Crypto Exchanges Included In New Thailand AML Law

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From now cryptocurrency will be under AML rules in Thailand

Thailand’s financial regulator is willing to amend local laws in order for those to include cryptocurrency.

Preecha Charoensahayanon, Police Major and secretary-general of the Anti-Money Laundering Office (AMLO), said:

“We believe that, while currently not an issue, cryptocurrency will be a tool of new money laundering. We may not find any clue, but that doesn’t mean the wrongdoing does not occur.”

At this point, AMLO does not receive complaints with respect to money laundering involving cryptocurrencies, but Preecha said that the country must be ready for this, since criminal elements will increasingly use digital assets to conceal their illegal funds. In order to prepare for this, the secretary-general plans to amend local legislation and bring cryptos into the AML regime. The aforesaid process will start with the Anti-Money Laundering Act.

Changes shall be made in accordance with international standards on crypto exchange service providers, hence cryptocurrency exchange platforms will have to report their financial activities to the AMLO. Local representatives explain that such information is very important for tracking of laundered money through the internet.

Worth to note that Thailand is a member of the Financial Action Task Force (FATF) which recently announce guidelines for cryptocurrency and how platforms monitor and report suspicious transactions.

Read our blog to keep abreast of all actual and interesting crypto news.

CySEC proposes bringing crypto asset activities under ambit of AML Law

The Cyprus Securities and Exchange Commission on Tuesday issued a Consultation Paper, proposing the transposition of the provisions of the 5th AML Directive into national law.

Since launching the CySEC Innovation Hub, CySEC has been contacted by a number of entities engaging in crypto-asset activities; a number of which do not appear to fall within the existing regulatory framework. As a consequence, CySEC considers it as urgent to proceed with the transposition of the parts of the AMLD5 concerning crypto asset activities, into national law.

Taking into consideration the FATF recommendations, CySEC also advises on gold-plating AMLD5 in order to bring the following activities under the AML/CFT obligations (which are not included in AMLD5):

  1. a) exchange between crypto assets,
  2. b) transfer of virtual assets, and
  3. c) participation in and provision of financial services related to an issuer’s offer and/or sale of a crypto asset.

Such an extension is necessary and proportionate as it will address the AML risks emanating from crypto assets activities in a more comprehensive manner, it said.

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Crypto-friendly countries

Crypto-friendly jurisdictions

This category can conditionally include all countries where the state bodies have already started active work on determining legal status of cryptocurrency, or have already successfully completed such work.

Australia

Australia tends to become one of the centers for development of innovative blockchain technologies and is a favorable and progressive jurisdiction.
Cryptocurrency in Australia is considered as one of the possible means to make payments. Accordingly, standard rules of taxation (corporate income tax and income tax), net of value added tax (VAT), apply to cryptocurrency transactions.
In August 2020, Australian government introduced a bill to regulate cryptocurrency in the country, but it is still under consideration by lawmakers. Moreover, Tony Richards, the head of the Reserve Bank of Australia (RBA), stated that the Central Bank does not consider a need for normative regulation of cryptocurrencies, since there are no apparent problems in their turnover, and any attempts to resolve were called useless.

Argentina

The authorities of Argentina are also very positive about turnover of cryptocurrency in the country. In accordance with Argentine law, cryptocurrency is not a national currency, but can be treated as money. Digital currency can also be considered a commodity or goods within the meaning of the Civil Code. In terms of taxation, transactions with cryptocurrency are taxed by existing taxes depending on the type of transaction. It is very important to pay attention to the fact that the President Mauricio Macri is one of the main crypto-enthusiasts in the country.

Belarus

On December 22, 2020, Alexander Lukashenko, the President of Belarus, turned Belarus into a progressive “crypto-valley” by signing the Decree on development of digital economy. This document details the issues related to taxation of cryptocurrencies transactions, mining at various scales, rights and abilities of individuals and legal entities in the sphere of circulation of cryptocurrencies and so on. The decree itself must come into force on March 21, 2020.
More details can be found in our article of December 25, 2020.

