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By Jade Doherty | May 09, 2023 - London<h3 id="em-while-blockchain-and-cryptocurrencies-may-transcend-borders-the-regulatory-framework-varies-hugely-from-country-to-country-and-what-is-permitted-in-one-jurisdiction-may-be-prohibited-in-another-em">While blockchain and cryptocurrencies may transcend borders, the regulatory framework varies hugely from country to country and what is permitted in one jurisdiction may be prohibited in another.</h3>Dusk Network is dedicated to enabling secure, compliant, and scalable decentralized finance and facilitating the tokenization of securities and other financial instruments. While our focus has largely been on Europe due to its significance for our target audience and the impact of the upcoming MiCA regulations on the blockchain industry in the region, we are actively monitoring and staying up to date with evolving global regulations dealing with blockchain. Ryan King, Head of Business Development, wrote extensively about MiCA in this 5-part series (<a href="https://dusk.network/news/who-cares-about-eu-crypto-regulations-and-why-should-i" rel="noopener noreferrer nofollow">click here for part one</a>) if you would like a deep-dive into what’s going on in the EU.Though the US typically dominates the news, different countries have different needs and situations and as such are responding to cryptocurrencies and blockchain in different ways, with some making steps towards adopting the technology, others creating business-friendly environments with taxes, and others being HODLers themselves.In this post, we will explore the diverse approaches countries are taking to regulate and engage with blockchain technology, highlighting some key challenges and opportunities this presents for the global community.El SalvadorEl Salvador, quite possibly the most overtly pro-crypto country, has demonstrated a strong openness toward Bitcoin. President Nayib Bukele goes as far as regularly tweeting about it and even playing along with <a href="https://nypost.com/2022/01/24/el-salvador-president-posts-meme-wearing-mcdonalds-uniform/" rel="noopener noreferrer nofollow">crypto Twitter culture</a>.In a groundbreaking move, El Salvador recognized $BTC as legal tender in September 2021, becoming the first country to do so. This means that Bitcoin can be used to pay for goods and services as well as to settle debts. According to <a href="https://www.pwc.com/gx/en/financial-services/pdf/el-salvadors-law-a-meaningful-test-for-bitcoin.pdf" rel="noopener noreferrer nofollow">this report</a> by PwC, the three main reasons for doing so are to increase the efficiency of remittances, reduce the number of unbanked people, and reduce the reliance on the US Dollar.It is important to consider the unique motivations and needs of countries outside the West when examining the impact of cryptocurrencies.t. People all over the world rely on remittances but the process for sending remittances back home can be slow, expensive, and time-consuming. The <a href="https://www.worldometers.info/gdp/gdp-by-country/" rel="noopener noreferrer nofollow">value of remittances globally</a> reached $796 billion in 2022, more than the GDP of Turkey, Saudi Arabia, and Switzerland, and if “Global Remittances” was a country it would have the 17th biggest GDP just after Indonesia.AustraliaAustralia has adopted a proactive approach to cryptocurrency and blockchain technology, with regulatory frameworks and innovation from both the public and private sectors, where severely regulated institutions like banks have been venturing into stablecoin experimentation.In Australia, cryptocurrencies are <a href="https://cointelegraph.com/learn/an-overview-of-the-cryptocurrency-regulations-in-australia#:~:text&#61;Bitcoin%20%28BTC%29%20and%20other%20cryptocurrencies,not%20obliged%20to%20accept%20it." rel="noopener noreferrer nofollow">treated like property</a>, meaning that they are subject to capital gain taxation, and can be used for transactions while being legally traded, stored, and even included in training for KYC and CTF procedures. Unlike El Salvador which has classified $BTC as legal tender, Australia views cryptocurrencies as investments.In a significant development, the National Australian Bank partnered with renowned crypto company Fireblocks to launch AUDN, a stablecoin on the Ethereum and Algorand networks, which was <a href="https://news.nab.com.au/news/nab-completes-world-first-with-cross-border-stablecoin-transaction/" rel="noopener noreferrer nofollow">recently used for cross-border transactions</a>.Australia seems to be taking great steps by not over-regulating the industry, and even having an environment where national banks feel they can get involved.PortugalPortugal is known for its crypto-friendly tax laws, which have contributed to the growth of FinTech companies and investment in the country. As part of the European Union, Portugal is not only covered by the MiCA regulations, but has also been adopting blockchain technology, <a href="https://cointelegraph.com/news/5-countries-leading-the-blockchain-adoption" rel="noopener noreferrer nofollow">using blockchain</a> in the public services, healthcare, and supply chain industries. The Government is at work to put together a <a href="https://portugaldigital.gov.pt/en/accelerating-digital-transition-in-portugal/get-to-know-the-digital-transition-strategies/national-blockchain-strategy/" rel="noopener noreferrer nofollow">blockchain strategy</a>, recognizing the value and potential of the technology.IndiaHome to the world&#39;s largest population, India has been cautious in its approach to cryptocurrency regulations, with the government observing international developments before committing to a clear framework. The Minister of State Finance <a href="https://www.forbes.com/advisor/in/investing/cryptocurrency/crypto-bill/" rel="noopener noreferrer nofollow">declared</a> “Crypto assets are by definition borderless and require international