Twelve years ago, when the world was coming out of one of the worst financial calamities it had ever seen in a century, it never thought that the Bitcoin cryptocurrency market was worth nothing and could be a major geopolitical player like gold. Crypto at its peak, however volatile, is a $ 3 Trillion(INR 239 Trillion) market. That means it has the power to impact economies in both positive and negative ways.
Across the world, the views on cryptocurrencies are different and are changing rapidly. Governments are researching blockchain technology thoroughly, but the central banks' implication toward crypto is unclear.
While the world was shocked by the recent Russia-Ukraine war, every market tumbled, and yet crypto initially stood firm with gold. This is a big deal since it came a long way from being labeled as fraud and a Ponzi scheme to being recognized as digital gold.
Banks and other institutions, which were against crypto, are now heavily investing in them; banks like JP Morgan are replacing real estate with crypto as an alternative investment.
Countries like El Salvador and Cuba saw the opportunity of cryptocurrencies being at the forefront of a financial revolution and recognized them as legal tender. However, citing the volatility of cryptocurrencies, larger economies like India and USA decided to regulate them and make them taxable. Also, economically significant countries like China and Qatar decided to place a blanket ban on the system.
Let us look at how the governments from different continents are dealing with this newfound technology.
While Canada and the US accept cryptocurrencies as payment and investment and are mildly regulated, the CRA or the Canadian Revenue Agency has cited that cryptocurrencies are taxable and will be considered commodities. The SEC or US's Security and Exchange Commission, taxes crypto on capital gained tax. Both the countries have ETFs on Bitcoin and have some of the biggest whales on cryptos residing there.
On the other hand, Mexico is unclear on the decision, and many young enthusiasts in the country anticipate a clear verdict.
Some of the countries in South America, like El Salvador and Chile, have supported cryptocurrencies and are in process or have already declared Bitcoin as a legal tender, meaning the citizen in those countries can use Bitcoin as the local currency for day-to-day life.
Countries like Argentina and Brazil have supported cryptocurrencies and are in the process of regulating them.
Australia has legalized cryptocurrencies since 2017; they are GST-free and are taxable only when you cash out. However, New Zealand's IRD or Inland Revenue Department recognizes cryptocurrencies as real estate and will be taxed accordingly. Other countries in the continent have an unclear stance on cryptocurrencies.
While most of Europe is allowing every service that cryptocurrency has to offer, Russia put a banking ban, and Kosovo put a mining ban on cryptocurrencies. Amid war, the Ukrainian government restricted its citizens from buying cryptocurrencies from their local currency. Every country in Europe has some laws regarding cryptocurrencies except the Netherlands.
The Northern African countries of Algeria, Egypt, and Morroco have put a blanket ban on cryptocurrencies. Other countries like Nigeria and Nambia have put a banking ban since the tech is still in its infancy. Zimbabwe's stand on cryptocurrency is still unclear since the Reserve bank of Zimbabwe has banned the use of cryptocurrencies. Still, the high court lifted the ban, followed by the notice of objection by the Reserve bank.
Asia has some of the most diverse sets of opinions regarding cryptocurrencies. But the use of cryptocurrencies as a domestic means of transaction is prohibited in almost every country in the continent.
Every country except Israel and Lebanon has placed a banking ban in the Gulf area. Bangladesh, China, and Nepal from the Indian subcontinent have put a blanket bank on cryptocurrencies.
In countries like South Korea, there are many trading restrictions, and in India, digital assets are subjected to both TDS and a flat profit percentage as tax.
Central Bank Digital Currency is an initiative taken by the reserve banks of the country; these are the digital currencies issued by the country's central banks. These digital currencies will promote inclusion ad simplify the policies for digital currencies.
According to new data, there are around 80% of countries researching CBDC and streamlining the digital monetary flow. CBDC will be the next big thing in cryptocurrencies since regulation and taxation of cryptocurrencies has proven to be a far more complicated task than previously thought.
Different countries around the world are approaching this problem of regulating cryptocurrencies; differently. Some consider cryptocurrencies as real estate, while some as commodities, but the world is reaching toward a global consensus of being pro-crypto.