Bulgaria

State authorities in Bulgaria equate cryptocurrency with “hybrid currency” at the moment, and it must accordingly be taxed in accordance with general principles of taxation in the state, but only if they are used as currency and during exchange transactions into/from fiat money.
On the other hand, on January 22, 2020, Bulgarian law enforcement officers raided the office of Onecoin and a number of other firms that might be associated with it. The basis for such search is suspicion of “creating a cryptocurrency pyramid”. Directors and employees of the company were also interrogated, and many servers and information carriers of the company Onecoin were seized during the search. This fact suggests that, despite the loyalty to digital currencies in general, Bulgarian authorities are actively monitoring cryptocurrency activity in the country and will not allow its use for criminal purposes.

United Kingdom

Currently, cryptocurrencies are not a specific financial product or commodity in the UK, and therefore they are outside the scope of legal regulation. From the point of view of their nature, cryptocurrencies are treated as “private currency”. Transactions with cryptocurrencies are taxed depending on the type of such operation. Her Majesty’s Treasury (Ministry of Finance) of Great Britain also announced plans to bring cryptocurrencies under regulation of the acts on combating money laundering and terrorist financing, and the foregoing will lead to an obligation to disclose personal data of all market participants. Based on the latest news, it is necessary to note that the Central Bank of Great Britain plans to introduce a cryptocurrency to be directly pegged against pound sterling into circulation. Thus, the regulator intends to overcome one of the most significant shortcomings of cryptocurrency, that is, extreme degree of volatility.

Venezuela

Venezuela has been in a deep economic crisis for several years. Uncontrolled inflation, unemployment led to the fact that people are trying to transfer their investments into assets that would be subject to deflation, but not to inflation. In such circumstances, cryptocurrencies have become one of the most common means for population to protect their few savings. It is also interesting to note that President Nicolas Maduro initiated creation of Venezuela’s cryptocurrency “El Petro” (the launch is planned for 2020), creation of the General Directorate for Cryptocurrency and introduction of procedures for state registration of miners in the country.

Germany

From December 2020 until now, the Federal Financial Supervisory Authority (BaFin) considers bitcoin in particular (and some other cryptocurrencies in general) as a payroll unit, which in turn leads to a possibility of applying tax rules for “private money”, that is, as capital. However, so far only transactions between individuals remain legal. More details can be found in our article of September 28.

Gibraltar

The regulator of Gibraltar (Financial Services Commission or GFSC) adopted an unprecedented decision at the end of 2020 that all companies registered in Gibraltar and using blockchain technology in their work must pass mandatory procedure for obtaining a license. Also, new requirements for conducting business by blockchain companies entered into force on January 1, 2020. Now these companies must comply with requirements of the law on consumer protection. Cryptocurrencies transactions for individuals are not limited.

Hong Kong

The Hong Kong Monetary Authority published an official statement back in 2020, according to which Bitcoin was equated to a virtual commodity and, accordingly, other cryptocurrencies have the same status.
It follows that transactions with cryptocurrencies are unrestricted and have no special regulation. The question regarding taxation of cryptocurrencies transactions and mining remains open.
On the other hand, in 2020, after a further variation in Bitcoin’s exchange rate by more than 20 percent, the Hong Kong’s Secretary for Financial Services and the Treasury made an official statement urging citizens to refrain from investing in cryptocurrencies, since the latter are subject to strong volatility and have a vividly expressed speculative character.
As for holding an ICO in Hong Kong, conditions for carrying out this procedure in Hong Kong are less loyal. The regulator equates tokens to securities, and, accordingly, requires strict compliance with all regulatory requirements of securities legislation.

Georgia

In Georgia, there are no specialized normative acts that would regulate cryptocurrencies. However, the authorities are enthusiastic about blockchain technology and are actively trying to introduce related technologies into their work (for example, the country’s geocadastre works on blockchain). Free economic zone (FEZ) can also be attractive for miners, where preferential tax rates for business operate.

