Due to the novelty of cryptocurrencies, legislation is still in a state of flux in most places. Given the plethora of specialised exchanges and brokerages that are in existence today, Bitcoin has attracted scrutiny from governments across the world. Some countries have outrightly banned Bitcoin, while some are altering their policies to facilitate tax collection on Bitcoin trades. As CoinHako braces for growth across Asia, we would like to share our awareness of the state of Bitcoin legislation in some countries in the region. We invite discussions/updates on our current findings.
Bitcoin is illegal in Bangladesh, Vietnam and Thailand. Private entities can hold and trade Bitcoins in China. However, regulations prohibit banks from using Bitcoins. In 2013, China Central Bank prohibited financial institutions from handling Bitcoin transactions. However, we do not see an outright ban on trading of Bitcoins by private individuals in China. In fact, some sources show that most of Bitcoin trading in Asia happens in China.
Regardless, China is possibly the country with the harshest Bitcoin regulations. The government does not allow Bitcoin companies to hold accounts in Chinese banks, those which do have had their accounts shut from the financial system. Hence, while there is no outright ban on Bitcoin in China, it is clearly frowned upon as a tool for getting around capital controls and money regulations.
Hong Kong lists Bitcoins as a virtual commodity. Norman Chan, CEO of Hong Kong Monetary Authority (HKMA) states that Bitcoins will not be regulated by the HKMA, but the usage, trading and development of the trading systems overseas will be watched very carefully. In a clear signal of distance from cryptocurrency, Hong Kong financial authorities have publicly announced that regulation of Bitcoin is not a part of the Hong Kong Monetary Authority’s jurisdiction.
Malaysia follows most Asian countries by claiming that Bitcoin is not recognized as legal tender. Since it is not a legal form of money, the Central Bank does not regulate its operations. In addition, public is cautioned to be wary of the risks involved in trading and spending non-legal tender. Nothing too new here, we notice plenty of users in Malaysia are still using Bitcoin these days.
Over here in Singapore, the Monetary Authority of Singapore (MAS) cautions Bitcoin users of the risks associated with the virtual monetary system as well. The authorities stress that if Bitcoin fails, there will not be any protection or way to refund losses made by incumbents.
However, in a sign that we interpret as positive for the crytocurrency ecosystem, the Inland Revenue Authority of Singapore (IRAS) has issued tax guidelines for Bitcoins. Bitcoin transactions are taxed if used as a payment method for real goods and services. Furthermore, in Singapore, businesses that use Bitcoins will be taxed on their sale of Bitcoins. The move by IRAS is good in setting up for a future where Bitcoins are adopted widely.
Finally, Japan is also in the group of countries that is not regulating Bitcoin transactions. The Liberal Democratic Party officially made this announcement as an interim measure, but the final decision will be made after consideration of further developments in the trend of Bitcoin/cryptocurrency usage. The current stand by Japan is while Bitcoin is not a legal currency, it is taxable.
In conclusion, Bitcoin remains largely a phenomenon at the fringe of mainstream society, albeit gaining popularity and awareness rapidly. The fact that governments are stating their stand on whether they view it as a currency is a positive indicator of the rising levels of adoption across the region. Moreover, as some governments are preparing to tax Bitcoin, it is clear they are bracing for potentially higher levels of usage. We will keep you posted on updates as we learn of developments in regulation across the region. Likely, it will be influenced by BitLicense, a proposal in development by authorities in New York.
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