Rumors of Bitcoin “bans” have been greatly exaggerated. This week, Russia, India, and Indonesia are rolling out coherent regulatory frameworks regarding Bitcoin transactions, mining, and the digital assets ecosystem as a whole. Each of these countries have previously been rumored to be exploring shutdowns of cryptocurrencies by their banking institutions, but the economic incentives of digital assets appear to have overcome skepticism among some in government.
Further, US state lawmakers in Arizona, Wyoming, and Texas are becoming increasingly proactive in their approach to digital assets, likely attempting to lure industry to their state and votes to their campaign. With as many as 22% of US adults owning cryptocurrency, Bitcoin has begun to carry a certain amount of political capital with it and candidates are taking notice.
Related Assets: Bitcoin (BTC-USD), Grayscale Bitcoin Trust (GBTC)
Russia, India Defy Ban Rumors and Roll Out Regulations
The last couple of weeks have been significant for Bitcoin and other digital assets on the international stage. Both Russia and India, each regimes generally considered to be anti-Bitcoin, and had been falsely rumored to be preparing cryptocurrency bans, laid out new plans for digital assets’ role in their economies.
Initially, a proposal from Russia’s central bank reportedly proposed a Bitcoin ban that was rejected by Russia’s President, Vladimir Putin. Instead, Putin urged government officials to reach a consensus on how to regulate cryptocurrencies and support Bitcoin mining in the country. Russia has several regions with excess electricity, making it especially attractive to crypto miners, and a resource that Putin himself acknowledges, stating his country maintains “certain competitive advantages… the surplus of electricity and well-trained personnel available in the country.”
According to the Kremlin and other government resources assessing the country’s approach to cryptocurrencies, Russians already own an estimated ₽16.5 trillion ($214 billion) worth of cryptocurrencies. According to Bloomberg, that is equivalent to about 12% of the total value of global holdings, or a third of the market capitalization of Russia’s benchmark stock index.
In India, finance minister Nirmala Sitharaman announced this week that cryptocurrencies will not be banned in the country. Instead, they will be taxed and regulated alongside a central bank digital currency (CBDC) set to be issued by the Reserve Bank of India by 2023. Per a Deloitte survey of 1,800 Indians, 82% have plans to invest in cryptocurrency with the condition that the government provide more clarity surrounding regulation. 55.2% said they have invested in cryptocurrencies and will continue to do so.
Elsewhere in Southeast Asia, Indonesia’s trading regulator, the Commodity Futures Trading Supervisory Agency (CoFTRA), has issued permits to trade digital assets within the country, including 229 approved cryptocurrencies. This is a significant development for the country of 273 million people, as Reuters reports 2021 transactions reached Rp 859 trillion ($59.83 billion), up from Rp 60 trillion ($4.2 billion) in 2020. Indonesia’s trade ministry is currently designing a separate exchange for digital assets, called the Digital Futures Exchange, which officials say will be launched in the first quarter.
Additionally, Thailand scrapped its plan for a 15% cryptocurrency capital gains tax after public backlash. Cointelegraph notes the Bank of Thailand, the Ministry of Finance, and the Securities and Exchange Commission announced that they will provide regulations for particular digital assets that do not endanger the financial system. Citing data from Datareportal, Finbold writes that Thailand has the highest concentration of internet users reporting cryptocurrency ownership at 20.1%.
Bitcoin’s Political Power in Democracy
In the US, President Biden’s Administration is preparing an imminent executive order regarding Bitcoin and digital asset markets, the details of which are expected to be announced sometime within the next few weeks. Regarding this issue as “a matter of national security”, Barron’s reports that the State Department, Treasury Department, National Economic Council, and Council of Economic Advisers will all be involved in the initiative.
While specific reporting requirements and other policies in the order will remain a mystery for now…
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