Denmark

The Danish Financial Supervision Authority does not consider bitcoin and crypto-currencies as “regular” currencies, which means that it does not fall under regulation of the authority. Transactions with cryptocurrencies are not limited.

Mario Draghi, the Chairman of the European Central Bank, in his comments and press releases repeatedly emphasized the risks of investment / cryptocurrencies transactions for potential cryptoinvestors. Despite this, in December 2020, he also admitted that the cryptocurrency market has already had such a colossal influence that it is impossible to leave it out of sight. His views are shared by other EU representatives (in particular, Ewald Nowotny, Member of the governing council of the European Central Bank, believes that bitcoin transactions should be regulated and taxed).
Moreover, since December 15, 2020, EU authorities have approved the decision on mandatory identification of users of cryptocurrency exchanges. This decision was taken as part of implementation of the policy on combating money laundering and combating financing of terrorism (hereinafter – AML/CFT).

Israel

In early 2020, the Israel Tax Authority issued a statement where equated cryptocurrencies to assets, but not to currencies, securities, etc. Accordingly, cryptocurrency is regarded as an asset for accounting purposes, and is subject to taxes on capital gains and VAT. As of January 2020, state bodies are preparing a bill that would resolve the issues of using cryptocurrency in the country.

India

To date, there are no specialized legislative acts that would regulate cryptocurrencies transactions in the country. At the same time, cryptocurrencies are not recognized as a legal means of payment or a financial instrument in the country. It is interesting to note the fact that the state authorities of India have repeatedly underlined the risks of investing in cryptocurrencies (although they do not prohibit any cryptocurrencies transactions), and the Ministry of Finance of India compares cryptocurrencies with financial pyramids. A few weeks after such statements were announced, several cryptocurrency exchanges in India began to experience some problems with conducting transactions. Delays in carrying out above transactions began to reach two weeks. It should also be noted that as of January 4, 2020, Indian tax authorities started to conduct large-scale inspections of existing exchanges in the country in order to identify possible violations of tax legislation. Moreover, tax authorities began to conduct inquiries regarding activities of wealthy bitcoin-entrepreneurs and enthusiasts. Such policy of the authorities can lead to transfer of India from the first category to the second one, or even to the third one.

Currently, there are no specialized legislative norms in Iran that would determine legal status of cryptocurrency in the country. However, the High Council for Cyberspace (HCC) called for adoption of cryptocurrencies regulation that would be in line with current legislation in Iran and could be available for control by government officials. It should be noted that at the moment, there is very limited number of ecryptocurrencies, which would fall under the above criteria, because it contradicts the very concept of cryptocurrency.
Moreover, the State Central Bank (CBI) is actively working on a whole package of normative documents that would serve as a kind of foundation for regulation of the cryptocurrency market. Completion of this work is planned for March 2020. Today – cryptocurrencies are actively mined, transferred, bought / sold in the country.

Spain

The Parliament of Spain attributed cryptocurrency to electronic means of payment in 2020. Moreover, the Spanish authorities obliged the miners of crypto-currencies to undergo a special registration procedure and pay corresponding taxes in 2020. Also, other draft legislative acts were introduced to the parliament, which were supposed to impose additional taxes on cryptocurrencies, however, they were not adopted. Cryptocurrencies transactions are exempt from VAT.

Canada

As early as in 2020, Canada began to actively explore the features of innovative blockchain technology. At the same time, the Central Bank of Canada began developing own cryptocurrency called CADcoin.
In turn, other government agencies are still conducting market research for cryptocurrency for its better understanding. Normative regulation will be carried out in full when the scale and popularity of cryptocurrency will require it.
At present, cryptocurrencies can be taxed at once with several taxes (depending on the type of transaction), namely:
a) if there is a payment for goods or services – then such a transaction will be taxed as barter;
b) when selling cryptocurrency (in case of occurrence of a tax base), it is subject to income tax / profit tax (for business entities) or a capital gains tax.
It should be remembered that general AML / CFT requirements and KYC (know your customer) policy rules are applied in carrying out any transactions.