collaboration to prevent regulatory arbitrage. Therefore, any legislation on the subject can be effective only with significant international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards”As it currently stands there are no concrete rules on cryptocurrency in India, with the space currently being unregulated (but crypto profits are taxed at 30%). India recently overtook China as having the biggest population in the world and has already embraced electronic payments for goods, so it might be just a matter of time until India begins to regulate and enter the crypto and blockchain space.ChinaWhile Bitcoin is classified as a virtual commodity in China, its use as legal tender is prohibited, and there are restrictions on cryptocurrency-related activities.China has had an interesting journey with cryptocurrencies and blockchain and was initially very enthusiastic. However, the Initial Coin Offerings (ICOs) mania led to a blanket ban, and Binance - which was started in China - was also forced to leave.While Bitcoin is classified as a <a href="https://freemanlaw.com/cryptocurrency/china/" rel="noopener noreferrer nofollow">virtual commodity</a> in China, its use as legal tender is prohibited, and there are restrictions on cryptocurrency-related activities. In 2021 China “<a href="https://worldcoin.org/articles/china-crypto-ban" rel="noopener noreferrer nofollow">banned Bitcoin</a>” and prohibited mining, although it’s worth noting that China has been banning Bitcoin since 2013. Currently, the buying of Bitcoin is banned, but holding cryptocurrencies isn’t.However….Hong Kong looks to be <a href="https://techcrunch.com/2023/02/20/hong-kong-crypto-regulation/?guccounter&#61;1&amp;guce_referrer&#61;aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&amp;guce_referrer_sig&#61;AQAAAJq02NiY4PYclrr9OBI11gr6y5h2NdCqq2QqVFvVsgISQ1F35MSOyVUqQkx-Y6gisAalASxJG-ZkGFSBWS5mWFcCHaVsAxqgLyjfWocd7HYeXKpvIPAytyqjMSOZ4gnBwZseL-8ufhIdYeIiIoWFunwGdA99yHCH5uj8jjLb6Ox7" rel="noopener noreferrer nofollow">opening up to crypto</a> and working on crypto-friendly regulation so we could see Hong Kong become a thriving hub for crypto and potentially benefit from China’s talent.The UAEThe UAE, especially Dubai, is emerging as a hub for business, innovation, and cryptocurrency activities, attracting influencers and traders from around the world (those low/no tax rates work!).With regard to blockchain and cryptocurrency regulation, the UAE’s approach seems to focus on facilitating the trading and ownership of digital assets, as well as fostering innovation <a href="https://freemanlaw.com/cryptocurrency/united-arab-emirates/" rel="noopener noreferrer nofollow">in the blockchain space</a>. Institutions in the UAE (as well in collaboration with Saudi Arabia) are embracing cryptocurrencies, with many new departments being set up as well as pre-existing ones including cryptocurrencies within their remit.Other Notable LegislationsEarlier this year Indonesia <a href="https://www.coindesk.com/policy/2023/01/25/indonesia-regulatory-switch-could-see-crypto-classed-as-securities-not-commodities/" rel="noopener noreferrer nofollow">updated its laws</a> to be more up-to-date with the current context and shows a deeper understanding of the tech and its potential than just trading.Singapore has long had a reputation for being crypto-friendly (and business-friendly too) with the <a href="https://www.coindesk.com/policy/2023/04/06/singapore-working-with-banks-to-provide-guidance-on-crypto-businesses-bloomberg/" rel="noopener noreferrer nofollow">authorities working with banks</a> to provide clarity on crypto moving forward.Malta is another country that has a reputation for being crypto-friendly and is implementing <a href="https://www.pwc.com/mt/en/publications/technology/pwc-malta-blockchain-alert.html" rel="noopener noreferrer nofollow">three new laws</a> to help regulate and develop blockchain technology; The Malta Digital Innovation Authority Bill, The Technology Arrangements and Services Bill, and the Virtual Financial Assets Bill. These could see Malta really lead the way, however as a member of the EU Malta will fall under the MiCA regulations too.What does this mean?The diverse approaches we analyzed to cryptocurrency and blockchain regulation offer valuable insights into the future of mass adoption and institutional involvement in this rapidly evolving sector and there’s a lot to be excited about. In many ways, mass adoption relies on institutional adoption, and institutions can’t get too involved in crypto until they have a clear regulatory framework.Across the world, we see different approaches to this new technology and the opportunities it brings, with some countries making it easier to do business and trade, while others are looking to develop the underlying technology in addition to trading.There is also a difference between countries that are “crypto-friendly” due to not yet having clear regulations and countries that are actively crypto-friendly and have created regulations.It’s noteworthy that countries like India appear to be hanging back. A country like India could be primed for mass adoption of blockchain (amazing engineers, the tech hub of Bangalore, a lot of QR code payment apps for digital payments, and a lot of unbanked people/limited access to banking) but it seems to be hanging back to see what other countries do and how that works out.As MiCA takes effect and other countries develop their own regulations, it will be fascinating to observe how the global landscape of cryptocurrency and blockchain technology evolves, with some countries potentially benefiting from international stablecoin trading and near-instant settlements, while others may lag behind.It is certainly an exciting time for blockchain and crypto, and we’re thrilled that the EU has laid out a clear plan and are happy to be involved in the process of making blockchain normal and usable.

Regulations Around the World

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