Exchanging digital coins around the world: an overview of cryptocurrency regulation worldwide

As cryptocurrencies continue to gain widespread acceptance and adoption around the world, the need for regulation of this asset class increases. Different countries take different positions on this issue, with some advocating broad integration of cryptocurrencies and others strictly prohibiting cryptocurrency platforms.

“At Bintense, we use advanced technology and recognised security protocols to help our customers exchange digital coins efficiently. Our platform provides a seamless entry into the cryptocurrency markets, equipped with expert tools, support and a transparent fee structure.

But here is a bird’s eye view of the cryptocurrency regulatory situation in some well-known countries.

Canada

Canada considers cryptocurrency a security but does not recognise it as legal tender. In addition, cryptocurrencies are taxed in Canada regardless of whether they are classified as capital gains or business income.

For cryptocurrency exchanges, Canada applies similar rules to both digital currency exchanges and fiat money service businesses to ensure that they comply with the same due diligence and reporting standards. As of June 2021, all cryptocurrency exchanges in Canada must register with FinTRAC (Financial Transactions and Reports Analysis Centre of Canada), which is responsible for monitoring financial transactions and operations in the country.

Recently, Canadian securities regulators, together with the Ontario Securities Commission, have been taking active action against unregulated cryptocurrency trading platforms against the backdrop of the dramatic collapse of FTX.

Earlier this year, cryptocurrency trading platforms were given a 30-day deadline to prove they met specific regulatory requirements to continue serving Canadian clients. If a trading platform fails to provide a formal “pre-enrolment undertaking” within the time limit confirming that it is complying with these rules, it will be obliged to close the accounts of its Canadian clients and prevent further access to its services by Canadian participants.

South Korea

Cryptocurrencies are not recognised as legal tender in South Korea, and while exchanges are legal, they are strictly controlled by the country’s regulatory system.

South Korea is stepping up its efforts to regulate the cryptocurrency market, with local media reporting that the country’s parliament is actively discussing the Digital Assets Act, which will affect anyone who wants to exchange digital coins.

The cryptocurrency market in South Korea is reported to have exceeded 55 trillion won in the second half of 2021, equivalent to around $42 billion, with around 15 million users. Given the size of the market and the number of users, the authorities consider it essential to put in place measures to protect cryptocurrency investors and ensure transparency.

Cryptocurrency legislation is currently under consideration by the Executive Committee of the National Assembly of South Korea, with expert opinions to be sought and public hearings scheduled for April 2023. After these initial stages, cryptocurrency legislation will be able to move forward.

India

Cryptocurrencies are not considered legal tender in India and are currently not regulated by any central authority when used as a form of payment. As a result, there are no established rules, regulations or guidelines for resolving disputes relating to cryptocurrency transactions. This makes the exchange of digital coins difficult as it is a potentially risky activity for Indian investors.

The Union Budget presented in India last year sought to address this problem by introducing new measures. The government announced that profits from cryptocurrencies would be subject to a tax of 30%, while 1% would be withheld at source.

Australia

Australia recognised the legality of cryptocurrencies as early as 2017 and has implemented progressive regulations in this area.

The country has also become an important hub for cryptocurrency ATMs, ranking fourth after the US, Canada and Spain, allowing its citizens to exchange digital coins safely.

This year, Australia’s financial regulators are continuing their efforts to develop a regulatory framework for stablecoins, building on work done in 2022. To this end, the government recently published a consultation paper on 3 February 2023, which examines areas of the cryptocurrency ecosystem that require further regulation.