Should cryptocurrency be legalised
Blockchain technology in general, and cryptocurrencies in particular, are closely followed topics in the financial technology industry amongst the Portuguese government and the relevant regulatory authorities, along with prevailing fintech trends in other jurisdictions. Particularly in recent years, these technologies have been brought to public attention largely due to the increase in the value of Bitcoin, the rise in the number of initial coin offerings ICOs globally, and their market capitalisation. This focus is also driven by some significant developments that the Portuguese market has seen in recent years in this sector, most notably the rise of tech-based companies and the steady increase in the use of cryptocurrencies in the last decade. Blockchain technology is slowly being implemented in a significant number of projects in early stages of development but is yet to have mainstream usage in private or public organisations. Nonetheless, cryptocurrencies are largely seen as an alternative payment method with a contractual nature that results from a private agreement between participants of cryptocurrency transactions, and with intrinsic characteristics that somewhat replicate some of the core traits of traditional money: storage of value; unit of account; and medium of exchange.
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Content:
- Should cryptocurrency be legal tender? 44% of financial institutions say yes
- El Salvador buys first 200 bitcoins ahead of adopting cryptocurrency as legal tender
- Cryptocurrency: Risks to your institution and the regulatory landscape
- In Global First, El Salvador Adopts Bitcoin as Currency
- Bitcoin tumbles nearly 10% as El Salvador adopts it as legal tender
- El Salvador Just Became The First Country To Accept Bitcoin As Legal Tender
- Everything you need to know about cryptocurrencies
- Commentary: Bitcoin is now legal tender in one country. Regrets may soon follow
- Is Bitcoin Legal in India? 5 Commonly Asked Questions
- Paytm may consider Bitcoin offerings if India legalises crypto
Should cryptocurrency be legal tender? 44% of financial institutions say yes
However, a need for selective action and improvements in certain areas of private, financial market and insolvency law was identified. Finally, during its meeting on June 18, , the Swiss Federal Council enacted the remaining provisions of the DLT-Law, which, together with the implementing ordinance, entered into force on August 1, Swiss law does not define the terms cryptocurrency or virtual currency.
FINMA points out that tokens may also fall into more than one of these three basic categories. Such hybrid tokens are, for example, asset tokens or utility tokens, which at the same time also qualify as payment tokens.
Although a number of variations exist, such coins use algorithms or other automated systems to stabilise the price of the token by directly or indirectly influencing the demand and supply of the respective token.
For example, depending on the current price of the respective token, more tokens may be issued or redeemed on the market. In Switzerland, cryptocurrencies do not qualify as legal tender. In particular, the SNB has not issued any cryptocurrencies.
The aim of this Innovation Hub is to gain in-depth knowledge of the relevant technological developments affecting the tasks of central banks. In one of the research projects under this initiative, the integration of digital central bank money into a DLT infrastructure was tested.
Moreover, tax authorities in the Canton of Zug started accepting Bitcoin and Ether for tax payments as of , making it the first Swiss canton in which taxes can be paid with cryptocurrencies. The concept of DLT-Securities aims to ensure the tokenisation of rights by providing the legal framework for an electronic registration of rights that entails the same protection as a traditional security.
The intended purpose of these new ledger-based securities is primarily to allow the issuance and transfer of rights directly on a DLT-based register. In order to validly create DLT-Securities, the involved parties e. The register must satisfy certain statutory technical minimum requirements. The register must, namely, exclusively grant the creditors, but not the debtor, actual power of disposal over the respective rights.
Pursuant to the DLT-Law, the issuer of DLT-Securities is liable for ensuring that the register functions correctly and that the technical and organisational protective measures are adequately implemented and maintained.
The DLT-Law does not specifically define the criteria that the register and respective measures must satisfy. In view of the potential liability of the issuer, it will therefore be of great importance that adequate market standards are developed, i. In Switzerland, cryptocurrency-related activities are not prohibited.
Under Swiss law, securities Effekten are financial instruments that are: i standardised; ii suitable for mass trading; and iii either certificated securities Wertpapiere , uncertificated securities Wertrechte , derivatives or intermediated securities Bucheffekten. Therefore, each token will have to be subject to a specific determination on a case-by-case basis in consideration of the principles outlined by FINMA.
