(MENAFN- AzerNews)
Nazrin Abdul
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The growing development of digital technologies worldwide is
increasing the demand for cryptocurrency, which is a profitable
segment of the cashless payment system and online money market.
Since Cryptocurrency is a virtual currency, it is primarily
acquired through cryptocurrency exchanges and services operating
globally. It is not an official payment instrument regulated by
central banks. To obtain virtual money, individuals must register
with various companies, exchanges, and exchange services. After
registration, users can buy cryptocurrency according to the balance
in their accounts and conduct transactions.
Cryptocurrency is increasingly used as a means of payment, and
the global market recognizes it as a medium of exchange. However,
in Azerbaijan, there is no legal framework governing the
cryptocurrency market, and current legislation does not officially
support the circulation of virtual money.
The digital economy remains a government priority. On September
10-11, the "Chain Reaction 2024" forum was held in Baku, focusing
on blockchain, Web3, artificial intelligence, and digital
assets.
Speaking at the conference, Angelica Lair, Deputy Director of
the Liechtenstein Government's Financial Innovation Office, stated
that governments should lay the groundwork for the successful
implementation of blockchain and digital assets.
“Our task is to create a conducive environment. We need to
prepare the ground so that participants can operate freely within
this framework. That's exactly what we did in Liechtenstein with
blockchain and digital assets. Initially, we considered: what do we
need? The primary issue is regulation, which can be both beneficial
and problematic. We believe it is important to engage with the
public and companies because understanding the technologies and
innovations is crucial for adapting them to state decisions,” she
said.
A key topic discussed was the development of new tax regulations
for individuals earning income from cryptocurrency activities in
Azerbaijan.
In his comment to Azernews, economist Vugar Bayramov highlighted
that the Central Bank's monetary policy includes exploring
blockchain technology and virtual currency circulation.
Historically, the Central Bank has considered these technologies in
its policies.
"Since the Central Bank has previously incorporated blockchain
technology and virtual currency into its policy, and since both
Azerbaijani law and international practice require individuals who
earn income to pay taxes, entrepreneurs should be taxed if no
specific exemptions apply," Bayramov said.
He emphasized that taxing virtual or online transactions aims to
formalize these transactions and increase transparency.
Bayramov also explained another goal of taxing online
transactions.
"Another objective is to regulate online payments, including
income generated from cryptocurrencies, and to boost budget
revenues. This approach aligns with international practices, where
individuals who earn income, whether online or offline, are subject
to taxation."
The expert noted that this matter is also related to social
responsibility.
"Every entrepreneur and income earner has obligations to the
budget. This reflects the increasing number of people and
entrepreneurs earning income through cryptocurrency in Azerbaijan.
It confirms that the use of cryptocurrency has become a priority in
Azerbaijan, with our people actively investing in these innovative
assets."
Approaches to cryptocurrency in other
countries:
United States: The U.S. has a relatively well-developed
regulatory framework for cryptocurrency. The Internal Revenue
Service (IRS) treats cryptocurrencies as property for tax purposes,
meaning that capital gains taxes apply. Additionally, the U.S.
Securities and Exchange Commission (SEC) regulates certain aspects
of cryptocurrency transactions and Initial Coin Offerings
(ICOs).
European Union: The EU is working towards a comprehensive
regulatory framework for cryptocurrencies and digital assets. The
European Commission's Markets in Crypto-Assets (MiCA) proposal aims
to create a single market for digital assets, ensuring investor
protection and market integrity. Member states have varying
regulations, with some, like Germany, recognizing cryptocurrencies
as units of account.
China: China has taken a restrictive approach to cryptocurrency.
The country has banned cryptocurrency trading and Initial Coin
Offerings (ICOs) but is actively developing its own central bank
digital currency (CBDC), the Digital Currency Electronic Payment
(DCEP), to enhance control over the financial system.
Japan: Japan has embraced cryptocurrencies and has established a
regulatory framework to support their use. The Financial Services
Agency (FSA) regulates cryptocurrency exchanges, requiring them to
register and comply with anti-money laundering (AML) regulations.
Japan recognizes Bitcoin as a legal tender.
In conclusion, as the global landscape for cryptocurrency
evolves, Azerbaijan is beginning to explore regulatory frameworks
to support and govern its use. This move aligns with international
trends and aims to formalize the digital economy, ensuring
transparency and contributing to the national budget.
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