London, UK, 2nd Oct 2021, ZEXPRWIRE –
Regulation of cryptocurrencies has become more and more of an issue and has been a hot topic for many cryptocurrency news sites. FinancialCentre Broker Nick Johnson says that the general consensus is that the governments will have to start regulating cryptocurrencies soon if they want to ensure they can properly tax people who trade them and prevent companies from funding terrorism which would be considered a money laundering crime.
The current legal situation of cryptocurrencies is a bit confusing. In many countries, including the US, Bitcoin, and other cryptos are not recognized as a currency but rather as an asset. Therefore any profit made from trading or exchanging cryptocurrencies falls into capital gains tax which is lower than the rate for income taxes. Some governments have decided to consider cryptocurrency trading as a taxable event and decided to cast taxes on it. They include Singapore, South Korea, Japan, etc. Others have made Bitcoin legal but subject to certain rules such as the need to declare the profits for tax purposes. For example, it was declared legal in Greece but profits are taxed at 24%. Ukraine has gone one step further and declared Bitcoin fully legal too.
Mr. Johnson says that regulation isn’t always about taxes though, often it’s more to do with security. For example, the Isle of Man which is an independent country within the British Isles decided to regulate cryptocurrencies in order to prevent them from being used for crimes such as money laundering or terrorism financing. In order to achieve this goal, they have introduced a number of rules that crypto exchanges must obey or they will have to face face sanctions. As another example, European Union has also taken measures to regulate cryptocurrency exchanges to prevent money laundering and terrorism financing.
Jordan has decided to pass cryptocurrency regulation which requires any company dealing with cryptocurrencies in the country to get licensed by the central bank of Jordan first. This regulation has been passed in order to protect investors from any potential scam.
Some of the countries have taken a different approach and decided that cryptocurrencies should not be subject to regulation but rather leave it up to the people who trade them. Among these countries include Malta, Belize, etc.
Countries all around the globe are looking for ways to regulate crypto because of the nature of digital token. These can be sent to anyone in the world, regardless of where they are which poses a problem for many governments. The anonymity of cryptocurrencies also means that trade can occur without any taxes being paid or money laundering checks being done. Governments want to ensure that everyone who does cryptocurrency trading is paying the correct taxes and adhering to anti-money laundering laws.
Mr. Johnson agrees that the regulation ought to be rather light on cryptocurrencies since it has a lot of potential and could bring some benefits to the economy and society. It has been argued that regulation should be done in a way that does not stifle growth and can be used for good such as financial inclusion or to speed up transactions.
Binance and Singapore
Singaporian authorities have decided to regulate cryptocurrencies. They introduced new rules that allow cryptocurrencies and cryptocurrency exchanges to exist but in a controlled way in order to prevent illegal activities. Due to these laws, Binance has prevented Singaporeans from trading on the platform. This announcement came out after the country’s financial institutions prevented Binance from providing payment services to its people because it would be then seen as a breach of the local laws. Binance has also suspended trading for its customers in two other countries, Indonesia and Australia.
Binance has been forced to close down its office in Hong Kong as well because it will now be required to register with the authorities as a so-called virtual commodities trader.
These new regulations have greatly upset many cryptocurrency exchanges. They believe that regulations will stifle innovation and growth which is not good for the sector as a whole. Many exchange owners believe that If they’re not able to innovate and create things and experiment and try out new stuff, It is not going to be a very supportive exchange ecosystem.
Mr. Johnson thinks that one thing for sure is that regulation will be coming to cryptocurrencies and soon we see all countries in the world deciding how they want to regulate them, especially if their numbers continue to grow.
Apart from the exchanges, many crypto users feel that regulation is unnecessary. They argue that it should not be up to governments to decide how people can use their own money. It could also stifle innovation as well because it could prevent blockchain projects from being developed. Another concern is that international cooperation will be necessary for crypto regulation to work efficiently and effectively.
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