According to FINMA, utility tokens are not treated as securities if their sole purpose is to confer digital access rights to an application or service, and if the utility tokens can already be used in this manner at the point of issue.
This view on payment and utility tokens is supported by the Dispatch. The Crypto Market Index Fund enables qualified investors to participate in this digital asset class. The objective of the Crypto Market Index 10 is to reliably measure the performance of the largest, liquid crypto-assets and tokens and to provide an investable benchmark for this asset class. Licensed DLT-Trading Venues are authorised to provide services in the areas of trading, clearing, settlement and custody of DLT-Securities to both regulated and unregulated financial market participants, including retail investors.
Pursuant to the revised Financial Market Infrastructure Ordinance, which also came into effect on August 1, , complex financial products qualifying as DLT-Securities, such as derivatives, may also be admitted to trading on a DLT-Trading Venue, as long as such products do not provide for a time value or a leverage component.
Under certain conditions, the trading of cryptocurrencies may also be permitted at a DLT-Trading Venue. The DLT trading facilities are essentially modelled on the existing traditional trading facilities and are subject to similar requirements such as stock exchanges and multilateral trading facilities.
SDX will offer its participants a fully regulated, integrated trading, settlement, and custody infrastructure based on DLT. This is the first time that a licence has been granted by FINMA to financial market infrastructures that offer trading of digital securities in the form of tokens and provide the integrated settlement services.
For the purpose of tax assessment, cryptocurrencies must be converted into Swiss francs. According to the understanding of different cantonal tax authorities, cryptocurrencies are considered to be assets, comparable with bank deposits, and are therefore subject to wealth taxes.
If the FTA does not determine a year-end market value, the cryptocurrencies must be declared at the year-end price of the trading platform via which the buying and selling transactions are executed. If no current valuation rate can be determined, the cryptocurrencies must be declared at the original purchase price in Swiss francs cost of acquisition.
Because the rules for declaring cryptocurrencies can vary, the rules must first be checked in the canton of residence. In general, capital gains on assets of individuals such as cryptocurrencies are exempt from income tax.
However, if cryptocurrencies are held as part of the business assets of an individual e. Legal entities are subject to annual capital tax.
Therefore, legal entities have to declare cryptocurrencies in their tax assessment at cost of acquisition or, if this value is lower, converted at the year-end exchange rate provided by the FTA. Therefore, cryptocurrencies with no market value provided by the FTA are to be declared at acquisition costs. Corporations are subject to Swiss corporate income tax on any net taxable earnings from the sale of cryptocurrencies.
Non-realised gains on cryptocurrencies are only subject to Swiss corporate income tax in case of a mark-to-market accounting in the Swiss generally accepted accounting principles accounts of the corporate investor. Under Swiss law, both issuing cryptocurrencies as well as the subsequent trading of such tokens may be subject to anti-money laundering regulations. There are two main groups of financial intermediaries. The AMLA and implementing regulations provide for a series of obligations that financial intermediaries must adhere to, e.
With regard to cryptocurrencies, the following is important concerning anti-money laundering regulations:. However, there are specific rules in place, which aim at generally promoting FinTech developments in Switzerland. In , the Swiss government announced that it plans on reducing barriers to market entry for FinTech businesses.
Under Swiss law, it is undisputed that securities may be legally owned. With regard to tokens that do not qualify as securities, i. Moreover, for crypto-based assets that banks hold as deposit assets for custodian clients, FINMA may, under the DLT-Law, set a maximum amount on a case-by-case basis if this appears necessary due to the risks associated with such business. Specifically, with regard to stablecoins, no general statement is possible whether financial market activities in connection with such coins require any financial market licence.
Depending on their design features, stablecoins must therefore be analysed on a case-by-case basis to determine whether any such licence is required. Design features such as i whether a single underlying or a basket of underlyings is used, ii the type of underlying, as well as iii if the stablecoin in question gives the holder a contractual redemption claim with regard to the underlying s , respectively, the value of the underlying s , or if the token merely fulfils the function of evidencing an ownership position with regard to the underlying s , may be decisive.
