In comparison, cryptocurrency gains are heavily taxed in Japan compared to other traditional financial instruments. Despite this discrepancy, Japanese Finance Minister Taro Aso has stated that he opposes taxing cryptocurrency in the same way as traditional stocks. Therefore, Aso stressed that the Japanese government has no intention of reducing Bitcoin`s income taxes to 20%. Another reason why taxes on cryptocurrencies are high in Japan is that Japanese taxpayers cannot deduct their losses elsewhere to offset their profits from cryptocurrency transactions. As a result, Japanese taxpayers cannot reduce their income tax by offsetting their losses. Finally, estates holding crypto assets of a deceased person must pay inheritance tax. Therefore, cryptocurrency is heavily taxed in Japan because taxpayers have to pay inheritance and income taxes and cannot offset their losses in the form of tax deductions. While the Commission de Surveillance du Secteur Financier (CSSF) has warned about the volatility of cryptocurrencies, their vulnerability to crime and the risks associated with investing in ICOs, Luxembourg`s gradual approach to crypto has nevertheless endured. The CSSF recognized the financial benefits of blockchain technology and Pierre Gramegna spoke of the “added value and efficient services” that cryptocurrencies bring.

Following these statements, lawmakers passed a law in early 2019 that gave blockchain technology transactions the same legal status as those executed using traditional methods. Cryptocurrencies are not legal tender in India and the status of exchanges remains unclear as new regulations are considered. Although there is currently uncertainty about the tax status of cryptocurrencies, Finance Minister Bhagwat Karad hinted in February 2022 that cryptocurrency transactions could be subject to a 30% tax. Cryptocurrency exchanges are legal in Malta, and in 2018, the Maltese government introduced landmark legislation that sets out a new regulatory framework for cryptocurrencies and addresses AML/CFT concerns. The legislation included several bills, including the Virtual Financial Assets Act (VFA), which set a global precedent by introducing a regulatory system for crypto exchanges, ICOs, brokers, wallet providers, advisers and asset managers. In summary, the amendments to the PSA include specific definitions of cryptocurrency by defining crypto assets and cryptoasset exchanges. To better protect Japanese investors, the PSA requires companies to register with government agencies to obtain appropriate approval. In particular, cryptocurrency regulations are subject to the JFSA and JVCEA.

In addition, companies that trade cryptocurrencies must comply with strict anti-money laundering and know-your-customer requirements. Overall, the purpose of the PSA amendments is to protect investors by: (1) preventing future hacks on cryptocurrency exchanges, (2) creating a transparent legal framework for cryptocurrency, and (3) limiting investors` ability to trade cryptocurrencies on margin. To protect cryptocurrency investors in particular, the PSA amendments provide cryptocurrency-specific definitions to include crypto assets in Japan`s broader financial regulation. Therefore, cryptocurrencies are explicitly subject to the laws of Japan. There are no specific regulations on cryptocurrencies in Luxembourg, but the government`s legislative position towards cryptocurrencies is generally progressive. Although they are not legal tender, Finance Minister Pierre Gramegna said that, given their widespread use in Luxembourg, cryptocurrencies “should be accepted as payment for goods and services.” In 2018, the authorities published guidance on the tax treatment of cryptocurrencies, which, in the business context, depends on the type of transaction. In South Korea, cryptocurrencies are not legal tender and exchanges, although legal, are part of a tightly monitored regulatory system. Taxing cryptocurrencies in South Korea is a grey area: since they are considered neither a currency nor a financial asset, cryptocurrency transactions are currently exempt from tax. However, the Ministry of Strategy and Finance has indicated that it is considering imposing a tax on income from crypto transactions and plans to announce a tax framework in 2022. Japanese law does not have a uniform regime for tokens issued or minted on a blockchain. The legal status of tokens under Japanese law is determined based on their functions and uses. For example, cryptocurrencies and utility tokens such as BTC and ETH are regulated as cryptoassets under the Payment Services Act (PSA).

Entrepreneurs who buy, sell, trade, mediate or manage cryptocurrencies for the benefit of others must register as a cryptoasset exchange service provider (CAEP). Japan currently has the world`s most advanced regulatory climate for cryptocurrencies and recognizes Bitcoin and other digital currencies as legal property under the Payment Services Act (PSA). In December 2017, the National Tax Authority ruled that the profits of cryptocurrencies should be classified as “miscellaneous income” and that investors should be taxed accordingly. In Switzerland, cryptocurrencies and exchanges are legal and the country has taken a remarkably progressive stance on the regulation of cryptocurrencies. The Federal Tax Administration (FTA) considers cryptocurrencies as assets: they are subject to Swiss wealth tax and must be declared in the annual tax return. Cryptocurrency exchanges are legal in the United States and fall under the regulatory scope of the Bank Secrecy Act (BSA). In practice, this means that cryptocurrency exchange service providers must register with FinCEN, implement an AML/CFT program, maintain proper records, and submit reports to authorities. Meanwhile, the U.S. Securities and Exchange Commission (SEC) has stated that it considers cryptocurrencies to be securities and broadly applies securities laws to digital wallets and exchanges. In contrast, the Commodities Futures Trading Commission (CFTC) has taken a more user-friendly “Do No Harm” approach, which describes Bitcoin as a commodity and allows for public trading of cryptocurrency derivatives. Switzerland prescribes a registration process for cryptocurrency exchanges that require authorization from the Swiss Financial Market Supervisory Authority (FINMA) to operate.

ICOs are also subject to Swiss cryptocurrency regulations and FINMA applies existing financial legislation to offerings in various areas – from banking to securities trading and collective investment schemes (depending on the structure). In 2019, the Swiss government also approved a motion calling on the Federal Council to align existing financial regulatory provisions with cryptocurrencies. In September 2020, the Swiss Parliament passed the Blockchain Act, which further defines the legality of cryptocurrency exchanges and the operation of cryptocurrency exchanges in Swiss law. Cryptocurrencies are not legal tender in Canada, but can be used to purchase goods and services online or in stores that accept them. Canada has been very proactive in its treatment of cryptocurrencies, regulating them primarily based on provincial securities laws. Canada placed businesses that trade in virtual currencies under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) in 2014, while the British Columbia Securities Commission registered the first pure cryptocurrency mutual fund in 2017. In August 2017, the Canadian Securities Administrators (CSA) issued a notice on the applicability of existing securities laws to cryptocurrencies, and in January 2018, the head of Canada`s central bank referred to them as “technically” securities. The Canada Revenue Agency has been taxing cryptocurrencies since 2013 and Canadian tax laws apply to cryptocurrency transactions. 6AMLD has also had consequences on cryptocurrency exchanges. Under the directive, liability for money laundering offences will be extended to legal persons and natural persons, meaning that managers of cryptocurrency wallet providers and cryptocurrency exchanges will have to exercise much stricter oversight of their internal anti-money laundering controls.