(MENAFN- CCP Marketing)
Crypto adoption has significantly soared in the past year, attracting individuals and corporations worldwide. Several mainstream financial institutions, including banks, now process payments in Bitcoin. Leading global corporations and asset managers use Bitcoin to diversify their portfolios. Merchants and individuals, too, use it to pay for goods and services.
Although Bitcoin is a decentralized currency, its increasing adoption has issued a wake-up call to global regulators to develop measures for regulating it. Only one country, El-Salvador, has made Bitcoin a legal tender, with others still divided on controlling it. Nevertheless, here are the essentials to know about Bitcoin regulation.
Global Regulators' Stance on Bitcoin
Overall, Bitcoin is not subject to any government or institutional regulations. However, there have been multiple attempts by global regulators to standardize Bitcoin's transactions and usage. Some governments have expressed concerns that cryptocurrencies pose financial risks and should be banned. However, others also insist Bitcoin presents no threats to global financial stability; hence, it doesn't require banning.
Italy's central bank leader said at a past G-20 summit that Bitcoin and other virtual currencies threaten financial stability and offer incredible benefits to users. Even the global watchdog for regulating G-20 economies' economic activities, the Financial Stability Board, says crypto-assets pose no financial risks since their combined market value is less than 1% of global GDP.
The IMF has called for cooperation amongst governments, highlighting the potential of cryptocurrencies to facilitate financial crimes like money laundering and terrorism funding. The organization proposes policies to protect consumers similarly to the traditional economic systems.
Japan allows its citizens to use Bitcoin in financial transactions. However, they have policies regulating crypto exchanges. Crypto exchange platforms must register with the Japanese Financial Services Agency to operate. That means even the businesses that offer crypto trading apps must register with the agency. Cryptostrader.org is one of Bitcoin's popular trading platform.
Bitcoin is not a legal tender in the United States, according to the Financial Crimes Enforcement Network. However, the U.S. has legal crypto exchanges. The U.S. accounts for the second-largest Bitcoin volumes but, the regulators have different opinions on its regulation. The Securities and Exchange Commission perceives Bitcoin and other cryptocurrencies as securities.
That means crypto trading and investments are subject to the United States securities laws. The agency has increased efforts to police initial coin offerings and token sales through subpoenas. However, the Commodity Futures Trading Commission insists Bitcoin is a commodity, encouraging a friendly approach to cryptocurrencies.
The IRS, on the other hand, says cryptocurrencies such as Bitcoin are not actual currencies. Instead, it defines Bitcoin as property, subject to the prevailing taxation laws. The U.S. Treasury Department has been vocal about Bitcoin's potential to aid criminal activities, stating regulators should mainly focus on ensuring people do not use crypto to commit crimes.
The European Union restricts any member state from introducing an independent currency. However, crypto exchanges are legal, depending on the country. E.U. leaders have raised concerns about money laundering schemes linked to crypto. The commission will continually monitor the crypto market to deter criminals. French and German financial regulators have said they would make a joint proposal to regulate the crypto market.
Overall, global regulators have different views regarding Bitcoin regulation. However, they all agree that Bitcoin poses some risks that require proper regulatory frameworks. They are mainly concerned Bitcoin's decentralization presents loopholes for criminal activities such as money laundering, fraud, and terrorism funding. However, it would take time to come up with proper Bitcoin regulations.
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