Kenya

The Central Bank of Kenya has repeatedly stated its somewhat cautious attitude to the market of cryptocurrency, even from time to time it compared them with financial pyramids. However, from the point of view of normative regulation, cryptocurrency transactions are not prohibited and not prosecuted, and other representatives of the Kenyan authorities on the contrary declare that they do not intend to limit turnover of digital currencies, since they want to be “open to innovation”.

Luxembourg

In April 2020, the Commission for the Supervision of the Financial Sector issued a statement in which it equated cryptocurrencies to ordinary currencies. Accordingly, the authorities provide an opportunity for both individuals and legal entities to use cryptocurrencies for mutual settlements or other transactions. As for the work of cryptocurrency exchangers or stock exchanges, the latter should receive special permits from government agencies to provide financial services.

Mexico

In 2020, the Central Bank of Mexico in conjunction with the Commission for the Protection of Users of Financial Services (CONDUSEFF) published a press release, through which they called cryptocurrencies highly speculative instruments and warned about dangers of investing in them. On the other hand, the Central Bank equated cryptocurrencies to commodities. In practice, legal status of cryptocurrency in Mexico is equated to status of the national currency (since the same restrictions apply to cryptocurrency, as well as to cash). As of today, the authorities are developing a regulatory basis, which would finally determine official status of cryptocurrency in the region.

New Zealand

Status of cryptocurrencies was initially equated to status of virtual goods in New Zealand. However, in October 2020, the regulator of New Zealand (the Financial Markets Authority or the FMA) issued an official press release on legal regulation of cryptocurrencies.
Now, legal status of cryptocurrencies transactions is identical to status of securities transactions. Moreover, unlike the regulator of other countries, for example the USA, , cryptocurrencies are subject to regulation of securities legislation in any case in New Zealand.
More information on the legislative novels of the authorities of New Zealand can be found in the article of November 24, 2020 on our website.

Norway

There is no detailed legal regulation. Position of the Norwegian regulator is quite interesting. It considers cryptocurrencies as a “financial asset”. And in accordance with Norwegian law – financial assets are subject to property tax. In order to conduct business, transactions with bitcoin fall under the sales tax. In February 2020, the Norwegian government also stated that it would not impose VAT on operations related to cryptocurrencies, which is in line with the practice established in the EU.

Isle Of Man

The country has limited legal regulation. There is a specialized definition of “digital currencies” (under which cryptocurrencies also fall). Transactions with cryptocurrencies are limited only for the purpose of fulfilling AML / CFT requirements (were adopted in March 2020).
ICO projects are also required to comply with AML / CFT requirements, register with the Financial Supervisory Commission (no license is required), and comply with the requirements for protection of personal data of customers. The same rules apply to the activity of cryptocurrency exchanges.

Poland

In Poland, there is no detailed legal regulation of the cryptocurrency market. Back in 2020, the Polish Ministry of Finance made a statement that cryptocurrency is not illegal, however, it is not a monetary instrument either. There is also no legislative definition of cryptocurrency. On the other hand, mining and buying-selling of bitcoins are officially recognized as one of the possible types of companies’ activities. It is worth mentioning that such activities should be additionally registered in specialized state bodies.

In the United States, there is a limited legal regulation of the cryptocurrency market. As early as 2020, the US Internal Revenue Service determined that for the purposes of federal taxation Bitcoin and crypto-currencies were considered as property with application of relevant taxation rules (property tax). These rules were easily circumvented by users using the procedure of “exchange of similar assets,” so that cryptocurrency transactions were not subject to taxation.
But, from January 1, 2020, revolutionary changes in the US tax legislation come into force, according to which the rule of “exchange of similar assets” now applies only to real estate, thereby closing this “loophole”. Now all transactions with cryptocurrencies will be subject to personal income tax or capital gains tax (depending on variables).
In turn, the US Securities and Exchange Commission (SEC) considers cryptocurrency “as a digital embodiment of value that is distributed digitally and can be used as a means of accounting, exchange, or accumulation.”
Entities must adhere to AML / CFT and KYC rules in some activities, for example, on sale/exchange of cryptocurrencies. Holding an ICO in the country may be subject to regulation of securities legislation under certain conditions. As a consequence, many initiators write that US citizens can not take part in the procedure of buying and selling coins during ICO.

