7 Government Reactions to the Rise of Cryptocurrencies

The creation of Bitcoin brought cryptocurrencies into the spotlight. The rising popularity of cryptocurrencies cannot be ignored.

Cryptocurrencies support a peer-to-peer mechanism and eliminate the third party for transactions. For example- no bank account or credit card is required for crypto transactions. It just needs a crypto wallet. Cryptocurrencies attracted the attention of the public and solved the problem that came with traditional financial systems and governments of different countries reacted towards it.

Different Countries’ Government Reactions to the Rise of Cryptocurrencies

  1. El Salvador 

El Salvador is the first country in the world to use Bitcoin as a legal tender in 2021. Bitcoin has been accepted as a form of payment for products and services. El Salvador government passes a law regarding cryptocurrency transfers which will attract national and foreign investors.

  1. India

  Cryptocurrencies as a payment medium in India are not regulated by any central authority. There are no rules and regulations laid down for settling disputes while dealing with cryptocurrencies. They are unregulated but according to the union budget government of India announced a 30% tax on gains from cryptocurrencies and a 1% tax deducted at source.

  1. Bolivia

The Bolivian government banned the use of cryptocurrencies in 2014 in the belief that it would facilitate tax evasion and monetary instability. It is illegal to use digital currencies that are not issued by government.

  1. Canada

Canada has approved Bitcoin exchange-traded funds. Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC) have issued guidance requiring crypto-traded platforms and dealers in Canada to register with the provincial regulators. In 2021 Canada adopted a clear regime for trading platforms. The Canada Revenue Authority (CRA) treats cryptocurrency like a commodity for purposes of the Income Tax Act.

  1. China

China’s central bank has announced that all transactions of cryptocurrencies are illegal. Since 2014 China has been developing a digital currency called the e-yuan,e-CNY, digital renminbi or digital RMB. China’s e-yuan is a central bank digital currency (CBDC) issued by the People’s Bank of China (PBOC). It is a legal tender since it is a digitized version of the physical renminbi.

  1. Russia

The Russian government has taken positive steps with regard to cryptocurrencies. The government approved the use of cryptocurrencies for cross-border transactions. The Central Bank of Russia has taken a huge step regarding its crypto legislation as it moves to legalize cryptocurrencies for cross-border transactions, allowing crypto payments for cross-border use also enables its citizens to have access to their digital asset wallets within or outside of Russia.

  1. Ukraine

The Ukrainian government legalized cryptocurrencies in the country. Ukraine has passed a law that creates a legal framework for the cryptocurrency industry in the country. The law allows foreign and Ukrainian cryptocurrency exchanges to operate legally. Ukraine has started to accept cryptocurrencies as donations as Russia continues its invasion.

Countries Government Reactions
El SalvadorLegal tender
IndiaMedium of payment but not regulated by any central authority
BoliviaIllegal
CanadaLegal and government has established rules and regulations to protect investors.
ChinaIllegal
RussiaLegal but prohibits their use as payments for goods and services.
UkraineUkrainian government enacted a law officially making cryptocurrencies legal.

Related: How Cryptocurrencies Promote Financial Inclusion?

Conclusion 

Different countries’ governments have different reactions to the rise of cryptocurrencies. Some are similar while others are different Since the existence of cryptocurrency governments and regulators are still working out how to govern its uses. Many countries are progressing while others are working on it.

Frequently Asked Questions (FAQs)

Which country likes crypto most?

Switzerland is one of the most crypto-friendly countries in the world.

Which country has the highest mining of cryptocurrency?

The United States has the highest mining of cryptocurrencies.

Is crypto legal in China?

All cryptocurrency-related transactions are illegal in China.

What are the countries where cryptocurrencies are banned?

China, Bolivia, Bangladesh, Egypt, Morocco, Nepal, Qatar and many more.

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