A cryptocurrency is a digital asset designed to work as a medium of exchange using cryptography to secure the transaction and to control the creation of additional units of currency. Cryptocurrencies have become very popular due to a number of reasons. They are safe, anonymous, and decentralized. The amount of cash in virtual currencies has ballooned, surpassing the returns seen in stocks, bonds, and many other investments. The market cap for cryptocurrencies is now more than $160 billion, up from about $20 billion at the beginning of the year.

Some recent events may have convinced investors that these currencies are here to stay – including a move from the government of Japan to make Bitcoin a legal method of payment. Although they treat it as an asset and not as a currency, Japan as seen a huge surge in Bitcoin demand. Bangladesh passed a law in 2014 stating that anybody caught using the virtual currency could be jailed for up to 12 years, under the country’s strict anti-money-laundering-laws.

Whatever the individual case is for a country, the growth in cryptocurrencies in the last decade has shown that there is strong momentum around this new technology. Some countries have become global advocates of cryptocurrencies, while others have actively banned cryptocurrencies completely, with various shades in between. Without further ado, here are 5 countries about to make big moves concerning cryptocurrency…

JAPAN

Japan has been at the center of technological innovation for decades, and it seems they are keeping up the trend with cryptocurrencies. They plan to create their own cryptocurrency called the J-Coin which will be pinned to the Japanese Yen, and users will store and spend them using their mobile device. The plan has been announced by some of the country’s leading banks, however regulators are yet to comment. The plans are in the very early stages, but a number of Japanese financial institutions are actively drawing up plans to eventually get rid of cash in Japan. The plans are hoped to be finalized for the launch of the Japanese 2020 Olympics in Tokyo.

RUSSIA

Russia has announced it will legalize the use of cryptocurrencies by drafting a bill that would create the legal framework for trading in digital currencies. This comes a year after the same Russian institutions said people trading in these currencies could be jailed. Russia wants to address serious problems in the banking sector and their impact on the economy. The current credit system is opaque – the central authorities have trouble identifying people involved in the regional banking system. This allows small banks to operate more or less separately. One solution is to implement new technological applications that allows the government to identify people involved in the system in real time. Currently, Russia is making its own blockchain based cryptocurrency, the CryptoRuble, announced officially by President Vladmir Putin. This virtual currency will be legal tender in the Russian Federation. The supply of this token will be regulated and maintained by state authorities. CryptoRuble will be a state-controlled cryptocurrency which cannot be mined by miners. Cryptocurrency owners unable to declare the source of origin will incur a 13% personal income tax while converting CryptoRuble to Russian Rubles. Similarly, a 13% tax is also levied on profits earned through buying and selling of this cryptocurrency.

The president also released five presidential orders related to the regulation of cryptocurrencies and blockchain technology. He tasked the Russian government with determining how cryptocurrencies like Bitcoin, Smart Contract technology used by the Ethereum network, and tokens released during ICOs, fit into the broader Russian financial regulatory framework by next July. Putin’s orders also require legislators to set up a framework for registering miners by 2018, so that the Russian government can effectively tax them. Moreover, the president has ordered a framework for figuring out how to regulate token sales during ICOs in the same way as securities sold during IPOs. Putin has also called for proposals for a special regulatory platform known as a “sandbox” where blockchain developers can basically demonstrate new technologies or applications to the bank of Russia so they can regulate appropriately – before the end of the year. The final order released by Putin called for the formation of a single payment space for the member states of the Eurasian Economic Union with the use of new financial technologies, including the technology of distributed registries by next March.

Estonia

Estonia wants to issue its own virtual currency, EstCoin, with the help of Ethereum founder Vitalik Buterin. The country has plans to use blockchain technology as a way to drive forward many of the country’s other developments, as it did to the e-residency program and an online voting system for its citizens. The initiative aims to make Estonia the first country on the planet to create a state backed cryptocurrency (though other countries are on the move as well). The proposed crypto will be controlled by the Central bank. The cryptocurrency could be launched via an ICO – the digital coin community’s version of crowdfunding.

Karspar Korjus, Managing Director at e-Residency, Enterprise Estonia, said that the initiative was about creating a borderless Digital Nation. According to Korjus, more than 22,000 “e-residents” from 138 countries have signed up to the initiative, and make an enormous contribution to the Estonian economy.

The president of the European Central Bank has criticized the Estonian government’s plan to launch a national cryptocurrency that competes with the Euro as the major currency within EU jurisdiction.

Malaysia

The Bank Negara Malaysia (BNM) said it will decide before the end of the year whether to ban the trading of cryptocurrencies under its mandate as a domestic financial regulator. The guidelines that will be issued will address issues in terms of registering players, collecting data, and ensuring that they will be transparent.

While it has previously stated that Bitcoin would be left unregulated, BNM announced in September that it would begin to create guidelines for entities working with cryptocurrencies. Last month, BNM issued an investor warning for those participating in blockchain token sales.

Vietnam

The Vietnam Central Bank is prohibiting the use of Bitcoin and other cryptocurrencies in payments. According to an October 30th statement, the state bank of Vietnam said that cryptocurrencies are not a lawful means of payment in the country, and that the issuance, supplying, and use of Bitcoin and other similar virtual currencies as means of payment is prohibited. Starting next year, illegal use of cryptocurrencies will be subject to penalties of between 150 million ($6,600) and 200 million ($8,800) Vietnamese Dong (VND). This move comes as part of a new legal framework for cryptocurrencies instigated by Vietnam’s Prime Minister.

The bans may already be having an impact on local institutions – FTP University in Hanoi, which recently announced it would allow students to pay for tuition in Bitcoin, could now be forced to reverse that decision as it would commit an act of violation under the current law provisions.

Cryptocurrencies have the potential to disrupt traditional industries and transactional methods, which they have been doing. Even though mass adoption may see bumps along the way due to opposition from world economies and governments, they are likely to continue growth and adoption moving into the future.


Resources:

http://cryptocurrencyfacts.com/how-does-cryptocurrency-work-2/

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https://news.bitcoin.com/russias-finance-ministry-drafts-law-legalize-cryptocurrencies/

http://www.mauldineconomics.com/editorial/heres-why-russia-opens-the-door-to-cryptocurrencies

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