This article comes fromCointelegraph, original author: Julia Magas

Odaily Translator |

Odaily Translator |

One of the hurdles to the worldwide adoption of blockchain and cryptography are the rules governing its entry into the business world. The nature of the ever-changing legal framework and the fear of legal disputes with regulators (particularly the tax authorities) prevent blockchain technology adoption from most SMEs around the world.

“Some countries now consider cryptocurrencies to be legal tender, while many countries see them as commodities. Governments around the world are acutely aware of the problem: technology is rapidly outpacing the laws and regulations governing it.”

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China: Blockchain Adoption Is Accelerating, But Cryptocurrencies Are Only DCEP

In China, the relationship between encryption regulation and blockchain cannot be summed up in one word. On the one hand, the Chinese government is introducing blockchain technology to some major institutions such as the Agricultural Bank of China and other financial institutions to track transactions and introduce transparency. On the other hand, however, the government is still cracking down on some mass-market cases where the technology has been adopted.

Recently, Weibo, a well-known Chinese social media platform, has suspended the relevant Weibo accounts of Binance and Tron for violating regulations, and the accounts of Tron founder Justin Sun and Binance co-founder He Yi have also been suspended. In November, Shanghai regulators ordered a probe of all local cryptocurrency exchanges and submitted the findings to the People’s Bank of China for further action.

Note: On November 22, the Shanghai headquarters of the central bank issued a document stating that in recent years, hype related to virtual currencies (such as ICO, IFO, IEO, IMO, and STO, etc.) has been refurbished, speculation is prevalent, prices have skyrocketed and plummeted, and risks have gathered rapidly. Relevant financing entities raise funds from investors or virtual currencies such as Bitcoin and Ethereum through illegal sale and circulation of tokens, which is essentially an unapproved illegal public financing behavior, and is suspected of illegally selling token tickets, illegally issuing securities, and Illegal fundraising, financial fraud, pyramid schemes and other crimes seriously disrupt the economic and financial order.

Recently, in the promotion and publicity process of blockchain technology, virtual currency hype has shown signs of rising. In order to further increase the prevention and control efforts, according to the overall requirements of the national Internet financial risk special rectification work, the Shanghai Financial Stability Joint Conference Office, the Shanghai Headquarters of the People's Bank of China, and the relevant departments at the two levels in Shanghai have launched a special project on virtual currency-related activities in Shanghai. For rectification, order companies that provide publicity, drainage and other services for virtual currency trading platforms registered overseas to immediately rectify and exit.

In the next step, the Shanghai Financial Stability Joint Conference Office and the Shanghai Headquarters of the Central Bank will continue to continuously monitor the virtual currency business activities within their jurisdictions, and deal with them immediately if they are found, so as to prevent problems before they happen. If investors discover virtual currency business activities, and organizations or individuals that continue to conduct ICO and virtual currency trading business for domestic residents by deploying overseas servers, they can report to the regulatory authorities, and report to the public security organs if they are involved in illegal and criminal activities.

Despite these bans, the Standing Committee of China's 13th National People's Congress has ruled that new encryption technology management regulations will come into effect on January 1, 2020. The regulation aims to establish a regulatory framework for blockchain applications in response to President Xi Jinping’s call to speed up the adoption of blockchain technology in China.

Steve Tsou, global CEO of RRMine, a distributed bitcoin hash rate asset management and trading platform, said 2019 was the year that the regulatory foundation for crypto in China was laid. He said:

"A series of policies to support blockchain companies have been introduced in various places, and innovation pilot zones have been established. Among them, the core directions are AI and blockchain technology based on computing power, Internet of Things networks, and offshore digital financial innovation."

“With a population of over 1 billion, China looks like the perfect testing ground for mass adoption (of blockchain technology). In mobile payments, China is already leading the way, and the natural next step is to create its own dedicated cryptocurrency.” China is home to thousands of blockchain startups, so I wouldn’t be surprised to see China take the lead and make more progress in 2020.”

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France: Currency transactions are not taxed

France, known for its high-end art and fashion, had been interstitial soil for blockchain integration until the country’s central bank governor, François Villeroy de Galhau, announced that he was ready to launch a central bank digital currency (CBDC) pilot project in the first quarter of 2020.

