How legal are cryptocurrencies around the world: Bolivia, China and Russia
Initially cryptocurrencies were used by suspicious characters such as drug dealers. However, the growth of bitcoin price together with popularity of the blockchain technology started to attract attention of governments. Many questions on legal status of cryptocurrency are beginning to emerge.
However, at the moment its legal status is unclear in many instances, although legislation is being prepared all around the world. It is supposed to shape government's’ attitude towards cryptocurrency. The approach is different: the EU recommends its members not to impose tax on cryptocurrency transactions whereas in Bolivia and Bangladesh making these types of transactions may be punished with imprisonment ! It should be noted that besides bitcoins there are several hundreds of alternative coins (Often called altcoins).
However the laws are applicable to all of them.
China: strict regulation
Probably, China is the most interesting country to look at. On the one hand, it is a totalitarian state, long known for its strict attitude towards financial flows. On the other hand, it is known that huge Chinese mining farms, which sometimes can occupy several hangars, get electric power at discount price. Needless to say that Chinese government did not like the idea of anonymous and unregulated currency.
Officially, in China cryptocurrency is often considered as a means of money laundering. In 2013-2014 the Central Bank of the People's Republic of China banned all bitcoin transactions for financial organizations. Actually, the ban also extended to payment services providers, although the regulator’s instruction said that they voluntarily decided to stop cryptocurrency transactions. In February 2017 the largest Chinese exchanges halted withdrawals , again, “by consent”. Next, there was considerable downfall of Chinese bitcoin market and decrease of its rate. By the way, at the end of May – beginning of April the moratorium was cancelled. That was one of the reasons which led to summer cryptocurrency boom.
Thus, the mining (production of crypto coins) and transactions between individuals have become legal in China. But corporations and banks have no right to use such currencies as a means of payment. It looks like the situation is not going to worsen. On June 27 a draft law was initiated in Beijing. According to it cryptocurrencies, online game currencies, etc. are required to be considered as objects of civil law rights. If it is passed, cryptocurrency in China is going to have a big future.
Japan: integration leader
The neighboring Japan is even more favorable to digital currencies – in this country they can be used for transactions on the same basis as usual money. Initially the question was only about registration of cryptocurrency exchanges, however, now it is possible to pay with bitcoin in hotels or in shops. In this regard Japan is a certain leader of cryptocurrency integration in the state economy. It was reported on July 4 that bitcoin was introduced as a payment method to one of the popular mobile applications. Shortly after 260 thousand outlets across the country were said to be ready to accept cryptocurrencies. And it is only the beginning.
After the crash of the MtGox exchange in 2014 Japan had been quite negative towards cryptocurrencies for a few years.
Therefore, this may be a reason for rather strict requirements imposed to the companies using cryptocurrencies such as reserve funds, regular accounting, external audit and expensive license (300000 dollars).. So, the government tries to protect the market from unreliable players.
Russia: what is not forbidden is allowed
In Russia there's still a long haul ahead of buying “Satoshi” (it is the name of bitcoin’s smallest part), but Russians have been looking closely at cryptocurrencies for a long time. Like everywhere, initial attitude to a new type of payment means was extremely cautious. While head of Sberbank German Gref advised "to study" a cryptocurrency phenomenon in 2014, the Central Bank and Rosfinmonitoring released warning notices, which could recognize exchange or use of virtual currencies as illegal transactions aimed at "laundering of money" or terrorism financing.
Cryptocurrency’s anonymity and decentralization became a stumbling block, as usual. And in 2016 the Ministry of Finance and the Investigative Committee of Russia offered to introduce a criminal liability for its use as a circulation of unsupported "quasi-money". However, at the end of 2014 the Ministry of Economic Development gave a negative response to the bill of the Ministry of Finance on "quasi-money", having specified that definitions in it are not properly worked out. The Federal Tax Service has published a letter according to which the Russian Federation law does not prohibit operations with bitcoin.
Position of the Central Bank which used to criticize cryptocurrency has changed - the studies and consultations conducted by the regulator during 2015 at first led to formation of a working group and then to creation of a consortium uniting five major banks: Sberbank, QIWI Bank, Tinkoff-bank, Alfa-Bank and Bank Otkritie. And the famous deputy Andrey Lugovoi declared that Russia can become the first country to completely legalize bitcoin.
Of course, it's already impossible to become a pioneer , but the above-mentioned leaves a hope that the legal status of cryptocurrency in Russia will become more certain soon. The final version of a bill prepared by the Ministry of Finance and the State Duma is planned to be issued in 2018. So far, transactions with cryptocurrencies are made according to the principle "what is not forbidden - it is allowed".