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Published December 18, 20238 min read

Regulation and Prospects Overview of Leading Countries in 2023 by the Coinmooner Team

CoinMooner Team

In a recent news article, the Coinmooner team has gathered up-to-date information for our readers on how cryptocurrency is being used locally in different countries. The legal status of cryptocurrencies, especially Bitcoin and other popular altcoins, varies significantly across nations.

In some countries, cryptocurrency transactions are officially permitted, treated as commodities or investment assets, and subject to relevant tax laws. In other nations, cryptocurrencies are recognized as a form of legal tender, while in some, they are considered a legitimate means of payment with a specified tax on their acquisition.

In certain states, banks may be prohibited from dealing with Bitcoin transactions, but individuals are free to conduct such operations, or cryptocurrency usage may be entirely banned. As of 2023, there are countries where cryptocurrencies are used alongside foreign currencies, indicating broad recognition and integration into economic activities.

The Coinmooner team has compiled the latest information on several countries that rank in the top 10 by population or blockchain technology adoption and cryptocurrency legislation. Let's delve deeper into the laws and regulations of these countries concerning cryptocurrencies in the current year, 2023. It's important to examine how these countries regulate the cryptocurrency sphere to fully assess the current state and future prospects of this market.

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The United States is a country in North America with an area of 9.8 million square kilometers and a population of over 336 million people. It is a federal presidential republic consisting of 50 states and the District of Columbia, with Washington as its capital.

The U.S. holds a prominent position globally in actively regulating and utilizing cryptocurrencies. Rules for their use can vary from state to state, applying to both companies and individuals. Overall, the country has a positive view of blockchain technology and cryptocurrencies.

The U.S. has the world's strictest regulatory system, closely pursuing fraudulent activities related to cryptocurrencies. Recent sanctions against Binance and its former CEO, as well as KuCoin, are examples. New laws and amendments related to cryptocurrencies are regularly introduced, such as the proposed "Financial Innovation and Technology 21st Century Act" by House Republicans in June of this year. This legislation mandates the SEC and CFTC to develop relevant rules, including defining the terms "blockchain" and "digital asset."

Due to stringent state regulations and high interest, citizens can freely use and trade cryptocurrencies in the U.S., both anonymously and centrally. In case of deception, citizens can turn to the government, even if their actions were anonymous. U.S. residents within the country can conduct transactions and pay for goods using bitcoins. The taxpayer's profit is determined based on the bitcoin-to-U.S. dollar exchange rate at the time of the transaction. Expenses related to the purchase of goods and services with bitcoins can also be considered when calculating the tax base, using the bitcoin-to-U.S. dollar exchange rate at the time of payment.

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China, officially known as the People's Republic of China (PRC), is a country in East Asia. It is the fourth largest in terms of land area (9,598,962 square kilometers) and the second most populous (1,411,750,000 people) in the world. The PRC is effectively a socialist state with an authoritarian dictatorship. It is a permanent member of the United Nations Security Council, a space and nuclear power, and has the largest army.

China has shown particular caution regarding cryptocurrencies and blockchain technology. Initially, Chinese citizens actively embraced cryptocurrencies and foreign services to explore the new digital frontier. However, over time, the country imposed a ban on the use of cryptocurrencies.

On December 5, 2013, the People's Bank of China restricted financial companies from conducting transactions with bitcoins. In an official statement, it emphasized that bitcoin is not a currency in the full sense of the term. Companies were not only prohibited from direct bitcoin transactions but also from publishing quotes and insuring financial products related to bitcoin. At the same time, individuals retained the option to participate in online transactions at their own risk. Bitcoins were treated as commodities rather than currency.

In March 2014, the People's Bank of China issued a circular instructing Chinese banks and payment systems to close accounts for fifteen Chinese websites selling bitcoins by April 15, 2014. Non-compliance was subject to punishment, although the People's Bank did not specify how, leading to the active use of virtual private networks (VPNs) and more cautious use of this technology by citizens.

Over the next 10 years, Chinese authorities made several amendments to legislation, either restricting or partially opening up the use of cryptocurrencies. In late September 2023, the People's Bank of China banned mining and all transactions involving cryptocurrencies. This included a prohibition on foreign crypto exchanges providing services to Chinese investors and financial companies facilitating cryptocurrency trading, deeming such operations illegal.

However, Chinese authorities do not deny the significance and interest in blockchain technology. They view it not as a decentralized asset allowing users to earn anonymously but rather as a means of control and ensuring more reliable technological development. As mentioned in a previous article by the Coinmooner team titled "Government's Use of Blockchain Technology: Issue or a New Stage of Development?" China plans technical innovation using blockchain technology, specifically the implementation of RealDID, a new digital identification service from the Blockchain Service Network (BSN). This initiative is supported by the Ministry of Public Security and the National Information Center.

