Bitcoin’s recent strides are making governments around the world wary about cryptocurrency activity. Bitcoin prices almost reached $20,000 at the end of 2017, but its prices immediately declined at the beginning of the year. In addition, Bitcoin’s unregulated nature is making cryptocurrency exchanges grounds for illegal activity. In order to protect the interests of investors, as well as put an end to individuals who take advantage of digital funds for the wrong reasons, some governments around the world are now seriously considering regulating cryptocurrencies.
The U.S. is one of the latest countries to consider regulating Bitcoin. This February, the U.S. Senate Banking Committee held hearings to measure the scale of Bitcoin operations in the country, and propose possible regulations for Bitcoin exchanges.
The move to regulate Bitcoin follows a report by the IRS in 2016 about three anonymous tax evaders. In the documentation filed by the IRS, two of the three anonymous tax evaders used the Bitcoin exchange Coinbase to wrongly declare their tax dues. The companies were able to hide Bitcoin transactions as “technology expenses” on their returns, allowing them to circumvent the law on paying tax dues when an investment appreciates.
The UK government is looking to write laws for regulating Bitcoin amid concerns of criminals laundering money and avoiding taxes. Business Insider claims that a spokesperson from the Treasury said that the government is “working to address concerns about the use of cryptocurrencies, by negotiating to bring virtual currency exchange platforms and some wallet providers within anti money laundering and counter terrorist financing regulation.”
Cryptocurrency-related crimes in the UK went up in 2017. The government believes that the numbers may rise if cryptocurrency transactions continue without regulation. The UK hopes to regulate all cryptocurrency trade under an EU-wide plan where all exchanges that offer cryptocurrency trades will be made to carry out due diligence on buyers.
President Frank-Walter Steinmeier asserted the importance of preventing harmful market activities in his speech for DekaBank’s 100th anniversary. Coinwire states that the German President wants markets to stay grounded in the real economy and protect private investors. In order to do that, Steinmeier believes that Bitcoin, along with other cryptocurrencies, must be regulated.
Germany’s president said that the country’s financial sector must prevent new speculation fads and bubbles from happening in order to protect the assets of investors. Despite Bitcoin’s popularity and demand, Steinmeier remains a skeptic and sees the cryptocurrency market as “betting games” instead of legitimate investments.
Last year, the South Korean government announced its desire to regulate Bitcoin in an effort to curb speculation. Today, the country is considering an approval system for regulating cryptocurrencies based on the Bitlicense model, which was developed by the New York State Department. New York allows exchanges to trade cryptocurrencies only when they obtain a charter, which involves restrictive controls and capital requirements needed for operating businesses within the state.
South Korea believes that using the model created by New York’s state department will allow the country to bring cryptocurrencies into the institution, as well as monitor the market in an organized manner.
The French Finance Minister Bruno Le Maire called for new regulations of cryptocurrencies to prevent individuals from dodging tax dues and initiating financial terrorism. In a statement to the media, the Finance Minister tasked a former central bank head to draft regulations that would warn private investors from the risks of speculations and pricing manipulations.
At this point, Le Maire’s office did not provide more details as to what the rules would contain. However, he mentioned that the French president’s government will “not cede anything” as it pushes internet giants to cease using tax havens, and warns neighboring countries to be more aggressive in cracking down illegal activities in order to be on par with other countries who are seriously talking about regulating cryptocurrencies.