Cryptocurrency Regulations: Why It’s Important to You

cryptocurrency regulations

Cryptocurrency Regulations – All You Need to Know

Cryptocurrencies are digital assets designed to work as a medium of exchange, outside of a centralized bank or government. Since cryptocurrencies function outside of traditional governing bodies, there are a different set of cryptocurrency regulations compared to other forms of currency.

There are no global cryptocurrency regulations. Instead, each country or government treats them differently. In some countries, cryptocurrencies are entirely outlawed (however, due to the anonymous and decentralized nature of cryptocurrencies, they cannot be banned entirely).  In others they are perfectly legal but have some stipulations that must be met.

Multiple US Government Bodies are getting involved in Cryptocurrency Regulations

Cryptocurrency, and cryptocurrency exchanges are difficult to define as far as regulatory bodies go. In fact, within the US alone, several federal cryptocurrency regulations agencies claim jurisdiction.

Securities and Exchange Commission (SEC

The Securities and Exchange Commission (SEC) considers most cryptocurrencies securities.  However they acknowledge that currencies such as Bitcoin and Ethereum are technically not securities.  As of March 2018, the SEC released a statement arguing that it would like to apply securities laws to digital wallets and exchanges. As of right now, these cryptocurrency regulations have not been passed. Cryptocurrency (Bitcoin in particular) is taxed as property.

US Justice Department

The United States Justice Department seems to be in agreement with the SEC over the regulation of cryptocurrencies in the future. The focus seems to be on:

  • Ensuring consumer protection,
  • More streamlined regulatory oversight,
  • Combating global and domestic criminal activities using cryptocurrency.

Financial Stability Oversight Council (FSOC)

There is currently a FSOC working group tasked with exploring the increasingly growing cryptocurrency market.

Cryptocurrency Regulations in South Africa

Are cryptocurrencies legal in South Africa? In short, yes. Cryptocurrencies are largely unregulated in South Africa.  However there are certain stipulations that must be met. Cryptocurrencies are not legal tender, however the South African Reserve Bank authorizes the use of cryptocurrencies when it comes to trading and exchanges. That means that crypto users are free to use cryptocurrencies in South Africa, but merchants have the right to refuse payment with crypto as they are not recognized as a legal form of payment. When trading cryptocurrency, taxation laws do apply. All transactions that involve crypto, including income, is subject to tax. It is advised that you consult with your tax attorney.

The South African Reserve Bank (SARB) plans to begin testing various regulations that relate to cryptocurrencies in the very near future. They are planning on working with the private sector to monitor developments, which should lead to harsher regulations sooner rather than later.

Should you worry about future regulations?

Cryptocurrencies are still largely unregulated worldwide, however that is changing. With that being said, there’s no reason to panic. Governments recognize the value that cryptocurrencies can have for us as a society, and regulations are expected follow that sentiment.

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