Overview: Major Countries' Attitude Towards Cryptocurrencies

Regulations of cryptocurrency, the most important factor affecting the price of the digital asset, vary widely around the world. 

Some global economies and governments maintain a generally friendly stance towards digital assets, like El Salvador where the Bitcoin Law was passed on 8 June 2021, giving the cryptocurrency Bitcoin the status of legal tender within the country.

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By contrast, countries such as China, Russia and Nigeria have cracked the policy whip to stop dealing with cryptocurrency transaction, outlawing their use and investment altogether.

In this article, Fazzaco will briefly introduce the main countries and regions towards cryptocurrency.

China:

At the end of June this year, the People's Bank of China (PBoC), China's central bank, has discussed the issue of the recent speculative activities around crypto trading with financial institutions and payment providers like the Industrial and Commercial Bank of China, Agricultural Bank of China, Construction Bank, Postal Savings Bank, Industrial Bank, and the Alipay (China) Network.

These banks are required to stop dealing with cryptocurrency transaction​s, as well as cut off any funding channels for crypto OTC merchants if found.

Shortly after the PBoC's statement, ICBC, ABC, CBC and AliPay all issued a similar notice, stating that they will not allow cryptocurrency transactions in any manner.

Russia:

Russia gave cryptocurrencies like Bitcoin legal status in 2020 but banned digital assets from being used in payments.

The Bank of Russia recently announced that Russian exchanges were not recommended to list investment products related to crypto.

Managers should not include these assets in mutual funds, while brokers and trustees are advised to refrain from offering pseudo-derivatives with such underlying assets to unqualified investors.

South Korea:

In March, South Korea passed a new legislation to strengthen the supervision of virtual assets. The new law, however, has resulted in pushback by banks and concerns that many of the altcoins and cryptocurrency exchanges that have sprung up in South Korea could be put out of business.

The move is expected to ensure that this new asset class does not become a haven for money laundering and financial crimes.

As South Korea tightens its regulation of the cryptocurrency industry, digital asset exchanges have started to halt trading on certain coins deemed to be too risky.

El Salvador:

​El Salvador is the first country in the world to adopt bitcoin as legal tender as its Congress approved President Nayib Bukele’s proposal to embrace the cryptocurrency in 9 June this year. 

According to a new survey, Nayib's decision to make cryptocurrencies legal tender in his country has been met with skepticism by the majority of citizens. Roughly 54% of Salvadorans believe that Bitcoin adoption is "not at all correct." Another 24% felt it's "just slightly correct." The government's crypto act received less than 20% approval.

Earlier, Fazzaco has reported that the Salvadoran Congress approved the bill making Bitcoin (BTC) an "unrestricted" legal tender in early June​. Since then, the unique decision has been met with concerns over how the crypto-friendly move will affect the country's economy.

United States:

​Cryptocurrency exchanges are legal in the United States and fall under the regulatory scope of the Bank Secrecy Act (BSA).

The US Securities and Exchange Commission (SEC) has indicated that it considers cryptocurrencies to be securities, and applies securities laws to digital wallets comprehensively in an approach that will affect both exchanges and investors alike. 

By contrast, The Commodities Futures Trading Commission (CFTC) has adopted a friendlier, “do-no-harm” approach, recognizing Bitcoin and Ethereum as commodities and allowing other virtual and cryptocurrency derivatives to be traded publicly on exchanges that it regulates or supervises.

United Kingdom:

Back to October 2020, the UK Financial Conduct Authority (FCA) published final rules banning the sale of derivatives and exchange traded notes (ETNs) that reference certain types of cryptoassets to retails consumers. The ban has come into effect on 6 January 2021. 

Nigeria:

On February 5 this year, the Central Bank of Nigeria (CBN) issued a circular asking commercial banks and other financial institutions to close accounts transacting in, or operating on, cryptocurrency exchanges. All deals involving cryptocurrency are now “prohibited” with “severe regulatory sanctions” awaiting erring outfits. The banks are also required to identify “persons and or entities transacting in or operating cryptocurrency exchanges within their systems and ensure that such accounts are closed immediately.”

The move is said to served to enforce orders in place since 2017 banning crypto transactions in the country’s banking sector.