The history of cryptocurrency regulation
📖 The history of cryptocurrency is being written before our eyes. Several legal eras can be conventionally highlighted.
Market: Satoshi Nakamoto publishes his White Paper. Bitcoin 0.1 is released, the first crypto farms and exchanges appear, Laszlo buys the most expensive 2 pizzas in history for 10,000 BTC.
Regulation: Regulators prefer not to notice new money and transactions in it at all. There was no investigation even when in 2011 an unknown person stole 25,000 BTC from the user Allinvain.
Market: Illegal goods are sold for Bitcoin on the Silk Road website and other similar stores. The token is becoming popular with companies and people soliciting donations. Bitcoin thefts are becoming regular, crypto trading platforms are undergoing the first serious attacks, which leads to the collapse of the largest exchange MtGox at that time and the collapse of the value of tokens.
Companies and private users are filing the first lawsuits against marketplaces, demanding a refund. The court recognizes for the first time that bitcoin is "a currency or form of money" (that is, it can be regulated by federal securities laws).
Legal issues: The US Senate Committee has recognized the use of virtual currencies as a legitimate financial service. Canadian authorities have legalized the installation of the world's first bitcoin ATM.
Situation in individual jurisdictions:
🔻 Thailand became the first country in the world to officially outlaw the Bitcoin payment system.
🔻 Attempts by Internet giant Baidu to accept payments in Bitcoin have resulted in Chinese financial institutions being banned from using cryptocurrencies.
Market: Accepting bitcoins as payment is becoming an important marketing trend. Cryptocurrency ATMs are popping up in many countries. Bitcoin alternatives: the Bitshares and Ethereum projects are launched.
Legal issues: The New York State Department of Financial Services has released the first ever set of rules for digital currencies. The New York Stock Exchange began to publish daily Bitcoin against the dollar. The European Court of Justice recognized Bitcoin as a currency, not a commodity, exempting the exchange of money from VAT.
The Luxembourg Ministry of Finance has issued the first BitLicense in Europe to conduct financial activities for a company that works with cryptocurrency. The UK Treasury has announced that it will require digital currency exchanges to implement standards similar to conventional exchanges.
Situation in individual jurisdictions:
🔻 The Hong Kong authorities, even after the collapse of the Hong Kong Bitcoin exchange, said there was no need to restrict cryptocurrency operations in any way.
🔻 Canada's Senate Banking Committee has decided that the best strategy for dealing with cryptocurrency is surveillance.
🔻 In Sweden, income from bitcoin issuance is considered a "hobby activity", meaning it is not taxed.
Market: More and more tokens are appearing on the market, a huge variety of different projects are launching: from blockchain sand pits to distributed AI. The governments of various countries are catching up with the "hype" around cryptocurrencies.
Legal issues: The European Union and the United Kingdom have announced the introduction of rules for bitcoin platforms deanonymization. The Czech Republic was the first to limit the anonymity of transactions. Exchanges and exchange services are obliged to verify their clients in order to combat money laundering and terrorist financing. South Korea has also banned the use of anonymous accounts for cryptocurrency transactions.
Situation in individual jurisdictions:
🔻 Japan recognizes crypto as legal tender by canceling VAT on their exchange.
🔻 The UAE issued the first license for the sale and purchase of cryptocurrencies in the Middle East.
🔻 Estonia was officially allowed to engage in cryptocurrency business. It was announced that Estonia's plans to be the first in Europe to introduce the state cryptocurrency - Estcoin.
🔻 The UK Treasury announced that it would introduce bitcoin into the country's economy and created its own currency, RSCoin.
🔻 The creation of their own tokens was announced in Canada, Venezuela and Norway, where the government decided to abolish VAT for all cryptocurrency transactions.
🔻 In France, known for its high taxes, the Council of State has cut the tax rate on the sale of cryptocurrencies from 45% to 19%.
Market: DeFi appears, NFT tokens are popular (the idea of which was used back in 2014 on the Bitshares platform). The terms "staking" and "farming" appear in the language of investors. The mining boom is causing an acute shortage in the graphics card market. Developers are forced to release video cards with a hardware and software ban on mining cryptocurrencies.
Legal issues: Regulators around the world are issuing numerous directives to control crypto business.
🔻 In China, where, before the release of CBDC, all crypto exchanges operating in the country were closed and mining and ICOs and, in general, any operations with cryptocurrency were limited.
🔻 Great Britain introduces restrictions, explaining them for economic reasons.
🔻 The European Union sees cryptocurrencies as a problem of money laundering and terrorist financing, therefore, when working with them, you will have to transfer the same amount of information to the regulatory authorities as with conventional electronic payments.
🔻 In Turkey, work with tokens was banned and local exchanges were closed.
🔻 The Estonian authorities are tightening the regulation. In particular, 500 licenses have already been revoked from registered cryptocurrency companies.
🔻 In Russia, on January 1, 2021, Law 259 on digital currency, also known as the “CFA law”, came into force. The law allows transactions with cryptocurrency and its use for savings and investments, but you cannot buy goods and services for it.
It is obvious that the legislative bodies, which for many years lagged behind reality and did not touch this segment, now seek to regulate the industry as much as possible. It is clear that if you do not restrict the market at all, then it is difficult to avoid the emergence of financial pyramids and other fraudulent schemes. However, tough restrictions lead to stagnation, so it is worth sticking to the "golden mean" and avoiding overly harsh measures.
A business that plans to operate in foreign crypto jurisdictions should monitor all relevant changes in legislation. Or the best way is to contact trusted specialists.
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