Cryptocurrency Is Banned in China and Eight Other Countries
Cryptocurrency is prohibited in Algeria, Egypt, Oman, Iraq, Qatar, Morocco, Tunisia, China, and Bangladesh. As per a summary report issued in November 2021 by the Law Library of Congress, 42 other nations, including Algeria, Bangladesh, Bahrain, and Bolivia, have implicitly prohibited digital currencies by restricting banks’ ability to deal with cryptocurrencies or outlawing crypto exchanges.
Since 2018, when the association first published a study on the subject matter, the number of countries and authorities that have outright or tacitly outlawed cryptocurrency has more than doubled.
Cryptos are being used to route money to criminal sources, according to several governments that have banned them, and the spread of crypto might disrupt their financial systems. Although not all governments are taking steps to outlaw cryptocurrency, many are considering ways to regulate it, including the United States. The head of the Securities and Exchange Commission, Gary Gensler, has referred to crypto as “the Wild West” and stated that he wants stronger regulation on these digital currencies. Last Monday, Gensler hired a senior adviser who specializes in crypto.
When China banned cryptocurrency last year, it did so in stages. In May, the country made it illegal for financial institutions to engage in any cryptocurrency transactions. In June, it banned all domestic crypto mining, and in September, it prohibited all cryptocurrencies altogether.
The world’s second-largest economy had previously been a leader in digital currency mining, and the government’s anti-crypto efforts triggered massive selloffs before prices recovered. Furthermore, the Chinese authorities expressed concern over cryptocurrency mining’s impact on the environment, as well as people who use digital currency for fraud and money laundering.
Is Estonia Also Planning on Banning Cryptocurrency?
The Estonian Ministry of Finance said on Sunday that new draft legislation for virtual asset service providers (VASPs) is not going to prohibit people from trading or owning cryptocurrency; however, the proposed requirements for VASPs, which include high capital requirements, might apply to decentralized wallet creators.
Following reports that the planned measure was going to effectively ban decentralized finance (DeFi) and non-custodial wallets, the White House issued a statement on Sunday. Users have complete custody of their crypto and private keys with a non-custodial wallet.
On 23 December 2021, a tweet was posted regarding the new set of rules in the draft bill. The measure is intended to tighten anti-money laundering (AML) standards for VASPs, especially to reduce the formation of anonymous accounts, according to Estonia’s Ministry of Finance Keit Pentus-Rosimannus. If passed, Estonian VASPs are going to be compelled to identify their consumers while issuing wallets or accounts under the new regulation.
“This means that the legislation does not contain any measures to ban customers from owning and trading virtual assets and does not in any way require customers to share their private keys to wallets in any way,” according to the statement.
The ministry also released an information page on Monday that answers frequently asked questions regarding the draft measure. The proposed bill is Estonia’s response to the Financial Action Task Force’s (FATF) guidelines on regulating VASPs, as per the ministry.
Additionally, the Estonian Financial Intelligence Unit (FIU), which began licensing VASPs in 2017, was criticized for being excessively lax with its initial licensing standards for cryptocurrency service providers, according to the journal. More than 1,000 crypto firms had their licenses revoked by the FIU in 2020 due to poor connections to Estonia. An Estonian-licensed VASP must either operate in Estonia or have a proven link to the country, according to the new law.
The new draft also recommends that VASPs have higher capital requirements. VASPs are now required to have a minimum share capital of approximately $141,000 or $395,000, based on the services provided. The current minimum wage is roughly $13,500.
Lastly, the ministry reaffirmed that no services are going to be prohibited and that businesses that “wish to provide such services in Estonia” must merely follow the AML rules. The bill now needs to pass Parliament before it can take effect in the first half of 2022.