For example, according to the FINMA Supplement, in particular issuers of stablecoins that are linked to i fiat currency applying a fixed ratio e. For instance, FINMA may qualify a currency, security or commodity-linked stablecoin that provides each holder with a redemption claim, whose value is derived from the value of a basket containing various currencies, securities, and commodities, as a collective investment scheme, provided that the underlying assets contained in such basket are managed by the issuer for the account and risk of the token holders.
The latter, according to FINMA, mainly means that all opportunities and risks of asset management in the form of profits or losses due to, among other things, interest rates, fluctuations in the value of the underlying assets, and counterparty and operational risks, are borne by the holders of the stablecoin in question.
With regard to licensing requirements, it must further be kept in mind that Switzerland implemented the new FinIA along with FinSA in These new acts set forth a new licensing requirement for individual asset managers and a registration requirement for client advisors. Such registration will be subject to certain requirements such as proof of sufficient education, training and professional experience in the respective area of practice.
Under the former Swiss insolvency regime, it was not sufficiently clear whether cryptocurrencies could be segregated in favour of the entitled creditors if a third-party custodian, such as a wallet provider, were to enter into bankruptcy proceedings.
In view of these uncertainties, the DLT-Law introduced a new segregation regime that allows the segregation of crypto-assets for the benefit of the relevant creditors and investors in the bankruptcy of the custodian, if certain requirements are met, including, in particular, the following:.
Therefore, the custody set-up under which the cryptocurrencies are stored is decisive for the question of whether the cryptocurrencies will be segregated in insolvency. Switzerland has no laws or regulations that are tailor-made to the phenomenon of cryptocurrencies or mining of cryptocurrencies. Hence, mining of cryptocurrencies is permitted and the activity is not subject to particular laws and regulations. In Switzerland, there are no particular border restrictions or declaration requirements that would apply to cryptocurrencies.
In Switzerland, making payments with cryptocurrencies is not a regulated activity and there are no reporting requirements to be met when such payments are made. In Switzerland, there are no particular estate planning or testamentary succession aspects concerning cryptocurrencies.
Under Swiss law, heirs acquire the inheritance as a whole upon death of the testator by operation of law. Therefore, all possessions with an inheritable value are transferred to the heirs by universal succession.
Cryptocurrencies such as Bitcoin are considered to have an inheritable value. Bitcoins that are recorded on a blockchain are attached to the latter. Problems arise when the heir does not possess the necessary means usually the private keys to dispose of the inherited cryptocurrencies. The content of this website is for general information purposes only and does not purport to provide comprehensive full legal or other advice. Global Legal Group Ltd. This material is intended to give an indication of legal issues upon which you may need advice.
Full legal advice should be taken from a qualified professional when dealing with specific situations. Please see our terms and conditions page for further details. Free Newsletter. About Us Contact Us Partners. Toggle navigation. Sign up for free newsletter. Government attitude and definition. Cryptocurrency legislation. Sales regulation. Money transmission laws and anti-money laundering requirements. Promotion and testing. Ownership and licensing requirements. Border restrictions and declaration.
Reporting requirements. Estate planning and testamentary succession. Back to top. Definition Swiss law does not define the terms cryptocurrency or virtual currency.
Utility tokens are tokens that are intended to provide access digitally to an application or service by means of a DLT-based infrastructure. Asset tokens represent assets such as a debt or an equity claim against the issuer. Asset tokens promise, for example, a share in future company earnings or future capital flows.
El Salvador buys first 200 bitcoins ahead of adopting cryptocurrency as legal tender
Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy. While banks and other financial institutions are prohibited from dealing in cryptocurrencies in Nigeria, cryptocurrency has not been termed illegal, but it is unregulated. Engaging in cryptocurrency transactions does not constitute illegal activities, but what the user does with the cryptocurrency in the transaction determines whether it is unlawful or not. No specific regulation in Nigeria has declared cryptocurrency trading illegal or criminalized it.
