Cryptoeconomics Asia’s Blockchain Government Policy Indicator (BGPI)
|Australia||Papua New Guinea||Ukraine||Malaysia||South Korea||China||Kyrgyzstan|
Last updated: June 2018
|Japan||A1||Bitcoin is legally recognized as a method of payment under the Virtual Currency Act (2017) in Japan and continues to welcome cryptocurrency related investments in the country despite several high profile hacks on Japanese-based crypto exchanges such as Coincheck and the infamous Mt.Gox hack. Japan is the first nation to fully recognize the status of a cryptocurrency and will be remembered as such.|
|Switzerland||A1||The existence of crypto valley (between Zurich and Zug) where a large concentration of blockchain startups are based on signals that blockchain (and cryptocurrencies) are thriving in Switzerland. A sign of the country’s growing acceptance of crypto is Zug’s acceptance of Bitcoin for payment of taxes and other city fees up to 200 CHF, as well as government enterprises such as Swiss Federal Railways selling Bitcoins on its ticket machines|
|Germany||A2||Bitcoin is considered “private money” in the country and can be used for transactions, with recognition as a unit of account. Bitcoin transactions without the involvement of fiat currency as well as miner fees are considered tax-exempt. However, converting crypto into fiat and vice versa is classified as a “taxable miscellaneous benefit” and both buyer and seller are subject to VAT (with intermediaries facilitating crypto exchange being tax-exempt for such transactions).|
|Norway||A2||The Norwegian Tax Administration regards Bitcoin as an asset and not a currency, with profits subject to a wealth tax. Transactions, where Bitcoin is used as a mode of payment, is subjected to VAT (same treatment as fiat). As of February 2017, VAT is not levied on the purchase or sale of Bitcoin.|
|Australia||A2||A non-interventionist stance is advocated by the Reserve Bank of Australia in 2013 when the Governor stated that “There would be nothing to stop people in this country deciding to transact in some other currency…”. Reaffirmed in 2017 when it confirmed that Bitcoin will be treated “just like money” and eliminated double taxation on crypto. There is increasingly easy access to Bitcoin as for example, bitcoin.com.au has launched a service allowing people to buy Bitcoin from 1,200 physical newsstands.|
|Belarus||A2||Despite its political reputation, the “Digital Economy Development Ordinance” that has come into force has provided for legalization and comprehensive regulations for blockchain based businesses and activities such as ICOs and smart contracts. Currently, the Hi-Tech Park (HTP) special economic zone provides for businesses registered within to enjoy simplified registration procedures and most transactions with crypto tokens will not be taxed, with exemption from VAT until 2023.|
|Cyprus||A2||There is no official regulation with regards to cryptocurrency in Cyprus, and crypto generally operates in a favorable environment in the country with low corporate taxes and double taxation agreements with various countries to prevent such occurrences. The 2012-13 banking crisis in Cyprus allowed for alternatives to traditional banking such as cryptocurrencies to thrive in the country and allows it to be among the forefront of blockchain inclusion. Uniquely, the University of Nicosia allows students to pay in Bitcoin and offers the Master of Science in Digital Currency, the first in the world to offer such a degree.|
|Denmark||A2||Bitcoin is not recognized as a currency and the Financial Supervisory Authority has stated that its use will not be regulated. While crypto activity is currently not taxed, taxation on crypto is possible as the tax board may consider trading Bitcoin to constitute speculation (this decision has not been made yet). While the central bank has labeled Bitcoin “dangerous” as it considers the cryptocurrency a bubble, it plans to digitize the national currency with Blockchain based system: the e-krone.|
|Finland||A2||The Central Bank of Finland has indicated in a policy paper that Bitcoin cannot and does not need to be regulated given that it is run by a protocol rather than a centralized entity. The Finnish Tax Administration has issued specific instructions for the tax treatment for cryptocurrencies; Bitcoin transactions are considered private contracts (and not a currency or security) equivalent to contracts for difference (CFD) with increases in price (of BTC) taxable and losses non-deductible. Mined Bitcoin is considered to be earned income and subject to appropriate income tax. Commission fees by exchanges are considered to be banking services under the EU VAT directive and therefore VAT exempt.|
|Papua New Guinea||B1|
|Thailand||B2||While there was a hostile reaction to Bitcoin by the Bank of Thailand (BOT) initially back in 2013, it now appears to be much more receptive to cryptocurrencies as regulators backed away from invoking the infamous Section 44 (which gives the government absolute power) and moved towards creating a “special law” that addresses cryptocurrency specifically. Regulations have been relaxed and the BOT has been ordered to study the use of Bitcoin for its suitability for use as a method of payment. A draft law would impose a VAT of 7 percent for all trades, in addition to a 15 percent capital gains tax. Thai-based Bitcoin exchanges are required to have an e-commerce license as well as KYC and CDD policies in place. The Thai SEC has expressed its view (regarding ICOs) that such activity has the potential to meet startups’ funding needs; the Thai SEC encourages access to funding for businesses. For now, the rating would be held at B2 pending the formalization of regulations.|
