While bringing US-based institutions on-board with digital asset trading is key to enlarging crypto’s overall market cap, crypto will only be successful as a truly international force—and not one only limited to the G-7. To that end, I’m going to shed light on other countries’ unique approaches towards digital asset classes in order to understand what the future of crypto regulation may look like.
The Singaporean government has recently instituted a major regulatory framework for cryptocurrencies and crypto payment services. The framework will include a licensing regime for crypto payment providers—a descriptor that includes exchanges—and will regulate the following:
The issuing of accounts and electronic money.
The transfer of money within and out of Singapore.
The acquisition of merchants who will use their platform.
Money changing and the dealing in and exchange of digital payment tokens such as Bitcoin.
Singapore instituted this new framework with an intention to bolster its economy’s already strong financial technology presence. Association of Cryptocurrency Enterprises and Startups Singapore (“ACCESS”) chairman Anson Zeall has pointed to recent developments in Singapore’s crypto regulatory regime, noting that it is becoming more competitive at the international level with recent developments such as a new voluntary ‘code of practice’ that aims to proactively allow crypto players to adhere to anti-money laundering standards to promote public and commercial trust in their services.
As of September 1 of this year, companies in New Zealand can legally pay their employees in cryptocurrencies such as Bitcoin. This new guidance from the government lays out specific rules, however, that govern how companies will be able to take advantage of this opportunity, including:
That the payments must be in regular, fixed amounts.
The digital currency of choice must also be pegged to at least one regular currency.
The digital currency must be able to be converted directly into a standard form of payment.
While this guidance isn’t anything new, as the US, UK, and Australia have offered similar rules, it is yet another sign that crypto adoption and use is only increasing.
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Liechtenstein regulates cryptocurrencies under the remit of its Due Diligence Act, which has a primary purpose of combatting money laundering and other illegal activities. While its Financial Market Authority recognizes that “the production and the use of virtual currencies as a means of payment are currently not subject to any [business] licensing requirements,” the Authority assesses licensing requirements and ICO filings on a case-by-case basis, leading to some uncertainty about when exactly certain regulations apply.
In addition, Liechtenstein is in the process of implementing a groundbreaking “Blockchain Act” that allows every possible asset, including real estate, bonds, and securities, to be tokenized, digitalized, and listed on a cryptocurrency exchange. This legislation creates a clear regulatory environment that counters risks, provides clarity, and facilitates the development of a token economy.
Finally, Liechtensteinische Post AG, its postal service, now offers cryptocurrency exchange services at its brick and mortar locations.
Belarusian President Alexander Lukashenka issued a decree in 2018 that fully legalized cryptocurrencies, initial coin offerings (ICO), and smart contracts. The decree also instituted a zero percent tax on crypto holdings until 2023. The move was designed to boost crypto innovation and attract interest in Belarus’s HTP, a special economic zone that has been likened to the country’s own Silicon Valley. Belarus’s government declared earlier in 2018 that a full crypto regulatory regime was a top priority in order to transform its “economy, public administration and social services.”
Many small jurisdictions like Belarus, Singapore, and Liechtenstein are crafting sector-specific rules for crypto, attempting to attract companies by providing regulatory security as well as tax breaks. On the other hand, larger countries with more established financial sectors are taking a more conservative ‘wait and see’ approach. In my view, much of the innovation in crypto regulation is coming from smaller countries due to a prevailing attitude of crypto as an opportunity, not as an active threat to established financial orders.
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