The global race toward mass adoption of cryptocurrencies shows dramatically different approaches from country to country, with government sentiment often clashing against private industries whose fortunes are tied to the performance of cryptocurrencies. The countries with the most trading volume – the US, Japan, South Korea and China – are trying to regulate cryptocurrencies or ban them altogether. Leading the way toward a full embrace of Bitcoin trading, along with legitimizing alternative cryptocurrencies, is Japan.
The world’s fourth largest bank, Mitsubishi UFJ Financial Group (MUFG), has announced plans to open a crypto trading desk for its retail and institutional investors. Japan has shown strong support for blockchain technologies, placing it at the forefront of a technological revolution that promises to transform transactions, trust and business dealings in the financial sector as well as every other industry. MUFG will also introduce a stablecoin, MUFG coin, tied to the Japanese yen. It’s expected to facilitate peer-to-peer transactions, lower fees and reduce volatility. The move is also regarded as a digital push to wean the Japanese off of the old school yen.
On January 11th, Japan’s DMM Group, an e-commerce and entertainment giant, launched DMM Bitcoin, a cryptocurrency exchange, with support for seven cryptocurrencies and 14 trading pairs. In a major push for mainstream adoption, the exchange is rewarding 1,000 yen to all customers who open an account during their 60-day, grand-opening campaign, from January 11 to March 11.
The government has legalized trading and has legitimized Bitcoin as a currency and payment method. Financial regulators have licensed over 10 exchanges. Critics say that its loose regulations have led to questionable protections for Japanese investors in light of the high-risk and extremely volatile crypto markets.
Bullish on cryptocurrencies, the Swedish government may be the first to issue its own central bank cryptocurrency, the e-Krona, guaranteed by the state. According to a prediction by an HSBC global economist, the cryptocurrency would take several years to implement. A leader in Bitcoin ETFs, Sweden first launched them two years ago.
The government is leading the charge for the mass adoption of cryptos in a bid to stabilize the Venezuelan economy and the plunging bolívar. They’ve issued “petro”, a new cryptocurrency backed by oil. US regulators have issued warnings that its citizens may run afoul of the law by undermining sanctions against Venezuela, if they invest in petro.
The Republic of Estonia is the first country to grant government-issued digital residency to non-resident citizens, and has set the stage for the launch of its estcoins, a government initiative to support its e-Residency program for entrepeneurs and investors. A fintech hotbed, Estonia is viewed as a contender for supportive legislation in the crypto space. Estonian-owned bank LHV partnered with Coinbase in 2014, giving the exchange a foothold in Europe. Bitcoin is classified as a legal alternative means of payment.
While Germany’s central bank is calling for global Bitcoin regulation, Germans can legally trade Bitcoin and use it as a form of payment. The government announced a “hands off” position, allowing Berlin to evolve into a fintech hub where most of Ethereum’s code was allegedly completed. Post-war skepticism about central banks, inflationary currencies and authoritarian rule, has made Germany pro-crypto. Germany will join the cryptocurrency debate at the G20 summit in Argentina in March.
United States ☆☆☆
The US leads in the number of Bitcoin ATMs with 1,340 locations. The runner-up is Canada, with 337 ATM locations. Despite the retail push for mainstream adoption, the US has floundered in terms of a clear consensus. Within Wall Street, the sentiment has been mixed, with JPMorgan Chase CEO Jamie Dimon infamously calling Bitcoin “a fraud” and investors “stupid”, while rival bank Goldman Sachs moves forward with plans to open a cryptocurrency trading desk, even though the SEC has rejected all Bitcoin ETF filings to date.
While e-commerce giant Overstock was an early adopter, Steam just removed the Bitcoin payment option with concerns over the speed and high cost of transactions. As the Bitcoin futures markets proliferate, investors and prognosticators are lining up on both sides of the aisle, with billionaire investor Warren Buffet alleging that cryptocurrencies will lead to a very bad ending and billionaire Mark Cuban championing cryptos and implementing Bitcoin as a payment method for sporting events. Adoption has been skittish, red hot, lukewarm and everything in between. US regulators are sideways with Treasury Secretary Steven Mnunchin establishing “working groups” to help figure it out.
Cheap energy and a KFC Bitcoin Bucket may be all that’s needed to lure Bitcoiners to Canada. Following the fallout from China’s latest pronouncements against the Bitcoin mining community that will prompt an exodus, regulatory-friendly Canada is opening its doors and staking its future as the world’s Bitcoin mining capital.
United Kingdom ☆☆
While there has been plenty of evidence of collusion among central banks to harm customers, the focus by the UK Treasury remains on how Bitcoin supports illicit activities instead of the underlying blockchain technologies that can make transactions transparent and improve the existing system. This narrative continues, along with plans to regulate Bitcoin to curb its use for money laundering and tax evasion. The UK Treasury is scheduled to introduce Bitcoin regulation by late 2018 which may be implemented throughout the EU. These regulations may limit Bitcoin but also further its adoption.
Like Venezuela, Zimbabwe has been hit with political strife. In recent months the country has suffered from a coup d’état, a destabilized economy and the lack of a local currency. Demand for Bitcoin has surged. The Reserve Bank of Zimbabwe has warned against Bitcoin where it continues to trade for a premium, currently $17,400 on the local exchange Golix or nearly 80% over the global price of $9,815. Zimbabwe lacks regulation and oversight of Bitcoin and cryptocurrencies.
Putin declared that regulations are necessary to make cryptocurrencies secure, and Russia appears to be trying to allow trading while limiting risks. Newsweek reports that the Russian Deputy Finance Minister supports the trading of cryptos and submitted a new bill to legalize cryptocurrency trading on organized trading platforms. The federal legislature will vote in February. Meanwhile, Putin convened with Ethereum co-founder Vitalik Buterin and several other blockchain experts to explore development of the first “multinational cryptocurrency” for BRICS and EEU countries. Since Bitcoin and cryptocurrencies are borderless, facilitating cross-border transactions, this initiative seems both positive (pro-blockchain) and restrictive (not supporting true decentralization).
South Korea ☆☆
Bitcoin’s latest slide is being attributed to South Korea’s looming crackdown on cryptocurrencies. Anticipated regulations range from an outright ban on trading to restrictions on exchanges and private accounts. South Koreans are fighting back with a petition intended to stop the government’s actions. Prior to the crackdown, South Korea traded high volumes of cryptocurrencies, including Bitcoin and Ethereum.
“Bitcoins are the tulips of modern times,” wrote France’s lead cryptocurrency regulator. “The mania is not yet over. But the longer it lasts, the more investors are likely to be burnt.” Although the debate will continue at the G20 summit in Argentina in March, France is expected to crack down on Bitcoin to curb its use for illicit activities.
The global hub of Bitcoin miners, China threatens to oust the industry after banning ICOs. It also intends to curtail crypto trading by blocking access to online platforms. China’s Ministry of Industry and Information Technology is leading the charge, backed by the central bank. At the same time, like Russia, Japan, Sweden and Estonia, China is piloting its own government-back cryptocurrency. The decision stems from weighing the risks of crippling the economy by turning its back on cryptocurrencies and the global shift toward a cashless world.
Algeria is planning to ban Bitcoin and all cryptocurrencies in its 2018 Finance Bill, making Bitcoin ownership and trading illegal.