By Veronica Dunlop and Robin Sosnow
Countries around the world are embracing cryptocurrency. The crypto events occurring in every region of the world are a testament to the international nature of this technological revolution and its adoption. Currently, much like in the United States, where Wyoming’s SFO125 Bill clarified the legal position of digital assets, countries are working to provide legal certainty to cryptocurrency. Countries in every region of the world are creating systems to establish cryptocurrency as a reliable, safe and efficient tool for, entrepreneurs, investors, institutions, and the national economy as a whole.
This article provides a brief overview of different countries’ approaches to cryptocurrency. Some governments are working to provide legal certainty, others have created a national cryptocurrency, and still others are forming bilateral crypto agreements. Although the ends and means differ, the fact that a diverse array of countries are grappling with crypto demonstrates its inevitable globalization.
Saudi Arabia and the United Arab Emirates have announced that they are in the process of launching a common digital currency. The Saudi Arabian Monetary Authority in conjunction with the United Arab Emirates Central Bank announced the plan in early February. The main objective of the common digital currency is to facilitate financial settlements between the two countries, as well as trade and tourism.
Iran plans to use its first state-backed cryptocurrency to circumnavigate US sanctions. A plan to develop an “indigenous” cryptocurrency is on the agenda of the government’s Science and Technology Department. Alireza Daliri, the department’s deputy head in charge of investment affairs, said on February 13th that the project is being coordinated with the Central Bank of Iran. Daliri explained that Iran is “trying to prepare the grounds to use a domestic digital currency in the country.” The national cryptocurrency would back and tokenize Iran’s national fiat currency, the rial, in order to facilitate domestic and cross-border transactions in spite of US sanctions.
In Korea, the national authorities have developed a new plan regarding initial coin offerings (ICOs). The chairman of Korea’s National Policy Committee has called for the legalization of ICOs provided that a regulatory framework is put in place. The chairman praised the economic advantages of token sales, noting that it is likely that many token projects have a viable future.
There have been several bills proposed to the National Assembly in South Korea designed to provide a legal framework for cryptocurrencies. With the chairman endorsing ICOs and expressing his belief that ICOs should be allowed as a matter of law, the odds of regulations being passed in the near future have increased. In an official statement the chairman called for the government, the National Assembly and the blockchain association to “quickly create a working group to block fraud, speculation, money laundering and develop the block-chain industry.”
Venezuela launched its cryptocurrency, called Petro coin, in the Spring of 2018. According to the government, Petro is backed by oil, gas, gold and diamonds, and, much like Iran’s Rial, is meant to help overcome US and EU sanctions. The idea for Petro can be traced to Hugo Chavez, who foresaw a “strong currency backed by raw materials,” as stated in the government’s white paper on Petro. Petros will be “pre-mined,” meaning that the government will produce and control it. To back its new digital currency, Venezuela allocated five billion barrels of oil, which, in turn, will affect the cost of Venezuelan oil in the global market. Petro will be available for purchase on online exchange platforms. Some of the platforms use bolivars, Venezuela’s local currency, while others will operate by exchanging other cryptocurrencies for Petro.
As part of its plan to effectively classify and regulate cryptocurrencies the Financial Conduct Authority (FCA) of the United Kingdom’s released a “consultation paper” on January 23, 2019. The paper specifies how different types of crypto assets are classified in the regulatory scheme. This consultation paper is public, allowing the citizens to voice concerns and give feedback on the proposed measures. The consultation phase will close on April 5th. The FCA explained that the purpose of this paper is to provide regulatory clarity in the crypto asset market, which is vital due to the ever evolving nature of blockchain technology.
In every region of the world, countries are exploring the uses of cryptocurrency, and implementing it into their legal regimes. Countries are employing it to bypass sanctions, improve domestic and cross-border transactions, facilitate trade relations and financial settlements with specific countries and generally to advance new business opportunities and bolster the economy. There are myriad benefits of, and uses for cryptocurrency allowing countries to implement it suit their individual objectives.
The global crypto trend is inescapable and undeniable, evidenced by the representative regional smattering of countries embracing digital currency on chain. Although crypto is still burgeoning, it is here to stay. With enough state practice, national laws regulating cryptocurrency may eventually become part of international law. The future of crypto is bright and boundless.