Summary of Bitcoin’s legal status
Bitcoin debuted in 2009 and immediately began a new disruptive revolution with the advent of the cryptocurrency era. Today, there are more than 700 different major cryptocurrencies, but Bitcoin is still the leader in the industry. Although tax authorities, law enforcement agencies and regulatory agencies in different countries are still struggling to deal with this recent phenomenon, a problem has arisen:
Is Bitcoin legal?
In this article, we will try to answer this question.
Nowadays, consumers have greater ability to purchase goods or services using bitcoin directly at online retailers, or they can use gift cards purchased through bitcoin in physical stores to purchase goods and services. Digital currencies are being traded on exchanges, and companies have invested billions of dollars in virtual currency-related businesses.
However, due to all such business activities around the Crypto currency, there is still no uniform international laws and regulations to regulate it.
Digital currency allows users to remain anonymous when performing transactions. In addition to being a decentralized cryptocurrency that does not have a central government independent of any government, Bitcoin is also a peer-to-peer payment system. In this way, it has almost no exchange rate fees or transaction costs, providing a convenient method for executing cross-border transactions.
The legality of Crypto currency
In the United States, Democratic senators from Delaware are very interested in Crypto coins. Representatives of law enforcement and financial institutions told the Senate that they have no concerns about Bitcoin.
The US government instructed the Congress Law Library to investigate the official position of bitcoin in more than 40 countries and whether bitcoin was actually used. According to the report, Ireland, Israel and Slovenia have already expressed plans to regulate cryptocurrencies, while Germany, Finland, Singapore and Canada are among the countries that have issued bitcoin tax guidance.
The legal status of bitcoin in various countries
The fact that Bitcoin can be used anonymously to perform transactions between users around the world makes this extremely attractive for criminal activities such as money laundering. Therefore, the government accuses Crypto currency as a tool for criminals to buy and sell illegal goods such as drugs or weapons. Below, you will find a list that lists the legal status of Bitcoin by country:
United States
The United States has adopted a positive attitude towards Bitcoin. At the same time, it has several government agencies dedicated to preventing or reducing the use of Bitcoin for illegal transactions.
Since the beginning of 2013, the US Department of the Treasury’s Financial Crime Enforcement Network (FinCEN) has been issuing guidelines on Bitcoin. The Ministry of Finance has defined Bitcoin as not a currency but a money service business (MSB). This puts it under the constraints of the Bank Secrecy Act, which requires exchanges and payment processors to comply with certain responsibilities, such as reporting, registration, and record keeping. In addition, the US Internal Revenue Service (IRS) classifies Bitcoin as property for tax purposes.
BitLicence proposal
Ben Lawsky, director of financial services for the New York State Department of Financial Services (DFS), announced the BitLicense proposal.
The Bitcoin license file contains the regulatory structure of Bitcoin, which means that New York State businesses can determine what they can and cannot do. This is done to make it easier for businesses to legally accept cryptocurrencies, and to encourage small business owners to accept Bitcoin. The document is said to be affecting the way other countries regulate cryptocurrencies.
BitLicence pointed out: “Entities that are leased under the New York Banking Act and have existing licenses for trading services can engage in virtual currency business activities” “Businessmen and consumers who use virtual currency to buy or sell goods or services can be exempted from licensing requirements” .
China
China remains one of the largest Bitcoin markets in the world. All banks and other financial institutions (such as payment processors) are prohibited from conducting bitcoin transactions or transactions. However, the Bitcoin culture is booming in the country, and individuals can trade Bitcoins freely.
At the same time, bitcoin is regarded as a part of personal property at the legal level, which can be inherited and cannot be maliciously occupied by others.
Russia
The legality of Bitcoin in Russia is highly controversial. The Russian Ministry of Finance hopes to pass a law to ban Bitcoin sometime this year.
Canada
Canada generally maintains a bitcoin-friendly position, while also ensuring that cryptocurrencies are not used for money laundering and other criminal activities. The Canadian Revenue Agency (CRA) considers Bitcoin as a commodity b; this means that Bitcoin transactions are considered barter transactions and the revenue generated is considered business revenue. Taxation also depends on whether the individual is engaged in buying and selling business or only owns Crypto currency investments.
Canada considers the Bitcoin exchange to be a currency services industry. This puts them under the jurisdiction of anti-money laundering (AML) laws. Bitcoin exchanges need to register with the Financial Transaction and Report Analysis Center (FINTRAC), report any suspicious transactions, comply with compliance plans, and even retain certain records. In addition, the Canadian government has ordered the Senate Banking Committee to draft a guide to the virtual currency legislature by July 2015.
Australia
Australia allows entities to trade, mine or buy Bitcoin. The Australian Taxation Office (ATO) believes that bitcoin transactions in barter transactions should pay appropriate taxes based on usage and users.
EU
The European Union (EU) has always been concerned about the development of cryptocurrencies, but has not yet issued any formal decisions regarding legality, acceptability or regulations. In the absence of central guidance, various EU countries have developed their own Bitcoin positions. Some countries allow the use of Bitcoin, while others have not yet decided or issued a warning.
In Finland, the Central Tax Commission (CBT) has granted Bitcoin a VAT exempt status by classifying it as a financial service. Bitcoin is considered a commodity in Finland, not a currency.
The Belgian Federal Public Service Finance Agency has also exempted Bitcoin from VAT.
In Cyprus, Bitcoin is not controlled or regulated, but it is not illegal. Financial Conduct Authority (FCA)
In the UK (UK) take a position in favor of Bitcoin, and hope that the regulatory environment can support Crypto currency. Bitcoin is subject to certain tax regulations in the UK.
The Bulgarian National Tax Agency (NRA) has also included bitcoin in its existing laws. Germany is open to Bitcoin; it is considered legal, but depending on whether the authorities deal with exchanges, miners, businesses or users, the taxation method is different.
Germany considers this to be a legal bid
Bitcoin-unfriendly countries
Although bitcoin is widely tolerated in some parts of the world, some countries are unfriendly to bitcoin mainly because of its volatility, decentralized nature, threats to the current monetary system, and illegal activities such as drug transactions and currencies Contact money laundering. Some of these countries banned the use of Bitcoin, while others tried to suffocate any support from the banking and financial industries.
Iceland
As part of the monetary policy adopted after the global economic crisis in 2008, the island nation implemented capital controls. Iceland seeks to prevent the outflow of Icelandic currency from the country. Because cryptocurrencies are not compatible with the country’s Foreign Exchange Trading Act, Iceland has banned bitcoin transactions. Contrary to its legal approach, the country saw a new cryptocurrency called Auroracoin being launched. Its founders hope to create a viable alternative to the existing Icelandic banking system.
Vietnam
The country links cryptocurrencies to criminal activities such as money laundering. The Vietnamese government and its national bank do not recognize Bitcoin as a legal method of payment. The Vietnamese government has made it illegal for financial institutions and citizens to buy or sell Bitcoin.
Bolivia
The Government of Bolivia and the Central Bank of Bolivia have banned the use of Bitcoin and other cryptocurrencies.
Kyrgyzstan
The government and central bank of the country did not recognize Bitcoin and altcoins as payment methods and declared them illegal.
Ecuador
Ecuador plans to create its own cryptocurrency in the future, but Ecuador banned Bitcoin and other cryptocurrencies by a majority vote in the National Assembly.
Countries still have no clear system to restrict, regulate or ban cryptocurrencies. The decentralized and anonymous nature of Bitcoin has challenged many governments to prevent legal transactions while allowing legal use. Most countries are still analyzing methods to properly regulate cryptocurrencies.
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