The rise of cryptocurrencies challenges legislators worldwide to create a solid yet dynamic legal frame for digital assets. Indeed, legislation surrounding crypto assets can vary drastically from one region to the other, and people often get lost in this legal maze. Here are some tips that help me navigate through different laws.
We Are Far From a Global Consensus
The decentralised nature of cryptocurrencies makes an effective ban almost impossible to enforce. Consider the Nigerian case and the country’s fruitless battle against cryptos over the years. After countless failed attempts to ban cryptos from the country, the government finally allowed crypto companies to operate upon registration.
Last year, crypto transactions corresponded to 12% of Nigeria’s GDP. Indeed, Nigeria has been among the top African countries regarding the volume of crypto transactions, even during prohibition times.
That’s what “decentralised” means: it doesn’t need legislation, and no prohibition can effectively fetter it. However, when it comes to online gambling, it’s preferable to be on the right side of the law. Here, you can check out the legal status of bitcoin gambling in your region.
Well-Established Markets
Indeed, we’re bound to find many different laws across countries that accept cryptos. Yet, some countries have been working tirelessly in the past few years to create an effective legal frame. Arguably, one of the main challenges is to bring transparency to this niche while allowing it to grow to its full potential. Here are some of the countries most engaged in the creation of a “crypto-legislation” to benefit everyone.
United Kingdom
The UK has pretty advanced legislation for digital assets and has embraced cryptocurrencies since the early days. The Financial Services and Markets Act was updated last year to include more crypto assets to be regulated by the government. Digital assets include crypto-backed tokens, commodity-linked tokens, fans tokens, fiat-backed stablecoins, and more.
North America
In the United States, crypto brokers and exchanges are categorised as MSBs (money service businesses), which the Bank Secrecy Act regulates. MSBs must also report transactions above USD 10,000 to the US Treasury, which has developed tracking and reporting protocols for cryptocurrency exchanges.
However, Canadian laws are even friendlier toward cryptos. The CRA (Canada Revenue Agency) treats cryptocurrencies as commodities, simplifying their taxation. Crypto exchanges are also considered MSBs under Canadian laws, framed by the Proceeds of Crime and Terrorist Financing Acts.
Australia
The Australian Taxation Office follows the Canadian understanding that digital currencies are financial assets and must be taxed accordingly. I always keep track of my crypto transactions for taxation purposes, but that’s actually mandatory in Australia.
European Union
The EU took quite some time to try to regulate cryptocurrencies. Until 2020, the region didn’t have legislation for it, and its citizens were even warned against the dangers of cryptos. It’s been one year since the European Parliament finally created its own legal frame: the MiCA (Markets in Crypto Assets) Regulation. However, this regulation is expected to come into force only in 2025. Meanwhile, crypto trading and crypto gambling aren’t technically “illegal.”
How to Navigate Across Different Regulations
Despite the wide variety of laws, crypto regulations can be divided into two approaches: supportive laws and outright bans. Luckily, there are plenty of online resources with updated information about the most recent legal changes in the crypto world.
It can be challenging to stay compliant with all the different regulations. Still, there’s no silver bullet: you should always read local laws carefully before using cryptos in a new jurisdiction. Understand what the law in that area requires of you before you find yourself in trouble.It’s also very useful to keep track of transactions, even when the local legislation doesn’t require it, just in case this information is requested elsewhere.
