India is all set to bring in new rules to regulate cryptocurrency as the Union government plans to introduce a bill to ban all private cryptocurrencies in the upcoming winter session of Parliament.
As per the Lok Sabha Bulletin, released on Tuesday, the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 seeks to create a facilitative framework for the creation of an official digital currency that will be issued by the Reserve Bank of India (RBI). The new bill also seeks to prohibit all private cryptocurrencies in the country. However, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses. The Bill will be introduced, considered and passed in the upcoming session starting from the next week.
In April 2018, the Reserve Bank of India (RBI) had advised all the entities regulated by it not to deal in virtual currencies. However, in a 2020 judgment, the Supreme Court set aside the RBI circular and allowed the trade in cryptocurrency in India. So far, over 10 crore people are said to have invested in cryptocurrencies in India. Time and again, the RBI has warned against the use of cryptocurrencies. Earlier this month, RBI governor Shaktikanta Das had also called cryptocurrencies a threat to the financial system.
However, India is not the only one trading cautiously on the crypto path. There are several others too.
Here is how other economies are dealing with cryptocurrencies around the world:
China has now become one of the most restricted crypto-markets in the world after initially welcoming all crypto-related activities early on. The country officially banned trading cryptocurrency since 2019. However, it continued online through foreign exchanges.
Chinese state intuitions had warned buyers earlier this year that they would have no protection for continuing to trade in Bitcoin and other currencies online. In May, the government officials vowed to increase pressure on the industry. The next month, banks and payment platforms were told to stop facilitating transactions. The country also issued bans on mining the currencies. In September, China made it clear that those who are involved in these virtual currency-related businesses are criminally liable and will be prosecuted.
In European Union, each country has its own regulation for cryptocurrencies. Most of these have opted for a soft-touch regulatory framework. The European Commission released draft legislation in September last year titled ‘Markets in Crypto-Assets Regulation’. It says that cryptocurrencies will be treated as regulated financial instruments. Any firm holding, trading, offering brokerage services, or providing investment advice regarding cryptocurrencies will need prior approval from the regulators as per the draft.
In the UK, the trading of cryptocurrencies is not directly regulated. However, offering services such as trading in cryptocurrency derivatives do require authorisation. The Financial Conduct Authority (FCA) is the body that grants licenses to authorized cryptocurrency-related businesses. The FCA periodically issues warnings to investors that they should invest with caution.
United States of America
Different states in the USA have varying regulations. Overall, the USA has been in favor of allowing all cryptocurrency activities.
Cryptocurrencies are not legal tender in Canada. However, cryptocurrencies are legal in the country. Further, tax rules apply to digital currency transactions, including those made with cryptocurrencies. Using digital currency does not exempt consumers from tax obligations in the country.
France began regulating cryptocurrencies in 2019. In France, cryptocurrency is taxed in the same way movable property is.
In April, Turkey banned the use of cryptocurrencies and crypto-assets to purchase goods and services. The country’s central bank published legislation saying cryptocurrencies and other such digital assets based on distributed ledger technology could not be used, directly or indirectly, as an instrument of payment.
El Salvador is the only country in the world to recognize Bitcoin as a legal tender. According to the country’s law, any good or service previously payable in dollars can now also be paid in bitcoin.