Virtual currencies are an uncontrolled and unregulated currency. It does not control or issue the central bank and is controlled only by its creator, used, traded, and accepted among the members of a specific virtually connected community.
Bitcoin, Litecoin, Ethereum, Tether, and X.R.P. are examples of virtual currency. On 2nd July 2020, Tether was the most purchased cryptocurrency, with 21.2 billion U.S. dollars trade volume in 24 hours. These virtual currencies are stored and transacted through specially designed and designated software applications and networks operating in digital forms.
There is a confusion around the concept of virtual currency because many people believe that all the digital currencies are virtual currency. You have to understand the difference, all virtual currencies are digital, but not all digital currencies are virtual.
As already mentioned above, virtual currencies are issued by private users, managed, and controlled by them for the payments or transactions of peer to peer.
Unlike flat currency, virtual currency is represented in terms of tokens or virtual coins protected and secured by software and networks that are at the verge of invasion because there are no regulations to monitor them and are also susceptible to price swings.
Rules And Regulations Of Virtual Currency Around The World
There are two major types of virtual currencies; one is centralized, and the other is decentralized. What is the difference between both? The significant difference is that centralized currency has a central administrator, whereas decentralized does not have a central administrator.
2020 is considered the all-time-high popular for digital currencies. Keep this thing at your fingertips that virtual currency does not have any regulations; it means you must be very cautious with your moves.
The biggest invested market of virtual currency is Bitcoin, as it has been estimated that 79% of virtual currencies holders have bought Bitcoin.
Before making your move, you must know what the regulations are for virtual currencies in these below mentioned ten countries.
1. United States of America (U.S.A.)
In the United States of America, virtual currencies have been the focus of much attention by both State and Federal governments. The federal government primarily focused on it at an administrative level and agency level.
Many agencies and policymakers in the United States have considered the technology and praised it by saying that it will be beneficial and might play a pivotal part in the U.S.'s future infrastructure, enabling the United States to maintain its leading position in the world.
The (C.F.T.C.), Commodity Futures Trading Commission, has regulated and may continue to regulate virtual currencies as commodities.
The boom of virtual currency has hit the Brazilian market, but The Central Bank of Brazil has not yet regulated virtual currencies over traditional currencies. The Brazilian government has issued the standard warning about the use of virtual currencies.
According to Brazilian law, all payment obligations enforceable in Brazil must be determined in Brazilian Real, and the use of any virtual currency for payment method is void. These provisions are referred to as the 'legal course' of the real.
Brazil Tax Authority announced new regulations for cryptocurrency exchanges, which offer services to customers in Brazil, which have affected by September 2019. Also, considering that virtual currencies are not a currency in Brazil, they are generally classified as assets subject to the general regimen created by the Civil Code.
Canada lawmakers and government seem to be taking a lighter approach to regulate and use virtual currencies. Canada has introduced a 'regulate and embrace' policy that allows the cryptocurrencies to run; the primary focus of allowing virtual currencies is anti-money laundering concerns.
Although Virtual currencies holders or user do not have legal tenders, still there is no federal law exist in Canada as against the regulation of financial transactions using virtual currencies.
You can use virtual currencies in Canada to buy products and services on the internet and in stores that deal and accept virtual currencies.
There are also open exchanges that buy and sell virtual currencies. Each province in Canada passes its binding laws and provincial regulations against digital currency service providers.
China has not passed any legal legislation regulating cryptocurrencies as regulators do not recognize cryptocurrencies for any payment purposes, such as retail payments. The Chinese banking system is not providing any acceptance of virtual currencies.
Since 2017, there has been a crackdown against the users and service providers of virtual currencies because virtual currencies cause financial risks. Every financial institution and third-party contractor are banned from accepting virtual currencies.
Although it has been studied and found that China is exploring its own state-sponsored sovereign virtual currency methods, as of the latest research it all the banks have been restricted from doing it.
5. United Arab Emirates (U.A.E.)
The United Arab Emirates has a developing legal system that has rapidly improvised and modernized in the past few years. The legitimate system of the U.A.E. has been influenced by Shariah (Islamic Law). All seven emirates of the U.A.E. Dubai, Abu Dhabi, Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah, and Fujairah) have their legal impetus for virtual currencies but they have not regulated virtual currencies.
On the other hand, no federal law exists. Though, they are working on legal status for token sales that will be governed by the government.
6. The United Kingdom (U.K.)
UK authorities, including the banks, decided not to give any legal framework or support to virtual currency-related businesses and transactions considering the insecure design and possible harm to the UK flat currency. However, FCA (Financial Conduct Authority) recently issued final guidance to all the holders and service providers to clarify the process.
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Virtual currencies are banned in Russia under federal law. Russian lawmakers often term virtual currencies as money surrogates. Russian officials made it clear that virtual currencies are only used to facilitate illegal activities such as bribes.
If one holds the virtual currencies, it does not make any difference, but it can't be traded against any terms of business activities. There was a time when there were plans to regulate virtual currencies, but the idea and process have been laid down later.
Virtual currencies are unregulated in France, although France's Financial Market Authority (AMF) has adopted new rules and regulations for virtual currencies service providers.
As of now, only two ordinances on blockchain technology were taken under single legislation in 2016. France's government and lawmakers are still actively studying the virtual currencies phenomenon and moving towards establishing a regulatory regime.
The people are still reluctant towards the idea of investing in virtual currency. However, the young generation is highly willing to try new technologies and prefer to buy essay editing service UK from online platforms as well, which was considered as a taboo in the past.
As many countries have seen and handled virtual currencies differently, Italy also has a strict and not-to-follow policy for digital currency.
Virtual currencies have not gained legal tender in the Italian Parliament. However, a proposal was presented in the Italian Parliament to grant or acquire legal effects on virtual currencies. Still, it was turned down, and no regulation has been set up till now.
In 2013, as soon as virtual currencies gained public attention, German financial regulatory authority (BaFin) quickly brought virtual currencies within the scheme known as General Financial Services Licensing. Since then, virtual currencies are financial instruments under German law and more precise 'private money' that can be taxed as capital.
German regulators have adopted specific laws for the representation of virtual assets. They have kept an eye on virtual currencies by analyzing its case-to-case studies and its approaches by implementing changes and bringing reforms to bring it under the legality banner.
Global Outlook On Virtual Currency – Bottom Line
After reading the details as mentioned above and facts, it can be understood that virtual currencies have their importance and significance. Still, trading in virtual currencies has been banned in most of the world. These bans have been imposed considering the security threats and unsafe networking of virtual currency holders.
On the contrary, many countries still do not have explicit systems that regulate or ban virtual currencies. Though, many lawmakers, writers, and economists say that it will be a revolutionary step in taking the world to a level forward. Still, digital currencies have remained in a legal gray area of the world.
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