Cryptocurrency: Risks to your institution and the regulatory landscape
Is cryptocurrency legal in India? And if it is, then how much should you invest in it? These are two questions that many Indians are trying to answer. Bitcoin and other cryptocurrencies have given super-normal returns in the last one year or so even if you take into account the recent percent fall. This is not an easy question to answer, to be honest. But here are few facts. In , RBI came out strongly and kind of banned these in India. This was followed by the Indian banks curtailing transactions with crypto-exchanges as, in their view, they are governed by the RBI and not directly by the Supreme Court
In Global First, El Salvador Adopts Bitcoin as Currency
Joe Hernandez. El Salvador's President Nayib Bukele shown here at a news conference in May spearheaded efforts to make Bitcoin legal tender in his country. El Salvador has become the first country in the world to make the cryptocurrency Bitcoin legal tender. Advocates of the digital currency, including the country's president, Nayib Bukele, say the policy that took effect Tuesday morning was historic. But the first few hours of Bitcoin's official status in El Salvador were marred by technological hiccups as the country opened its digital wallet app to residents and consumers for the first time.
Bitcoin tumbles nearly 10% as El Salvador adopts it as legal tender
Here's What Investors Should Know. Ethereum Just Hit a 6-Month Low. Upgrade Bitcoin Rewards Card: 1. Previously, she was…. House Committee on Financial Services.
El Salvador Just Became The First Country To Accept Bitcoin As Legal Tender
This year, Pakistanis witnessed something they had never seen happen before. One of the country's most viral memes, 'Friendship ended with Mudasir', was auctioned at an online platform for 20 Ethereum tokens. It was something new, something intriguing and social media soon buzzed with friends discussing the memes they had made and wondering whether they could be sold as non-fungible tokens NFTs — a new type of digital asset. It wasn't the first time that cryptocurrency and digital assets were being discussed. There are also numerous groups on social media claiming to teach newcomers everything they need to know about cryptocurrencies and how to mine them. It seems though that the hype and controversy surrounding cryptocurrencies, and to a lesser extent NFTs, is causing Pakistanis to overlook other digital assets and underlying technology that can meet their economic needs. Crypto such as Bitcoin is prone to controversy for real or perceived risks pertaining to money laundering, terrorism financing, excessive price volatility, mega and bizarre heists, attracting fraudsters and extortionists, legal battles with regulators, ideological battles with the state and central banks, excessive energy consumption and e-waste in mining, and so on.
Everything you need to know about cryptocurrencies
At least four more countries are preparing to table legislation to make Bitcoin legal tender, it is believed. El Salvador made history last week as it took a government vote to pass laws that brought Bitcoin into its mainstream financial system. The motion was passed and signed yesterday. The bold step, widely applauded throughout the crypto community, may now give other nations the confidence to adopt Bitcoin as legal tender.
Commentary: Bitcoin is now legal tender in one country. Regrets may soon follow
Bitcoin has been controversial since its beginning in , as have the subsequent cryptocurrencies that followed in its wake. While widely criticised for its volatility, its use in nefarious transactions and for the exorbitant use of electricity to mine it, Bitcoin is being seen by some, particularly in the developing world, as a safe harbour during economic storms. But as more people turn to cryptos as either an investment or a lifeline, these issues have manifested in an array of restrictions on their usage. The legal status of Bitcoin and other altcoins alternative coins to Bitcoin varies substantially from country to country, while in some, the relationship remains to be properly defined or is constantly changing.
Is Bitcoin Legal in India? 5 Commonly Asked Questions
Along with the explosion of interest in cryptocurrency, there is a growing need for clarity regarding the legal implications of these new currencies and the technologies that drive them. Regulatory agencies, tax authorities, and central banks around the world all are working to understand the nature and meaning of digital currencies. Meanwhile, individual investors can make a great deal of money investing in them, but they also assume certain legal risks when they buy and sell cryptocurrencies. Much of the murkiness of the legal standing of cryptocurrency is due to its newness relative to more traditional currency and payment systems. One of the most critical legal considerations for a cryptocurrency investor has to do with the way that government tax authorities view cryptocurrency holdings. In fact, their views are evolving, and cryptocurrency investors need to keep an eye on their latest pronouncements. In the U.
Paytm may consider Bitcoin offerings if India legalises crypto
Sunny Leone took the lead among Indian actors to secure her digital assets when she broke the news about her association with NFT, two months back. This made her the first Indian actress to mint NFTs. Choose your reason below and click on the Report button.
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