From India To El Salvador: How Governments Across The World Embraced Crypto In 2022
India imposed a 30 percent crypto tax, the UK high court said NFT is "private property," and El Salvador raised $1 billion to develop Bitcoin City.
2022 was not so favourable for the crypto industry, as the years witnessed more downs than ups, owing to the massive LUNA meltdown and the spectacular FTX crash. Different governments across the world embraced and interacted with cryptocurrency in different ways. Here, we look at how India and some countries, such as Brazil, The United Kingdom, El Salvador, The Central African Republic, and the United Arab Emirates treated the crypto sector in 2022.
India
Finance Minister Nirmala Sitharaman announced a 30 percent tax on any income from any business and transactions pertaining to crypto in the Union Budget 2022. She said that "any income from the transfer of any virtual digital asset shall be taxed at the rate of 30 percent." This was implemented on April 1, 2022. The move received widespread criticism from crypto enthusiasts. Last year in November, Binance CEO Chenpeng Zhao said that such an exorbitant crypto tax will end up "killing the industry" in India.
Brazil
In 2022, Brazil got its own regulatory framework. Jair Bolsonaro, the country's former president, signed a bill that legalised the use of crypto as an alternative payment method. However, it is not legal tender. The bill defines digital currencies in legal terms. It also sets up a licensing regime needed for the service providers of the virtual asset.
According to media reports, this particular bill was introduced at the right time, as more organisations and individuals have a huge number of cryptocurrencies. In fact, this set a new record. For instance, Brazil's taxation authority revealed that about 12,053 organisations declared details about crypto on their balance sheets in August 2022.
The country went one step further after the Brazilian Stock Exchange announced that they wanted to launch their first official product in their domestic crypto industry and related trade.
United Kingdom
The UK also indicated its interest in working towards crypto regulation in the industry. Britain has been pushing for a national regulatory framework. The country even introduced The Financial Services and Markets Bill in July 2022, which was aimed at attaining the goal of emerging as a global cryptocurrency hub. The bill brought several changes in terms of stablecoin regulation and coining new terms such as Digital Settlement Assets (DSA).
The Financial Services and Market Bill was introduced to ensure the legal authority to the Treasury to regulate DASs. The list of regulations included payments, service providers, and insolvency arrangements.
Another development in the UK's work towards industry regulations was the introduction of The Economic Crime and Corporate Transparency Bill in May 2022. It recommended a set of rules that meant "creating powers to more quickly and easily seize and recover crypto assets." This was expected to mitigate risks for individuals who often found themselves as the target of ransomware attacks.
Web3 community members also welcomed an important ruling by The High Court of Justice in London on Non-Fungible Tokens (NFTs). The court observed that NFT is "private property."
Towards the year-end of 2022, the UK informed its investors that transactions of their "designated crypto assets" were made qualified for the Investment Manager Exemption.
EL Salvador
El Salvador made cryptocurrency a legal tender in 2021 and continued to focus more on the domestic industry through 2022. After talking about plans to issue "Bitcoin bonds," Nayib Bukele's government has been attempting to implement it on a persistent basis. According to media reports, it got delayed many times in March and September last year.
Something interesting happened in November last year when El Salvador's economy minister, Maria Luisa Hayem Brevé, brought a bill regarding the government's plan to raise about $1 billion to invest in the development of a "Bitcoin city." Though its progress remains unknown to date.
Bukele is known for his love for Bitcoins. And it has even resulted in some good business for them as the tourism sector grew by over 30 percent after framing and implementing the Bitcoin law in September 2021, reported the media. According to the National Bureau of Economic Research study, Bitcoin has been accepted by over 20 percent of businesses as a payment method.
El Salvador welcomed a total of 44 central bankers from multiple countries in developing regions across the globe. The purpose of this move was to ensure the financial inclusion of Bitcoin and to participate in a conference that lasted for three days. Central bank delegates from Ghana, Burundi, Jordan, Maldives, Pakistan, Costa Rica, and others attended the summit.
Central African Republic
The Central African Republic, a country of 5 million people, legalised the use of cryptocurrencies in the financial market for the first time in the continent. The bill that made this possible was supported unanimously by lawmakers in the country. It allows traders and businesses to participate in crypto payments. Several provisions regarding the tax payments in crypto through authorised platforms were also included in it.
In July last year, they also launched the local Central Bank Digital Currency (CBDC), Sango Coin, for the purpose of raising about $1 billion. However, just about $1.66 million worth of the coin has been sold.
The government also announced plans to let investors from other countries across the world purchase citizenship by paying $60,000 worth of Sango Coins. This particular initiative has been put on hold by the Central African Republic court, as it observed that the sale of citizenship through crypto investment turns out to be unconstitutional.
United Arab Emirates
The United Arab Emirates promoted a regulatory environment to ensure it became an attractive destination for global crypto investors. In March 2022, UAE set up a regulator for virtual assets and framed crypto laws. The move was taken with an aim to safeguard investors by "designing much warranted international standards" for the country's crypto industry, reported Cointelegraph.
The government empowered the Dubai Virtual Asset Regulatory Authority (VARA) to exercise authority over special development zones and free zones in the Emirates. However, the Dubai International Financial Centre is an exception to these newly formed rules.
Meanwhile, Abu Dhabi also rolled out draft recommendations for Non-fungible Token (NFT) trading. They have put NFTs in the intellectual property category rather than "specified investments of financial instruments." Authorities have said that Multilateral Trading Facilities (MFTs) and Virtual Asset Custodians (VAC) will oversee NFT marketplaces.
Not just that, the Emirate of Dubai, announced the Dubai Metaverse Strategy to achieve the goal of converting the city into one of the top 10 metaverse economies across the globe. The strategy is expected to create over 40,000 virtual jobs by 2030. The plan also includes research and development (R&D) collaborations to increase the economic contributions of the metaverse, using incubators to invite companies and projects from abroad. In addition to all this, the move is expected to ensure assistance for metaverse education for developers, consumers, and content creators.
Besides all these government actions on crypto, the country also inaugurated its first city, Sharjahverse, in the metaverse. According to authorities, the artificial intelligence ecosystem has been described as a photorealistic and physics-accurate metaverse, that is spread over about 1,000 square-mile surface area. The project, supported by the Sharjah Commerce and Tourism Development Authority, is aimed at generating new jobs and enhancing the tourism industry.
Amid all these noteworthy events, the FTX crypto exchange filed for bankruptcy towards the end of 2022. Its former CEO, Sam Bankman-Fried, continues to face the hearing in the US. Currently, he is out on bail after agreeing to be placed under house arrest.
Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Cryptocurrency is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Cryptocurrency market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.
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