Countries are crypto curious

Good morning! Welcome to The Daily Moon. It's New Year’s week and we don’t want sudden surprises from the crypto market. We know you feel the same. So today we will talk about how different countries are looking at crypto. 

Yay Or Nay? It’s Complicated 

The pandemic was probably a moment of reckoning for a lot of crypto investors. Traditional investment returns had slid and there was a hunt for an alt. Bitcoin looked interesting not just because it was independent of government control, but also because its price had steadily risen.

From ~$250 levels in 2015, BTC had moved to ~$20,000 by the end of 2020. FOMO hit and crypto saw many first-time investors. That’s when governments around the world suddenly got cautious. 

There was no broad consensus on how to regulate, some were okay with licensed crypto companies, while others wanted a full-fledged ban. Here’s a look at how five major economies in the world view crypto:

Australia: Cautious optimism 

Over 1 million Australians own crypto. The government wants to foster innovation while protecting customer interests. It spent 2022 in “token mapping” where the number, type, and code of different crypto were mapped. Based on the findings, the regulation will be finalised in 2023. The three areas of focus are:

1. Taxation: Investors are mandated to pay capital gains tax on crypto profits, including NFTs and airdrops if the total taxable income is above ~$12,500. The rate differs based on the income levels, but there's a 50% discount for anyone who holds crypto>12 months. The government has also clarified that foreign currency tax won’t be imposed on crypto.

2. R&D: Australia’s telecom regulator has added metaverse to its 2022-2023 research programme agenda. It wants to find out how customers will be benefited by this technology.

3. Licence: A licence regime for crypto companies in Australia may be introduced in 2023. FTX’s collapse seems to be the final nudge to create a licensing framework. 

China: Nope

China was probably the first country to explicitly ban crypto trading and mining in 2021, calling it illegal. There was an exodus of companies from the country following this decision. Even technology giant Tencent hit pause on its NFT activities. But there are three things to remember: 

1. Miners are alive: Despite a ban, crypto mining is not completely dead in China. Miners have moved underground to join Bitcoin mining pools.  

2. Metaverse ready: China doesn’t have a problem with the metaverse. In fact, the country’s IT ministry has released a four-year action plan to support metaverse development.

3. NFTs grow: NFTs have taken off in the hope that this market will be left untouched. A court decided that termed NFTs as virtual properties protected by law added fuel to the fire.  

European Union: WIP

The EU has finalised the Markets in Crypto Assets (MiCA) regulation, which will allow crypto companies to operate across the region. These entities may need to follow a set of investor protection rules and disclose investment risks. While the European Parliament was supposed to pass MiCA by the end of 2022, this has been postponed to February 2023. Uniform disclosures about capital gains from crypto in the EU will be applicable from January 2026. 

Apart from MiCA, a few EU members have their own policies around crypto: 

1. Portugal has made crypto gains tax-free if the tokens are held for at least a year. If sold within a year, the gains are taxed at 28%. 

2. Italy will tax crypto gains at 26% from 2023 if profits exceed ~$2,062. 

3. Crypto profits are not taxed in Germany if held for more than 12 months. 

India: Finding a hedge

Indians hold more than $5 billion worth of crypto assets. But the lawmakers haven’t made up their mind about crypto. There’s a 30% capital gains tax on crypto, NFT profits and a 1% TDS on transactions exceeding Rs 10,000. But,

• It’s unclear if crypto is legal. The country’s finance ministry hasn’t termed it illegal, but doesn’t call it legal either. 

• Crypto laws are still under discussion. 

• Banking regulator RBI wants a crypto ban and has started testing e-Rupee, its Central Bank Digital Currency. 

United States: A divided house

There’s an unusual degree of dissonance between US lawmakers on crypto. Some want it, some don’t. President Joe Biden is undecided but wants responsible crypto development. We don't know when the US will introduce laws to regulate crypto. Meanwhile,

• Crypto mixer Tornado Cash has been sanctioned.

• Commodities watchdog CFTC has sued Ooki DAO. 

• The SEC wants to treat crypto like stocks. 

Unlike investments such as stocks and MFs where there is some consistency internationally, crypto rules are often vague and confusing. While there’s a call for uniform crypto regulations across countries, a consensus may be some time away. 

And that’s it for today. If this email was forwarded to you, please consider subscribing. It’s free. We’ll never show you an ad or charge you for this. We swear.

Also, to sweeten the deal, here's an offer you cannot refuse! You can refer this newsletter to your friends, family and any amazing community. The top referrer every month wins a guidebook to upcoming potential airdrops and exclusive premier content! Click below to share your unique referral link!

Share Daily Moon by Mudrex

You currently have 0 referrals.

Click to Share

Or copy and paste this link to others: https://thedailymoon.beehiiv.com/subscribe?ref=daqKCLROWs

Who are we? This newsletter’s ambition is to educate (and to entertain). The world of money is changing everyday and we want to help you decode what’s happening in the world of crypto, public markets in the US and India.