• Sanjeev Kumar & Kshitija Kaur

To C or Not To C: G20's Regulatory Stance on Crypto

The idea of decentralized currency has grasped everyone’s curiosity ever since its inception. A groundbreaker in the making, these digital currencies have started to shift the gears of how transactions, asset-classes, and investments are viewed through a never-done-before lens. Albeit there are a sea of possibilities to set sail on, the underlying apprehensions around anonymous transactions and the prospect of such a transformation falling into the wrong hands are equally brewing in the background.


Bitcoin's illicit ties with transactions on the dark web and facilitating payoffs for ransomware attacks, mixed with the concerns about cryptocurrencies affecting the monetary sovereignty of governments, have elicited polarized responses from authorities across the globe. This comes with its fair share of governments imposing certain regulations and laws in order to maintain a fundamental long-term result for the industry as a whole. The foundation of the current regulatory stance for crypto rides on four pillars:

1. Central Bank Digital Currencies (CBDCs), a digital form of a country’s official currency.

2. Transactional Use of Crypto, that signifies the everyday use-cases of crypto for transactions.

3. Asset Exchanges, where crypto is traded and held for investments and speculation purposes.

4. Initial Coin Offerings (ICOs), where funds are raised from the public by giving access to tokens of the firm, also called Utility Tokens.



From the broad attitudes of support, opposition, and work-in-progress, we look at the G20 members’ regulatory stance on various use-cases of crypto to do a dip-check on its acceptance and adoption across the globe in painting the picture for the evolution of these digital propositions:


  • All Those In Favour: Amongst those that have been fairly receptive to the window of opportunities that crypto has to present, Europe takes the lead – with nations under the European Union (EU), such as France and Germany, having legalized cryptocurrency for payments and pushing further for coordinated regulations on both national and international levels. Digital currency exchanges, on the other hand, still rely on the regulations of each independent state. While the profits from the sale of crypto in France are still taxable, Germany has no such taxes for using crypto as a source of transactions. Both the countries are currently working on establishing their respective CBDCs. Other regions that showcase a positive attitude and are on their way of improving their regulations around digital currencies include Australia, with a proactive stance that views crypto as legal property, and a free space for exchanges to operate. As of 2019, the Australian Securities and Investments Commission (ASIC) has framed regulations pertaining to ICOs, with only the transactional usage of digital currencies prohibited so far in the country.

  • All Those Against: China’s classification of cryptocurrencies as property for the purpose of determining inheritance rather than as a legal tender is no news. While the People’s Bank of China (PBOC) bans domestic crypto exchanges and even ICO financing by considering it an illegal case of token circulation without approval, the People's Republic of China is developing its own CBDC that has undergone a pilot program in 2020, and is expected to go through a large-scale test at the 2022 Olympics. In a similar boat is the regulatory framework in emerging markets such as India, South Africa and Saudi Arabia, where uncertainty clouds the path of how digital currencies will be incorporated in the existing infrastructure. All the nations currently consider the holding, issuing, and trading of cryptocurrencies as illegal, with the prospect of CBDCs still under consideration.

  • The Fence Sitters: Certain regions have shown a 50-50 attitude towards the adoption of crypto into their present-day frameworks. Canada, for instance, does not classify digital currencies as legal tender, and is in early consultations to consider the launch of its own CBDC; however, they can still be used for the purchase of goods and services. It is also worth noting that Canada was one of the first countries to approve Anti Money Laundering (AML)-related regulation for crypto service providers. Exchanges are legal – with the first cryptocurrency-only investment fund being registered in 2017 itself. The US and UK follow a similar approach – where both developed nations do not classify crypto as legal tender, but crypto exchanges are legal and regulated. This step is in correspondence with the unstable nature of decentralized currencies, as they are open to change in terms of their type, usage, and essence.

  • Honorable Mentions: The crypto regulation space is incomplete without imploring on the workings of El Salvador, the Central American country that became the first to recognize Bitcoin as a legal tender. Only recently, the Banco Central de Reserva (BCR), has released the draft laws on how banks ought to deal with Bitcoin, and the country is already three months in with the legal usage of the cryptocurrency. However, despite the legality of Bitcoin, no other regulatory frameworks on the verticals of CBDCs, crypto exchanges or ICOs have yet been fabricated. South Korea also represents a grey area for decentralized finance, by observing cryptocurrencies as legal entities, but not as legal tenders. Even exchanges are monitored through a closely-monitored regulatory system, where anonymous trading is prohibited. Although the overall scenario seems to be on the highway to improvement, the government is playing a tug of war between imposing more restraints on this growing popularity, or accepting the omnipresent disposition of digital currencies.


Rapid regulations and adoption of cryptos across nations is a big swing. The future holds innumerable prospects for all the nations and the world of finance to collectively investigate, and take action to ascertain the most critical elements in the interplay of it all: safety, stability and sureness in the development of diverse markets.


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