In another more crypto-friendly move, French Economy Minister Bruno Le Maire said on Sept. 12 that crypto-to-crypto transactions will no longer be taxed. However, selling cryptocurrencies for fiat is still subject to taxation to the country’s treasury.

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Germany: Banks can get involved in cryptocurrency business

As always geographical and cautious, the German government has been waiting for an opportunity to issue any kind of clarification on its stance on blockchain technology. Currently, Germany’s financial sector, one of the main engines of Europe’s largest economy, is banned from conducting any transactions with cryptocurrencies.

Although the law is still in the draft stage, it has been greatly welcomed by local businesses because it will allow banks to simplify the operation process of crypto business and empower relevant companies to protect user assets based on experience and established risk mechanisms.

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United States: Digital assets are regulated like fiat currencies

The U.S. is seen as a trendsetter when it comes to blockchain and cryptocurrency adoption, while most of the rest of the world is following suit from the transatlantic economic giant. While divisions remain over regulation at the national level, the U.S. is beginning to recognize the need to adopt new technologies as state governments individually pass encryption-friendly laws.

All assets in the virtual currency category will be equivalent to fiat currency and subject to the same tax and regulatory procedures. The bill also allows banks to provide custody services for digital assets, making the ownership of cryptocurrencies both legal and equal to fiat currencies.

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Iran: Crypto mining is legal but requires a license

Introducing new technology in a country facing heavy pressure from Western sanctions is tricky business. Notably, Iran is emerging as one of the major hubs for cryptocurrency and blockchain adoption, fueled by longstanding sanctions. Both the Iranian government and citizens are increasingly using decentralized technologies to bypass economic blockades.

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Other countries

Other countries

As the stance of major countries on the crypto market changed in 2019, other regions also played a role in influencing cryptocurrency and blockchain adoption. Galyna Danilenko from Smartlands, a U.K.-based digital securities issuance and investment platform, said: “The U.K. had a major breakthrough in 2019: digital assets were recognized as property with the publication of legal documents in November.”

Japan and New Zealand can also be said to be the main leaders in the crypto regulatory market in 2019, according to Jessica Renden, head of operations at cryptocurrency exchange Cointree. She explained:

“New Zealand tax authorities have confirmed that bitcoin and several other cryptocurrencies are approved as wage payment options subject to employment contracts drawn up by employers. Earlier this year, the Japanese government passed a bill to include cryptocurrencies Regulatory system, 21 crypto exchanges have been approved so far.”

Evan Luthra, a Forbes "Top 30 Under 30" tech entrepreneur and blockchain expert with an honorary doctorate in decentralized and distributed systems, said Russia is another country with the most impactful breakthrough in cryptocurrency regulation. one country. He stated that although Russia has yet to formulate cryptocurrency legislation, a lot has changed in the past year:

"The authorities have changed their initially aggressive negative stance and are now interested in developing new technologies that benefit the state, the financial system, welfare and convenience. In my opinion, the main achievement of the country's crypto regulation this year is the Russian Federation's law on Statement of Digital Rights' provisions."

Note: The Supreme Court of the Russian Federation has recognized tokens as assets like money and property. The court clarified that “digital rights,” the only legal description of cryptocurrencies currently in Russian law, could be used for bribery, just like regular fiat currency, property and other assets. If the corruption case under investigation involves the transfer of "digital rights," their value must be assessed by hired experts, and the timing of the transfer of those assets to e-wallets will be considered the exact timing of the bribe, the court said.

“This year, the Securities and Commodities Authority (SCA) of the UAE drafted a resolution on the regulation of crypto-assets, which provides clearer thinking for crypto-related projects in Middle Eastern countries. By drafting this resolution, the UAE sends a positive message to the world Signal that they are willing to explore this space and, by developing guidelines, provide more assurance, confidence and stability to business owners who may wish to enter this space.”

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Crypto regulation trends will continue

Experts predict that more countries will make significant changes in crypto regulation in the next few years. On that note, Renden said the first state-backed digital currency will be available in the next one to two years, likely from China. She added:

“This will open the floodgates as the regulatory climate softens and organizations around the world realize the benefits that digital currencies offer, such as low transaction fees and instant payments. Within five years, we expect all first-world countries to issue their own digital currency, if they haven't done so already."