The cryptocurrency market keeps growing and its landscape is constantly evolving pushing into mainstream acceptance and adoption. With thousands of cryptos and new tokens launching all the time with different use cases and technology, it is not always easy to keep up to date with new legislations and regulatory compliance frameworks. Although it might no longer be the “Wild West” as it used to, it remains that the regulatory environment is still adapting at best to newer technologies and the speed of adoption.
Many countries across the globe have taken very different approaches to crypto compliance regulations. Some have an overall friendly one to digital assets providing support and guidance, whereas others have a more prohibitive stance fearing a loss of economic control and power to decentralized models. We are still very far to have a global uniformity when dealing with crypto regulations and the implementation of a global regulatory framework will be complex and challenging and may not turn into reality in the years to come. Having said that, we are witnessing the start of a regulatory evolution in the space with new initiatives leading to new cryptocurrency regulations around the world.
We have put together for you some key takeaways (part 1) to get more clarity on cryptocurrencies and regulations for North America region and Japan which has one of the world’s most progressive and friendly regulatory environments for cryptocurrencies.
THE UNITED STATES
Cryptocurrencies
Legal (Buying, selling and owning) but not considered a legal tender
Cryptocurrency Exchanges
Classified as a Money Services Business (MSB)
Crypto Federal Regulators
Security and Exchange Commission (SEC)
Commodity Futures Trading Commission (CFTC)
Financial Crimes Enforcement Network (FinCEN)
Office of the Comptroller of the Currency (OCC)
Crypto-Currency Act of 2020
Clarity on which federal agencies regulate digital assets
Crypto- Asset Classification
Crypto-currencies, Crypto-commodities and Crypto-securities
Crypto AML/CTF
The Bank Secrecy Act (BSA) and USA Patriot Act
Crypto Tax Regulations
Cryptocurrencies classified as property for IRS US taxpayers
Self-Hosted Wallet Regulations
FinCEN proposed KYC requirements for transactions with Virtual Asset Service Providers (VASPs)
Cryptocurrency Custody
OCC authorizes national banks to provide custody services to crypto assets
CANADA
Cryptocurrencies
Legal but not considered a legal tender
Cryptocurrency Exchanges
Legal, regulation varies by province
Crypto Taxation
Cryptocurrencies classified as a commodity and not a government issued currency
Crypto AML/CTF
Considered “Money Service Businesses” for AML laws
Securities Law
Canadian Securities Administrators (CSA) outlines how securities law requirements may apply to crypto assets, initial coin offerings (ICOs), initial token offerings (ITOs), cryptocurrency investment funds and the cryptocurrency exchanges trading these products.
JAPAN
Cryptocurrencies
Legal, treated as property
Cryptocurrency Exchanges
Legal, must register with the Financial Services Agency
Crypto Regulator
The Financial Services Agency is the main regulator for financial markets and crypto assets
Self-Regulatory Body
Japanese Virtual Currency Exchange Association (JVCEA) promoting regulatory compliance and advisory to unlicensed exchanges
Crypto AML/CTF
Japan’s Act on Prevention of Transfer of Criminal Proceeds (APTCP) is enforced by the financial intelligence unit (FIU) and the Japan Financial Intelligence Center (JAFIC).
VASPs conducting virtual exchange services shall maintain stringent KYC checks and records of suspicious transactions.
The Payment Services Act (PSA)
Crypto Asset regulation
The Financial Instruments and Exchange Act (FIEA)
Main regulation on financial securities, initial coin offerings (ICOs) & securities token offerings (STOs)
Crypto Tax Regulations
Crypto assets taxation classified under ‘miscellaneous income
Crypto Asset Regulations on Mining
No crypto asset regulations governing the activity of mining
UGR Crypto Compliance Experts & Solutions
The fast-changing evolution of crypto assets regulations worldwide requires savvy and experienced regulatory and compliance experts. Here at UGR, we will help you navigate with success crypto regulations, compliance and AML/KYC requirements needed in your growth journey. We have some of the finest industry experts covering multiple jurisdictions and work with the best digital asset compliance solutions in the industry to meet all your requirements.
Contact us today for a free 30 min consultation!