Saudi Arabia

According to the authorities of the country, the regulator does not plan to limit conducting cryptocurrency transactions in the country in any way, since the market is too small to influence economy of the country.

Senegal

The authorities of Senegal decided to adopt positive experience of Tunisia and created a digital version of their national currency – the franc. After that, ecosystem of the Senegalese franc was transferred to blockchain. Maintenance of this cryptocurrency is carried out with the help of the Central Bank of the country and the company eCurrency Mint.

Singapore

In Singapore, there is an official definition of cryptocurrency as a financial asset (one particular type of digital token that normally functions as a means of exchange, a unit of account, or a means of accumulation). Transactions with cryptocurrencies are subject to VAT. Ravi Menon, the head of the Monetary Authority of Singapore, said that the authorities do not intend to implement additional regulation of the cryptocurrency market in October 2020 . However, any attempt to evade AML / CFT rules with the help of cryptocurrency will be stopped.
As for holding an ICO, they must undergo registration of tokens in the MAS (Monetary Authority of Singapore), obtain permission from the MAS and fulfill a number of additional requirements in a number of cases.
Existing cryptocurrency exchanges must receive a license from the MAS.

Slovakia

As early as 2020, the National Bank of Slovakia stated that bitcoin does not have the necessary attributes of currency, and therefore will not be regulated by the state. Cryptocurrencies transactions in the country are not prohibited or restricted in any way. Accordingly, there is limited legislative regulation in the country.

Slovenia

On December 23, 2020, the Ministry of Finance officially announced that digital currencies, such as Bitcoin, are not recognized by the authorities as a currency or as a financial asset. Taxes are levied only on transactions related to mining and exchange of cryptocurrency funds.

Taiwan

There is no legal regulation of turnover of cryptocurrency at the moment, however, the authorities of Taiwan are actively working on development of the necessary regulatory framework. While these acts are in elaboration, turnover of cryptocurrency is not restricted in the state. There is only one ban on installation of specialized bitcoin-ATMs.
Holding an ICO in Taiwan is also possible. Moreover, in October 2020, the authorities of Taiwan assured that they did not intend to ban holding an ICO.

Tunisia

Tunisia is a real “crypto pioneer”. In 2020, Tunisia became the first country to make a decision to transfer state electronic currency eDinar to blockchain.

Turkey

Turkey is also very positive about the issue of regulating turnover of cryptocurrency in the state. Despite the fact that there is no detailed legislative regulation of cryptocurrency in the country, according to the President of the Central Bank of Turkey, a specialized research group has been established to monitor the cryptocurrency market and develop an appropriate basis for legal regulation of this issue. Currently, cryptocurrency transactions are not restricted in any way. Moreover, national exchanges working with crypto-currencies have been functioning in Turkey for several years.

Philippines

In early 2020, the Central Bank of the Philippines began to actively regulate the cryptocurrency market (despite previous statements about the risks and dangers of investing in cryptocurrencies). Cryptocurrency exchanges were equated to companies that perform money transfers, which in turn makes it compulsory for them to obtain an appropriate license. Also, exchanges must form specialized annual reporting.
In early December, 2020, the Central Bank also announced that work is underway to create a regulatory and legal framework for regulation of ICO. Let us also note the fact that there are still unconfirmed rumors about possible equating of cryptocurrencies to securities.

Finland

Status of cryptocurrency is determined in Finland. Similar currencies are considered in the country as a means of payment / financial instrument. Accordingly, cryptocurrency is not subject to VAT.
More detailed information concerning taxation of transactions with cryptocurrencies are described in the specialized instruction, issued by the Tax Administration of Finland. It states that two taxes are levied on cryptocurrencies transactions: capital gains tax and “wealth” tax. As for mining, this activity is subject to taxation.