|United Arab Emirates||B3|
|Taiwan||C||While Bitcoin is not illegal in Taiwan, and individuals may freely hold and trade cryptocurrencies with no regulation in that regard, financial institutions are effectively barred from handling cryptocurrencies and Bitcoin ATMs are banned in the country. The Financial Supervisory Commission (FSC) generally has not intervened outside of banks with regards to the use of cryptocurrency; Bitcoins can be purchased from convenience store kiosks. Recent comments from the FSC suggest a friendlier attitude towards crypto, with support for the mainstream adoption of blockchain and ICOs in the country. Regulations may be forthcoming, as it is suggested that Bitcoin is regulated under anti-money laundering (AML) regulations; no concrete policy statements have been made on that regard.|
|India||C||Cryptocurrencies are a legal grey area in India; neither explicitly legal nor illegal, with no regulations in existence with regards to crypto. Bitcoin is not recognized as legal tender in India. There is ambiguity with the tax treatment for BTC proceeds as investors were served tax notices, while there are no official statements on how BTC profits are to be taxed. The government generally maintains a negative view of cryptocurrencies and discourages people from investing, even labeling Bitcoin as fraudulent.|
|Vietnam||D1||While there is no regulation with regards to the possession and trade of Bitcoins, it is illegal to use Bitcoin (and by extension other cryptocurrencies) as a payment tool, with fines of 150 to 200 million VND (USD 6,585 to 8,780) imposed to persons found guilty. However, there are plans by the Vietnamese government to legalize and formally recognize Bitcoin as a method of payment by the end of 2018.|
|People’s Republic of China||D1||There is a longstanding stance of hostility towards cryptocurrencies on the part of the People’s Bank of China (PBOC). There are numerous restrictions on crypto related activity including but not limited to the following: financial institutions are prohibited from handling Bitcoin transactions, Chinese-based Bitcoin exchanges have been closed and/or forced to base abroad, foreign-based crypto exchanges have been blocked from Chinese users and a crackdown on Bitcoin mining is in effect. However, it is important to note that cryptocurrencies in China are not illegal per se, and individuals are permitted to hold and trade cryptocurrencies.
Additional note: While the new PBOC governor Yi Gang is seen to harbor relatively more positive attitudes towards cryptocurrencies than his predecessor, there have been no positive developments with regards to PBOC policy towards cryptocurrency. China’s rating will, therefore, be held at D1.
|Indonesia||D1||It is illegal to make use of Bitcoin and by extension, other cryptocurrencies as a form of payment from 1 January 2018; banks and payment processors are banned from handling crypto transactions. However, there are currently no regulations on trade and mining of Bitcoin and other cryptos; technically leaving them legal. Belligerent rhetoric from Bank Indonesia warns the public “to not buy, sell or trade virtual currency”; this marks the official Indonesian policy towards cryptocurrency as being a hostile one.|
|Algeria||D2||The Algerian government, through the 2018 Finance Bill is seeking the total ban of Bitcoin and other cryptocurrencies. The bill renders any crypto related activity illegal including possession and use of cryptocurrencies. Although it is currently unclear whether or not the bill has been passed, the hostile direction which the Algerian government is taking with regards to cryptocurrency is very clear.|
|Bolivia||D2||Bitcoin, and any other (crypto)currency that is not been issued or controlled by a government or “authorized entity” has been specifically banned since June 2014. Citizens are also banned from denominating prices in an unapproved currency (e.g. Bitcoin). Bitcoin advocates and miners have been arrested and imprisoned in the country, rendering Bolivia an extremely hostile environment for cryptocurrencies/crypto-based companies to operate in.|
|Ecuador||D2||There is an explicit ban on Bitcoin and other cryptocurrencies in Ecuador as a means of payment since July 2014, with possible prosecution and confiscation of crypto assets for users if caught. The Central Bank of Ecuador has however backed away from complete prohibition with the statement that “the purchase and sale of cryptocurrencies like Bitcoin through the Internet is not prohibited”, and enforcement of the ban has been scant with few, if any, prosecutions for using Bitcoin for payment.
The government has attempted to issue a digital currency, the Dinero Electrónico which is pegged one-to-one to the U.S. dollar; the acceptance of this digital currency has been limited with private institutions expressing a lack of confidence in its security/value.
|Kyrgyzstan||D2||The National Bank of the Kyrgyz Republic has confirmed that the use of Bitcoin or any other cryptocurrency as a form of payment is illegal and affirmed that the Kyrgyz Som (KGS) is the sole legal tender in the country.|
|Nepal||D2||Bitcoin has been declared illegal in Nepal until regulations covering the use of cryptocurrency is created and passed into law. There is no definite timeline for crypto regulations to be created and hence the ban is considered to be indefinite until an announcement to the contrary is made; which may take months, if not years. Scores of people have been arrested for the use and trading of Bitcoin, making it one of the very few countries to carry out arrests for crypto activity.|
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