businesses “dealing in virtual currencies” to register with the federal financial intelligence unit, FINTRAC, and implement an anti-money laundering compliance regime. Banks will be prohibited from providing services to businesses not registered with FINTRAC as well. They believe excessive or inappropriate regulation beyond these requirements will stifle innovation.
FUTURE: Canada has a positive outlook towards the technology and Cryptocurrency and it can be inferred many positive seps are being taken to make sure mure innovation occurs in the Blockchain field.COUNTRY: Germany
STANCE ON BLOCKCHAIN: The technology enjoys favourable attitude in the country. the German regional bank LBBW and the automotive leader Daimler executed a debt certificate based on Blockchain also The German Blockchain-based payment service provider Bitwala announced that it is launching a new “crypto-first” banking service complete with accounts, international bank account numbers (IBAN), SWIFT codes, and corresponding MasterCard debit cards. There are multiple such innovations that are being put on Blockchain.
STANCE ON CRYPTOCURRENCY: Cryptocurrency is legal and the country is also home to one of the biggest Bitcoin marketplaces in the world which has recently finalized plans to introduce Ethereum trading into the platform.
CURRENT LEGISLATION/LAWS: German tax laws are favourable to Bitcoin with an exemption from the 25% tax on profits for Bitcoin that has been held for one year.
FUTURE: The future of the technology and currency seems favourable in this country as they are trying to innovate new applications that can be used on Blockchain.COUNTRY: Sweden
STANCE ON BLOCKCHAIN: Sweden has whole heartedly welcomed Blockchain and all its components. In fact, Sweden’s land-ownership authority, the Lantmäteriet has been testing first Blockchain technology property transaction since two years and now they are expected to soon conduct the property testing. That’s not it as Swedish bank SEB began testing a Blockchain-based trading platform for mutual funds.
STANCE ON CRYPTOCURRENCY: Sweden has enthusiastically embraced Bitcoin and is marching at the forefront of the cryptocurrency revolution. There’s a very high-level of knowledge about cryptocurrency in Sweden, and a high-level of digital competence in the Fintech space .In the south, where Plingpay a payment solution company is using bitcoin’s Blockchain as a bridge between traditional currencies, and in the far north Boden, there are several crypto mining and Blockchain companies which have established data centres. All in all, Sweden has solidified its position as a hotspot for cryptocurrency experimentation and innovation.
CURRENT LEGISLATION / LAWS: The Swedish jurisdiction is in general quite favourable for Bitcoin businesses and users as compared to other countries within the EU and the rest of the world. The governmental regulatory and supervisory body Swedish Financial Supervisory Authority (Finansinspektionen) have legitimized the fast growing industry by publicly proclaiming Bitcoin and other digital currencies as a means of payment. The Swedish Tax Agency has given a preliminary ruling on Value Added Tax (VAT) on Bitcoins , stating that trade in Bitcoins is not subject to Swedish VAT, but is instead subject to the Finansinspektionen (Financial Supervisory Authority) regulations and treated as a currency.
FUTURE: In Sweden, we can see that future of both – Blockchain and Cryptocurrency being bright as it is being adopted by the country as a whole.COUNTRY: Venezuela
STANCE ON BLOCKCHAIN: The country is using Blockchain only to hide its international debts by introducing their won cryptocurrency –petro.
STANCE ON CRYPTOCURRENCY: Like discussed above – the only reason the Venezuelan government is only keen on Cryptocurrency and Blockchain as they have intorudeced their own Cryptocurrency – petro . There’s a lot of confusion about their cryptocurrency starting with the fact that “The white paper says the Petro is built on the Ethereum network, while the user guide the government published says it’s on the Nem network.”
CURRENT LEGISLATION/LAWS: According to their current laws “The Bolivarian Republic of Venezuela guarantees that it will accept Petro’s as a form of payment of national taxes, fees, contributions and public services, taking as a reference the price of the barrel of the Venezuelan basket of the previous day with a percentage discount of Dv” Also the funny part is Venezuelan government apparently control 100% of the Petro in existence and another thing to be noted is the citizens or anyone for that matter cannot purchase petro with Venezuelan currency they own.
FUTURE: In Venezuela the future of Blockchain, Cryptocurrency and the country itself is in a chaos.COUNTRY: Russia
STANCE ON BLOCKCHAIN: Russia is open to Blockchain as not only the Russian state-owned development bank, Vnesheconombank (VEB), has inked a deal with the regional government of Kaliningrad to pilot a new Blockchain-based payment system but on a large scale they are planning to use the Blockchain to Protect 2018 Presidential Exit Poll Data.
STANCE ON CRYPTOCURRENCY: There is a disagreement going on between The Ministry of Finance of the Russian Federation and The Central Bank of Russia regarding the legalisation and regulation of Cryptocurrency, with The Ministry looking forward to legalizing and regulating it and the bank arguing that the digital currency trading rules should be only applied to tokens that would attract financial investments.
CURRENT LEGISLATION/LAWS: Russia’s president Vladimir Putin has signalled cryptocurrency regulation in the country should become law “by July 1” this year. The Digital Assets Regulation Bill will defines and establishes a regulatory system for cryptocurrencies, ICOs, mining and trading, At the same time, lawmakers in Moscow are currently preparing ICO and crowdfunding laws, some key details of which continue to cause friction between the central bank and government ministers.