France

At the moment, legal status of cryptocurrency in France is not determined, and it is very strange, since as early as July 2020 an official press release was issued stating that the French authorities are aware of the significance and prospects of the market of cryptocurrencies, opportunities and advantages from cryptocurrency transactions. It was also stated that projects of normative documents will soon be presented, aimed at settling the issues of taxation of cryptocurrency and cryptocurrency transactions in general. Up to this day – this never happened.
Given the fact that Emmanuelle Macron, current President of France, is positive about cryptocurrencies, then changes are possible for the better.

Switzerland

As early as 2020, the Swiss regulator FINMA (Financial Market Supervisory Authority) proposed to equate legal status of cryptocurrency in the country to foreign currencies. Due to this, transactions with cryptocurrencies are not subject to VAT, which is in line with the existing practice in the EU.
Individuals can carry out transactions without restrictions. However, a license is required for implementation of some commercial activities (for example, for purchase / sale of cryptocurrencies at specialized trade portals). Moreover, when carrying out cryptocurrencies transactions, it is necessary to comply with the requirements of AML / CFT in the state.
In July 2020, the Swiss Federal Council in its official press release announced creation of a “normative sandbox” aimed at creating an enabling environment for start-ups in the field of financial technologies.
As for legal regulation of ICO in this jurisdiction, we recommend you to read our article of October 4, 2020.

Sweden

Specialized body of the Swedish financial control (Finansinspektionen) legalized cryptocurrencies in Sweden as one of the possible means of payment.
For some companies (which interact with traditional currency), requirements have been introduced regarding licensing and implementation of AML/CFT requirements (including customer identification procedures).
Transactions using cryptocurrency in Sweden are not subject to VAT.
Of the latest news, it should be noted that in January 2020, the Central Bank of Sweden announced that it was considering a proposal to introduce own cryptocurrency – the digital krone.

South Africa

In South Africa, the South African Reserve Bank (SARB) regulates the cryptocurrency market. To study this dynamic market and form an official position, a special commission was created. However, it has not yet made any statements.
Despite the foregoing, the SARB announced beginning of cooperation with the blockchain start-up Bankymoon in July 2020. At the moment, transactions with cryptocurrencies are not restricted in any way.

South Korea

South Korea is very actively developing rules for legalization of cryptocurrencies at the moment. In particular, there are proposals to amend current Electronic Financial Transaction Act to create the basis for implementation of cryptocurrency transactions. The first result of this work was introduction of a new requirement for mandatory identification of cryptocurrency traders. This decision was made to strengthen combating money laundering and financing of terrorism;
As for holding an ICO in South Korea, we should expect further tightening of legal regulation. In particular, analysts expect creation of grounds for bringing to account the organizers of campaigns that raise funds through issuing securities using digital currencies.
Moreover, changes in tax legislation are being actively elaborated with a view to possible taxation of cryptocurrencies with income tax, VAT, gift tax and capital tax.
Of recent news, it is necessary to note the fact that the Korean Communications Commission (KCC) and the Ministry of Science and Information and Communication Technologies announced joint inspections of companies and exchanges that conduct cryptocurrencies transactions.

Japan

Legal regulation of cryptocurrency in Japan began with the fact that a number of legislative acts were adopted in January 2020 that were aimed at protecting participants of the cryptocurrency market from possible bankruptcies of cryptocurrency exchanges. The reason for this very beginning of regulation was the bankruptcy of one of the first and most famous exchanges of Mt Gox in the distant 2020 and those negative and long-lasting consequences for many players. At the same time, requirements regarding AML/CFT and KYC, which are applied to organizations carrying out transactions with cryptocurrencies, were legalized at the legislative level.
In April 2020, some cryptocurrencies (namely: bitcoin and ethereum) were recognized as possible means of payment. This step led to increased demand for cryptocurrency from investors and start of use of bitcoins as one of the payment methods in retail stores.
Cryptocurrency is generally recognized not as a monetary asset, but as a transferable value or property. It is important to remember that the concept of cryptocurrency is delineated with the concept of electronic money. In terms of taxation, cryptocurrencies transactions are not subject to VAT.

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