Cryptocurrency is a completely new asset class. Most governments in the world are unsure on how to regulate this type of new economy. As with all new inventions, there are always new regulations needed for society to move forward. Here are 5 countries with surprising cryptocurrency laws.
The world’s first crypto island as it was the first country with official crypto laws. On July 4th of 2018, Maltese Parliament established the first regulatory framework for blockchain, cryptocurrency and Distributed Ledger Technology (DLT) space. The 3 bills that they passed will be effective in November of 2018. The three bills are “The Virtual Financial Assets Act” (VFA), “The Malta Digital Innovation Authority Act”, and “Technology Arrangements and Services Bill”.
The Virtual Financial Assets Act will regulate ICOs, and it requires new companies raising capital through ICOs to publish white papers to outline a detailed description for the entire project as well as making their financial history public. The Malta Digital Innovation Authority Act establishes a new regulatory body for the industry which will carry out regulations by a Board of Governors and headed by a private industry CEO. The Technology Arrangements and Services Bill has the process down for registration and certification of technology service providers and technology arrangements. This is to attract entrepreneurs who want to start a crypto business to start it in Malta.
Although the 3 bills are not going to be enforced, it is already paving the way and attracting startups to move to Malta. Binance, a cryptocurrency exchange already announced its intention to set up shop in Malta. OkEx also intends to expand to Malta.
It is attracting crypto startups to move there in order to prepare for Brexit. The regulatory framework prepared by the Gibraltar Financial Services Commission (GFSC) was set to “promote good business, protect the public from financial loss and enhance Gibraltar's reputation as a quality financial centre.”
In order to keep up with a rapidly evolving fintech world, Singapore uses a fintech regulatory sandbox for startups. The Monetary Authority of Singapore encourages startups to try out their ideas in Singapore and abroad. It is surprisingly open-minded with cryptocurrency regulations.
Bermuda recently amended banking acts in order to favour blockchain startups. Its Premiere and Minister of Finance of Bermuda David Burt Introduced new regulations on ICOs. Its requirements for ICOs are very minimal. It also established the Digital Asset Business Act 2018, which protects the rights of cryptocurrency existing and potential clients.
It used to be the richest country in Latin America with the oil money, but its government used the oil boom to borrow heavily from foreign countries. The government then printed out bolivar (local money) to repay debt. This overprinting of bolivar caused hyperinflation in the country. The bolivar was losing value so bad that in order to buy a candy, one might need to bring a bag of bolivar. People started saving sugar instead of money to keep safe their value. Some people were using oil to mine cryptocurrency in order to keep up with living expense. In order to control the situation, the government then controlled the exchange rate to other currency in the bank. Then, there was a startup named Airtm allowing users to trade in their bolivar to dollars in a free market manner, and 216 people ended up being arrested for allowing free trade to happen. However, the socialist government of Venezuela refused to abandon the bolivar and use the dollar instead because it did not want to be colonized by the dollar system. Instead, it launched a new petro cryptocurrency, which is a commodity backed digital currency.
Without regulations, it is hard for investors and entrepreneurs to be involved in cryptocurrency. These new laws in these countries are not perfect yet, but they definitely pave a road forward for the new economy.