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Our New Reports on Regulation of Cryptocurrency Around the World

The Law Library of Congress often produces foreign, comparative, and international law reports on a wide range of issues. We recently completed two reports on the global cryptocurrency regulatory framework. While one of the reports is a compilation of brief surveys of the legal and policy landscape surrounding cryptocurrencies in 130 countries, the other one provides more detail about the laws applicable to cryptocurrencies in fourteen countries. These reports are follow-ups to our 2014 report on the same subject.

Map showing countries that impose an absolute or implicit ban on cryptocurrency trading. Created by Francisco Macias.

Although similar to the 2014 report, the new reports are significantly more comprehensive, both in the number of countries and range of issues covered. This is mainly attributable to the increase in popularity of cryptocurrencies since our 2014 report was published, prompting regulators in various jurisdictions around the world to take notice and respond.

One of the most common responses by regulators to the increase in popularity and use of cryptocurrencies are efforts to educate the general public about the pitfalls of investing in such markets. Regulators in many jurisdictions have issued notices warning citizens that cryptocurrencies, unlike actual currencies, are not issued or backed by central banks, that they are prone to high volatility, and that the institutions that facilitate cryptocurrency trades remain largely unregulated. Such warnings also often note that the anonymity of the cryptocurrency markets creates opportunities for illegal activities, including money laundering and terrorism.

Some countries have gone beyond just issuing warnings and imposed direct or indirect restrictions on trading in cryprocurrencies. Countries such as AlgeriaBolivia, Morocco, Nepal, Pakistan, and Vietnam ban any and all activities involving cryptocurrencies.  Other countries, including Bangladesh, Iran, Thailand, Lithuania, Lesotho, China, and Colombia, although they do not bar their citizens from engaging in cryptocurrency trading, seek to discourage such behavior indirectly by barring financial institutions within their borders from facilitating transactions involving cryptocurrencies.

One of the issues that the reports covered is taxation. While the question of whether jurisdictions should collect taxes from cryptocurrency transactions is not controversial, the issue of how to categorize different forms of earnings from cryptocurrency related activities for tax purposes appears to be one of the main challenges and an area where there appears to be a great deal of divergence across jurisdictions. For instance, while countries like Denmark, Argentina, and Spain categorize earnings from cryptocurrency trading as income, Bulgaria considers it a financial asset. Switzerland taxes it the same way as it does foreign currency with regard to wealth tax. This matters mainly because each categorization brings with it a different tax bracket.

If you would like to hear more about this issue, join Andrew Weber, Jenny Gesley, Laney Zhang and myself at the 2018 American Association of Law Libraries (AALL) Annual Meeting and Conference on Sunday, July 15 in Baltimore, Maryland. We will be speaking on this very subject.  Our colleagues Issam Saliba and Robert Brammer will also be presenting at the Conference. For more information on the programs that Law Library staff will be presenting at AALL 2018, see Robert’s blog post, Join the Law Library of Congress at the American Association of Law Libraries Annual Conference.

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