Crypto regulation in the world: weekly digest #116
UAE
The United Arab Emirates is set to implement significant changes to its Value Added Tax (VAT) regulations regarding cryptocurrencies. Starting November 15, 2024, the UAE will exempt crypto transfers and conversions from VAT, aligning these transactions with traditional financial services that are also VAT-exempt. This move is part of a broader strategy to enhance the country's appeal as a global hub for digital assets and blockchain technologies.
The VAT exemptions will take effect on November 15, 2024. However, the amendments will apply retroactively to January 1, 2018, covering all relevant transactions since that date.
Traders can now convert one cryptocurrency to another without incurring VAT. Any transfers of cryptocurrencies for payment or investment purposes will also be exempt from VAT.
This decision follows Cabinet Decision No. (100) of 2024 and is part of over 30 amendments aimed at streamlining VAT regulations across various sectors, particularly benefiting investment fund management and virtual assets.
The UAE aims to attract more blockchain businesses and foreign investments through these regulatory changes. Reports indicate that the UAE has already established itself as a significant player in the crypto market, receiving over $30 billion in crypto transactions from July 2023 to June 2024.
While the VAT exemptions offer financial advantages, businesses involved in crypto activities must still navigate other tax obligations. For instance, companies engaged in crypto mining may face different VAT liabilities depending on their operations.
This regulatory update reflects the UAE's commitment to fostering a favorable environment for cryptocurrency and blockchain businesses, positioning itself as a leader in the digital finance space globally.
Belgium
SWIFT is set to begin live trials for transactions involving tokenized assets and cryptocurrencies starting in 2025. This initiative marks a significant shift from experimentation to practical application, allowing financial institutions to conduct transactions across various digital asset classes and currencies using SWIFT's established messaging network.
The trials will involve banks from North America, Europe, and Asia, focusing on the settlement of digital assets and currencies. These trials aim to demonstrate how institutions can transact seamlessly across different asset types while utilizing their existing SWIFT connections. SWIFT has already shown its ability to transfer tokenized value across multiple blockchains and link central bank digital currencies (CBDCs). The goal is to create a unified platform that can facilitate cross-border transactions involving both traditional and digital assets.
Initial use cases for these trials will include payments, foreign exchange, securities, and trade transactions. The aim is to enable multi-ledger Delivery-versus-Payment and Payment-versus-Payment transactions, enhancing the efficiency of cross-border payments.
SWIFT is collaborating with various financial institutions and participating in projects like Project Agorá, which explores integrating tokenized bank deposits with CBDCs. This collaboration aims to tackle the fragmented landscape of digital asset platforms and improve interoperability. This initiative represents a pivotal moment in the evolution of digital finance, potentially paving the way for broader institutional adoption of blockchain technology and tokenized assets.
Kazakhstan
Kazakhstan is intensifying its crackdown on illegal cryptocurrency activities, having recently frozen $1.2 million in crypto linked to 19 illegal over-the-counter platforms. These platforms had a combined turnover exceeding $60 million and were identified as posing risks related to money laundering and terrorism financing.
The Financial Monitoring Agency of Kazakhstan has shut down 19 illegal OTC platforms as part of a broader regulatory effort to combat unlicensed crypto operations. Alongside the closures, authorities froze $1.2 million in cryptocurrency associated with these platforms. Also, since the start of 2024, Kazakhstan has dismantled nine illegal mining sites and confiscated nearly 4,000 mining rigs, further tightening its grip on the crypto sector.
Kazakhstan's regulatory landscape is evolving, with new guidelines set in January 2023. These guidelines require crypto miners to obtain state licenses and restrict their electricity purchases to surplus supplies from the national grid. Additionally, a significant percentage of mined coins must be traded through platforms registered with the Astana International Finance Centre (AIFC).
The crackdown also extends to major international players. For example, in December 2023, Kazakhstan banned Coinbase due to alleged violations of local regulations regarding uninsured digital assets. This reflects the country's commitment to enforcing its laws even against established global exchanges.
Kazakhstan's actions signify a robust approach towards regulating its burgeoning crypto industry while aiming to mitigate risks associated with illegal activities.
More information about crypto regulation in Central Asia you can find here.
We continue to highlight the news of the world of crypto regulation worldwide. Please stay with us!