FUTURE: The future of Blockchain seems positive but as far as Cryptocurrency is concerned, unless the deadlock between the central bank and ministry is sorted, nothing can be commented.
COUNTRIES: European Union (E.U)
STANCE ON BLOCKCHAIN: The E.U has welcomed Blockchain positively, in fact as of February 2018; European Commission launched the EU Blockchain Observatory and Forum. The Vice-President for the Digital Single Market Andrus Ansip said: "Technologies like Blockchain can help reduce costs while increasing trust, traceability and security. They have huge potential for making social and economic transactions more secure online by guarding against an attack and removing the need for any middleman. We want to build on Europe's substantial talent base and excellent start-ups to become a leading world region that will develop and invest in the rollout of Blockchain." The countries in E. U have encouraging governments and they want the European industry and citizens to benefit from Blockchain opportunities
STANCE ON CRYPTOCURRENCY: When it comes to Cryptocurrency, The E.U wants stricter regulation of Cryptocurrency.
CURRENT LEGISLATION/LAWS: On 19th April 2018 Member of European Parliament supported on Thursday -- by 574 votes to 13 votes, with 60 abstentions -- a December agreement reached with the Council, which also proposed closer regulation for virtual currencies, like Bitcoin, to prevent them being used for money laundering and terrorism financing.
The agreement represents the fifth and latest update to the EU’s Anti-money laundering Directive and is partly a response to the terrorist attacks of 2015 and 2016 in Paris and Brussels, as well as the Panama Papers leaks.
FUTURE: In the E.U the future of Blockchain seems positive as countries in E.U want to replace their existing technology to Blockchain and as far as Cryptocurrency is legal in most of the countries and the regulation proposed will only help in regulating the activities.COUNTRY: Switzerland
STANCE ON BLOCKCHAIN: Switzerland is highly accepting towards the Blockchain technology. In fact, since past year they have been holding annual CryptoSummit .The largest international conference dedicated to Blockchain technology in Switzerland. In fact, Switzerland is also home to crypto valley- a region in the country known for the number of companies developing projects based on the technology.
STANCE ON CRYPTOCURRENCY: The country has also embraced Cryptocurrency positively but might soon apply anti money laundering laws so as to regulate it. Also over here, Cryptocurrency is not treated as currency and also there are favourable tax laws towards it.
CURRENT LEGISLATION/LAWS: The Finma financial authorities
identify three categories of ICOs. The first are “payment ICOs”, which are transferable and can function as means of payment. The regulator said these would have to comply with anti-money laundering regulations but would not be treated like financial securities. Second are “utility ICOs”, which will not qualify as securities if their only purpose is to confer digital access rights to an application or service. Third are “asset ICOs,” which will be treated like equities or bonds if, for example, they pay dividends or interest, or give rights to earnings streams. These will be subject to strict securities law requirements..
FUTURE: The future of Cryptocurrency and Blockchain is positive in this nation as their laws are favourable towards this technology and they are determined to be known as “ CryptoNation” in the near future.COUNTRY: Cayman Island
STANCE ON BLOCKCHAIN: Welcoming towards Blockchain technology and Blockchain companies, so much that more than 200 businesses now operating in the Special Economic Zone in Cayman Islands are part of the Blockchain boom and there is a huge influx of new companies’ related to Blockchain wanting to start their operations here.
STANCE ON CRYPTOCURRENCY: The country has a positive approach towards cryptocurrencies, so much that they have laws that support the currency and technology.
CURRENT LEGISLATION/LAWS: “The Electronic Transactions Law (2003 Revision) (the "Law"), provides that information, documents and contracts (or any provision thereof) shall not be denied legal effector validity solely because it is in electronic form. Similarly, evidence of a contract (or provision thereof) shall not be denied admissibility solely because it is in electronic form and electronic signatures are also expressly permitted.”- This law is in favour of both Blockchain and Cryptocurrency and is the partial reason for it thriving here.
FUTURE: As long as the laws are in favour , the future of both – Blockchain and Cryptocurrency seems bright .
VERDICT
The attitude of countries falls under following categories- favourable to Blockchain and Cryptocurrency, favourable towards Blockchain but against Cryptocurrency and the third category are those that are still figuring out.
The countries that are favourable towards both are looking at ways in which they can maximize using Blockchain and at the same time they are planning or passing laws to regulate the Cryptocurrencies and Ico’s in such a manner that the citizens aren’t scammed.
The countries that fall in the second category are trying to maximize their use of Blockchain and at the same are taking strict action on those who are involved with Cryptocurrency and the countries that fall under third category and discussing with other countries to reach at a consensus.
While the countries are still figuring out where they stand, it is commendable that in this time period they are actually willing to look into an entirely new technology and change with it.
Blockchain as we now know if used by a country will give it multiple advantages not only in the fintech space but also in other things like securing the votes in election (Russia) and Cryptocurrency though very attractive can be easily used to scam citizens; hence it is advisable that Cryptocurrency be regulated- with or without imposing taxation on them.