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India is a country in South Asia with a population of 1.41 billion people and a land area of 3,287,263 square kilometers. It is the largest country in South Asia, ranking first in population and seventh in the world in terms of territory.

Unlike some countries, India does not have a central authority regulating the digital market. Virtual assets are not considered legal tender or commodities, and there are no rules for resolving disputes related to cryptocurrency transactions. Despite this, the cryptocurrency market in India has been thriving. However, in the current year of 2023, Indian authorities have been considering cryptocurrency regulations. The Finance Minister of India, Nirmala Sitharaman, confirmed that the government would maintain restrictive tax policies for cryptocurrencies in the financial year 2023. She stated during the budget discussion for 2023 that existing tax rules set by regulators for crypto assets and industry participants would remain unchanged. Despite a significant drop in cryptocurrency trading volumes due to the introduction of a 30% profit tax and a 1% tax deducted at source (TDS), the Indian Ministry of Finance stands firm on its position. Stringent regulatory restrictions have forced the country's crypto community to engage in international exchanges. However, industry representatives have urged the Finance Ministry to reconsider tax policies, including TDS, proposing a range from 0.01% to 0.1%.

Nevertheless, India leads the global ranking of countries where cryptocurrencies are actively integrated into daily life, according to a study by Chainalysis published on October 23, 2023. Analysts' data show that India acquired cryptocurrencies worth $250 billion in the past year. However, retail investors report a noticeable decline in crypto trading over the last two years, attributed to local regulatory pressure and the authorities' desire to make room for the digital rupee in the market. Chainalysis researchers believe that, despite uncertainty in tax legislation, there has been unprecedented growth in the overall transaction volume.

It's important to note that the factors mentioned above have not affected the use of cryptocurrencies, as residents actively apply them on decentralized exchanges, avoiding the government's tax system. Due to the relatively weaker cryptocurrency regulations in India compared to the United States or China, the country maintains its leadership globally in cryptocurrency usage.

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Canada is the largest country in North America and the second-largest in the world by land area. It has a population of around 40 million people, ranking 37th globally. Canada boasts the longest coastline (over 202,000 km) and the longest border with the United States. The population density is one of the lowest at 4.2 people per square kilometer.

Regulating cryptocurrencies is crucial for shaping a global financial environment where digital technologies are increasingly dominant. Canada, taking steps as early as 2014, acts as a pioneer in this digital evolution, recognizing the transformative potential of digital assets. Similar to the United States, Canadians experience freedom in using cryptocurrencies within their country.

Thanks to stable regulations that have remained largely unchanged for many years, Canada adjusts them based on global experiences and market situations. Canada's unique approach to cryptocurrency regulation lies in its balance. Unlike some countries with cautious or outright restrictive measures, Canada has established clear rules, provisions, and requirements for entities involved in cryptocurrency activities. This balanced approach has attracted numerous companies, including those specializing in decentralized applications (DApps) and blockchain technologies.

Tax obligations related to cryptocurrency transactions are calculated based on the profit from the sale or exchange of these digital assets. Whether you are an individual or a legal entity, the value exceeding the acquisition cost is subject to taxation, considering capital gains or business income accordingly.

A notable initiative in Canada is the "regulatory sandbox" by the Canadian Securities Administrators (CSA). This sandbox provides companies dealing with cryptocurrencies a platform to register and test their products and services in the Canadian market. It ensures supervision and compliance checks by the CSA, creating a collaborative environment managed by the cryptocurrency issuer and trading platform community.

Companies dealing with virtual currencies must register with the Financial Transactions and Reports Analysis Centre of Canada (Fintrac). They also need to implement compliance programs, maintain necessary records, report suspicious or terrorism-related transactions, and check if their clients are "politically exposed persons." These requirements extend to foreign virtual currency exchanges serving Canadian clients. Banks, in turn, are not allowed to open accounts or maintain banking relationships with virtual currency companies not registered with Fintrac.

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In 2023, significant regulatory changes are taking place worldwide. Many countries are adapting to the inevitable future tied to blockchain technology and cryptocurrencies. Influential figures like Cristiano Ronaldo actively promote digital gold. Analysts and Web3 personalities, such as Arthur Hayes, share their views on the potential Bitcoin price surge, attracting thousands of listeners daily.

However, with increasing popularity comes a rise in fraudulent schemes, especially in decentralized environments where financial institutions and economic opportunities for enrichment exist. The Coinmooner team advises readers to conduct personal analysis of information both within and beyond the crypto sphere. Additionally, we urge readers to exercise caution and prioritize safety when storing assets in the Web3 industry.

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