A Look at Crypto Regulation Around the World
As governments around the world scramble to take a stance on cryptocurrency and blockchain tech, is it possible that regulation could become machine readable one day?
There’s no question, 2018 has been a busy year for regulators around the world regarding blockchain technology and regulation. Most lawmakers are playing catch-up to understand the technology, but some countries have taken positive actions. Government responses vary from outright bans to creating legal frameworks welcoming new companies.
There’s a general lack of unity and uncertainty surrounding the space. So, let’s take a look at cryptocurrency legislation (or lack of) around the world–and why the Digitex team thinks it should become machine readable in the future.
What’s the Best Jurisdiction for Your Blockchain Startup?
One of the biggest questions that more blockchain startups are asking (which didn’t matter two years ago) is: “Where do I set up shop?”
Regulators are beginning to understand the possibilities of blockchain technology and jurisdiction is a growing matter depending on what your platform does. Technically, the technology is borderless. But the company and founders creating it are not.
There’s a competition taking place between countries, and money-makers like Binance (and in a few short weeks, Digitex Futures!) are being fawned over. In the first quarter of this year, in fact, Binance announced plans to relocate to Malta, leading to a wave of blockchain-based businesses doing the same–and to others wondering whether they should, or if there’s somewhere better to register their particular company.
Regulation in the Americas
Looking at the United States, the water is less murky compared to previous years. This year, Bitcoin and Ethereum have been taken off the securities list. However, because of the other regulatory hurdles for ICOs, the US is still seen as having an unfriendly legal environment.
In Colombia, newly-elected President Ivan Duque vows to make his country the technology leader of South America. His government is the first in the continent to provide a five-year tax exemption to companies that provide a certain number of sustainable jobs. This includes crypto and blockchain-based businesses.
Despite sending Ethereum off-shore, Canada, the previous home of Vitalik Burterin and the Ethereum Foundation, is now making a name for itself in the crypto space. Regulation-wise, the rules are more established than anything in South America, and Canada has made a clear stand compared to the US. Some would say the regulators actually listened when Andreas Antonopoulos spoke to the Senate of Canada back in 2014.
Looking at Europe East and West
Even though it’s just a city-state sitting in the middle of the Mediterranean Sea, Malta is moving in leaps and bounds to foster a friendly environment. And cryptocurrency and blockchain businesses are taking notice.
Malta is one of the first countries to recognize DAOs and smart contracts by setting up and implementing a practical legal framework. This means that investors and businesses know exactly what is expected of them.
Malta is looking at the future of crypto exchanges and that’s exactly what caught Digitex Futures CEO’s eye. Adam Todd will present a demo of the platform live and give a keynote speech on commission-free trading to 5,000+ attendees at the Malta Blockchain Summit in November.
Looking east, Estonia is another country leading the way in using blockchain technology. The country created an e-residency program that now has over 25,000 residents from more than 130 countries.
Liechtenstein’s Crown Prince Alois is also very interested in cryptocurrencies. The country has a unique status as a member of the European Economic Area but not the European Union, which allows its local banks to handle crypto investments for clients and even provide guidance on ICOs.
Switzerland also started developing its own answer to Silicon Valley back in 2013, called Crypto Valley. Following its traditional nature, legally it has taken a neutral stance on cryptos. But the country still works to provide a stable, supportive business environment to encourage blockchain startups to move to the landlocked country.
In fact, Switzerland is home to Bancor and other Ethereum-based research companies, as well as some 300 blockchain startups registered in Zug.
Africa, the Next Frontier
Even though crypto and blockchain awareness isn’t as widespread here as other regions, some countries are taking steps to be leaders in the space. Outside investors may not be at the levels of Asia and Europe, but still, things are happening.
South Africa has been hosting the largest conference in the Continent centered on blockchain technology since 2015, bringing together lawmakers, business entrepreneurs, and developers.
Companies like Microsoft are starting to pay attention, even partnering with WiseKey to develop a land registry system in Rwanda.
Exchanges are also starting to appear in places like Ghana, South Africa, and Nigeria. For the most part, however, governments have neither looked to encourage nor discourage cryptocurrency or blockchain startups.
Over to Asia
Looking at the Far East and Southeast Asia, ICO friendliness is measured in degrees.
Even though China has publicly put a ban on ICOs within the country, the People Supreme Court (their national court system) has created special courts called “internet courts.” These courts will deal with e-commerce where a blockchain is seen as a legal document. This is to say that eventually, China will probably catch up or even overtake other nations.
Hong Kong could be considered China’s safe space for crypto and blockchain businesses. After the mainland enforcement of new restrictions, many miners, exchanges, and ICO startups moved to the island.
Singapore is a funny animal; the government is okay with the use of cryptocurrencies but voices its authority more when it comes to ICOs. Regulation is handled through the Monetary Authority of Singapore (MAS) and SFA on a case by case basis. Outside of dealing with crowdfunding in the crypto space, Singapore is a pretty easy place to start a business.
Japan was home to the infamous Mt. Gox (that had the largest crypto hack in 2014). But since then, lawmakers have passed rules and formed the ICO Business Research Group to watch over crypto exchanges, arguably making it the leader in the region.
Could Regulation Become Machine Readable?
This list is by no means complete. However, in looking around the globe, it’s interesting to see how countries are slowly but surely beginning to accept cryptocurrency and blockchain, in varying degrees.
Most countries are looking at the space from a business perspective and are looking to achieve mass adoption of the technology from a top-down model. This means that eventually, the process of new regulation could be streamlined. And what better technology than blockchain to make blockchain regulation easy, transparent, and autonomous?
Instead of scouring the world for the friendliest jurisdiction and jumping through several hoops to register their companies, what if regulation was as easy as a few mouse clicks? While we use blockchain tech to build faster exchanges, make supply chains more efficient, and generally improve the world, what about applying it from the start?