At the end of 2021, cryptocurrency market capitalization exceeded $3 trillion for the first time in history. However, there is still no common understanding of how to regulate digital currencies worldwide. In this piece, we examine the countries that most actively use cryptocurrencies and how their authorities have changed their stance on their regulation.
U.S. declared about cryptocurrencies: “A matter of national security.”
13% of the country’s residents have ever used or owned cryptocurrencies (Statista data).
U.S. specialists will dissect the digital money circle and foster an administrative structure for every one of its areas – from bitcoin to stabelcoin and NFT. A relating request will show up before very long. As indicated by Bloomberg’s sources, the archive is as of now in the last transformative phases.
In the interim, the U.S. government is additionally thinking about giving state advanced money – Central Bank Digital Currency or CBDC. The U.S. Central bank has previously presented a fundamental report on the issue and sent it for public conversation until May 20.
CBDC is probably going to help the U.S. stay serious as an ever-increasing number of nations, including China, think about giving their own coins. Notwithstanding, an official conclusion on the issue relies upon whether the White House and the U.S. Congress support it.
Meanwhile, a few states are hoping to foster digital currencies, and their city chairmen even get compensated in bitcoins.
El Salvador: The first country in the world to accept bitcoin as official tender
In June 2021, El Salvador’s President Nayib Buquele announced that he planned to make bitcoin an official tender in the country on a par with the dollar.
As stated by the supporters of the idea, it will help Salvadorans who do not have bank accounts, as well as increase the efficiency of money transfer, stimulate economic development and make the country independent of global financial institutions. Earlier in March, El Salvador requested $1.3 billion in funding from the International Monetary Fund (IMF).
In November 2021, Bukele reported plans to assemble the world’s first digital money city, Bitcoin City.
In January 2022, the IMF encouraged El Salvador to quit utilizing bitcoin for of installment, highlighting dangers to monetary solidness and customer security. The country’s leader answered with an image.
El Salvador has spent about $85.5 million on bitcoin up until this point, remembering $15 million for its most recent securing for Jan. 22. The nation has paid a normal of $47,500 per coin.
Nigeria: Cryptocurrencies as a way to save money
As of October 2021, 42% of Nigerian respondents own or use cryptocurrencies (Chainalysis).
In February 2021, the Central Bank of Nigeria banned cryptocurrency trading and ordered banks to “identify people and/or organizations” that conducted such transactions or operated cryptocurrency exchanges and immediately close those accounts.
This has had little effect: Nigerians have continued to use cryptocurrencies to protect their savings as the value of the naira, the local currency, declines. They also use them to send payments abroad – it is quite difficult to buy U.S. dollars in Nigeria.
According to Chainalysis, the dollar value of cryptocurrencies received by Nigerian users increased steadily from 2021 to 2022. In May 2021, Nigeria’s total value of remittances reached $2.4 billion, though it was still $684 million in December 2020.
In October 2021, the Central Bank of Nigeria likewise sent off its own advanced cash, eNaira, which had been being developed for a considerable length of time. Nigeria turned into the second country on the planet (after the Bahamas) to give its own advanced money.
India: A window of opportunity for experimentation
It appears to be that India has at long last chosen how to manage this circle: Finance Minister Nirmala Sitharaman said that the public authority will before long present another draft of the cryptographic money regulation, and offered two significant expressions: the national bank of India will present computerized cash in the monetary year 2022-2023, and pay from advanced resources will be charged at 30%.
By introducing taxation, India has legalized cryptocurrencies, which could attract exchanges and investors from around the world to set up bases in a country with more than 15 million cryptocurrency owners. However, it is one of the first countries in the world that does not allow compensation for losses in cryptocurrency trading. On the one hand, this may discourage some investors and, on the other hand, create a market for cautious trading.
It is still unclear how transactions will be tracked and how taxes will be calculated.
Vietnam: A world leader in cryptocurrency adoption
As of October 2021, 27% of Vietnamese own or use cryptocurrencies (Chainalysis).
As early as 2017, Vietnam has had a total ban on the issuance and use of cryptocurrency as a means of payment. Nevertheless, the government allows bitcoins to be traded and stored as assets.
Despite this, according to the Global Crypto Adoption Index, Vietnam ranks first globally in the adoption of cryptocurrencies. They are most often used for money transfers, allowing migrants in the country to send money home without a fee.
Pakistan: Close government scrutiny
As of October 2021, 14% of Pakistan’s surveyed residents own or use cryptocurrencies (Chainalysis).
Pakistan’s national bank proposes to boycott a wide range of digital forms of money, contending that the dangers related with their exchange far offset the potential advantages. Simultaneously, Pakistan won’t give its own computerized cash. In addition, the specialists even arrangement to hinder locales that lead exercises connected with cryptoassets.
For many Pakistanis, cryptocurrencies are the solution to their financial problems, as the country suffers from high inflation, has large debts and possesses small foreign exchange reserves.
However, the cryptocurrency industry has recently come under the scrutiny of the authorities: in January 2022, Pakistan’s Federal Investigation Agency launched an investigation into the local cryptocurrency exchange Binance for alleged fraud, which caused several hundred investors to lose over $100 million.
China makes strict controls and a ban
Before the ban, the country was the leader in cryptocurrency mining.
In 2021, China completely changed its attitude toward cryptocurrencies in just a few months. Previously, the country’s residents could safely mine and trade in digital coins. Then, in May 2021, China banned financial institutions from conducting any cryptocurrency transactions.
In June, it was already impossible to mine cryptocurrencies, and their complete ban went into effect in September. Miners and owners of crypto exchanges were forced to sell off equipment or leave the country.
The Chinese government has said it is concerned about the environmental impact of mining and that digital currencies can be used for fraud and money laundering. China is now developing and testing its own centralized digital currency.
EU: Gradual adoption
Among European countries, Switzerland leads in the number of owners and users of cryptocurrencies with 16% (Chainalysis).
The European Union includes 27 countries, and implementing legislation at this level is a complex matter. Previously, most EU countries applied rather lenient measures to the cryptocurrency industry.
In September 2020, the European Commission introduced a bill called Markets in Crypto-Assets Regulation (MiCA). When it enters into force, cryptocurrencies will be considered regulated financial instruments. This will help strengthen consumer protection, define the activities of the cryptocurrency industry and introduce new licensing requirements.
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