Legalization of cryptocurrencies in 2021-2022

The legalization of cryptocurrencies in Russia is an unresolved issue, if we consider it as of the end of 2021. The bills that are being issued in the country still do not allow us to understand the status of digital money. Because of this, miners, traders and investors have difficulties with doing business.


Regulation in Russia


The legalization of cryptocurrencies in Russia (2021) began on January 1, when the law on the regulation of digital financial assets came into force. The huge document that the State Duma adopted in the summer of 2020 does not contain sufficient information about the status of virtual funds in the country, which is why experts were dissatisfied with it.


It follows from the bill that now only those organizations that are under the control of the Central Bank will be able to issue cryptocurrencies on the territory of the country. Individuals can continue to conduct transactions on exchanges, but they will not be able to legalize income.

Such problems arise despite the clear formulation of the concept of «digital financial assets», as well as excessive information on the topics of the issuance of cryptocurrencies, their use by enterprises and financial organizations and regulation of circulation. The requirements in the draft law are also described for an information system that can be used to issue virtual funds.

But in the whole document there is no information on how individuals can use electronic money, how to legalize income from their sale on stock exchanges. There is also no understanding of how to keep records of sold and purchased cryptocurrencies.


The Central Bank blocks transfers


In the fall of 2021, the legalization of cryptocurrencies in Russia, if we consider the latest news, has reached an impasse. The heads of the Central Bank of the country made an appeal, during which they stated that transfers to exchanges and exchangers would be blocked. The official reason for these actions: protection of Russian citizens from emotional purchases.


The Central Bank is confident that a sharp jump in the value of Bitcoin will be the reason for its purchase by individuals with the last money. Since the asset has high volatility, the regulator wished to protect citizens from financial losses. To do this, work was carried out with the banking system, where such transfers were blocked.


Representatives of the Central Bank also stated that operations with cryptocurrencies have high risks, but the regulator cannot protect citizens of the Russian Federation. Digital assets are perceived by the management of the organization as a «big minefield», experts believe that virtual money is a «high-tech financial pyramid that can collapse at any moment.»

Now the legality of cryptographic assets in Russia is in question. The Central Bank is already working on documents that may prohibit the use of virtual money in the country.


Positive regulation in other countries


The legalization of cryptocurrencies in many countries is in full swing. The leaders of foreign countries are confident that blockchain technology has a huge potential, so it must be used to obtain benefits.


Venezuela


The deep economic crisis in which the country has been in recent years has caused hyperinflation, unemployment and the search for new ways to invest money. In such an environment, cryptocurrencies, even with their volatility, are considered a more reliable tool for preserving material goods.

This was also noticed by the president of the country, Nicolas Maduro, who ordered the creation of a state cryptocurrency. For this purpose, a special department has been formed, whose specialists will be engaged in developments in the field of blockchain and digital assets. The activities of legal miners are also welcome.


Canada


Regulation of cryptocurrencies occurs not only in countries with economic problems, but also in fairly developed and stable states. In Canada, the Center for Analysis of Financial Transactions and Reports is responsible for the development of the digital asset industry.

Representatives of the state agency did not ban cryptocurrencies on the territory of the country, talking about the sponsorship of terrorism or drug trafficking. They went the other way: they implemented compliance programs for companies working with virtual assets and demanded their registration according to special protocols. This is enough for legal work.


El Salvador


The «Bitcoin Law» in this country was adopted in the summer of 2021, and it entered into force in September. Now the main cryptocurrency is another tool for conducting financial transactions within the state.

Residents of the country are actively starting legal wallets to use Bitcoin. In just a month, the number of cryptocurrency users exceeded the number of those who remained faithful to traditional bank accounts.

To control the movement of funds, the state even launched its own wallet – Chivo. More than 45% of the total population of the country registered in it, although in the first month only 1/5 of them used cryptocurrencies to pay for services and goods.


Negative regulation in other countries


The legal regulation of cryptocurrencies in foreign countries does not end with positive examples. There are states whose leaders have a negative attitude towards digital assets.


China


The most striking example of the end of 2021 is China. All operations with cryptocurrencies are prohibited here. The Chinese authorities have stated that they plan to eradicate digital assets and mining. This is due to the fact that the very idea of a decentralized economy contradicts the rules of financial management in the country. The leaders of the state also stated that electricity is consumed in huge volumes, and ordinary residents are already facing a shortage of electricity.

The Central Bank of China, armed with the support of the Supreme Court, law enforcement agencies and other state organizations, said that in the near future all loopholes allowing citizens to use cryptocurrencies will be eliminated.


Morocco


The problems of regulating cryptocurrencies are relevant not only for totalitarian countries. Back in the fall of 2017, representatives of the Ministry of Finance of Morocco stated that cryptocurrency transactions within the state are prohibited.

Any use of virtual funds will entail penalties provided for violation of the exchange rules. These include fines and criminal liability.

The international community does not have an unambiguous position. An ordinary user applies his skills in mining, trading and investing in the cryptocurrency sphere until his state follows the path of the Chinese government. Another option is also possible, which is actively promoted by countries struggling with the economic crisis.