Understanding Bitcoin-Legality of Bitcoin And Cryptocurrency

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Legality Of Bitcoin And Cryptocurrency. Bitcoin and other cryptocurrency is a new technological innovation that has not yet been fully implemented into the legal framework of many countries across the globe. There are many legal aspects of Bitcoin and crypto currency in general to consider. The laws that apply to Bitcoin typically apply to other cryptocurrency, the umbrella term Virtual Currency is often used. The following will be discussed: Legality of cryptocurrency in different countries, taxation, money laundering, other legal issues, and legal status by country at en.wikipedia.org/wiki/Legality_of_bitcoin_by_country. Legality of cryptocurrency in different countries. Bitcoin and crypto currency has various legal aspects to consider depending on the country. Some countries class Bitcoin and other virtual currency as money and legal, some class it as an asset and legal, some class it as neither illegal nor legal, with no legal frameworks in place. In Russia, Ecuador and Bangladesh, Bitcoin is Banned outright, in other countries such as China, Bitcoin is illegal for commercial use but legal for private individuals to hold, trade, mine, buy and sell. Some countries Bitcoin is banned due to already existing laws, such as Iceland. In the United Kingdom however like many countries, Bitcoin is unregulated with no legal framework in place. However, a recent ruling in the EU court system meant Bitcoin was exempt from VAT taxes in any EU member state.

The countries where most or all use of Bitcoin and other virtual currency is illegal are: Bangladesh. Ecuador. Iceland. (Excluding Mining). Thailand. China (legal only for private individuals). Russia Kyrgyzstan. The next section will discuss taxation and taxation issues on Bitcoin. Taxation. The subject of taxation is one of the main issues to come up. Due to Bitcoin’s pseudo anonymity if used correctly, usage of Bitcoin to hide assets and help reduce taxation is not too difficult provided the person follows precautions doing so. Bitcoin is often classed as an asset in many countries for tax purposes, such as in the United States. While bringing large amounts of foreign currency into a country can cause tax issues, bringing in or storing a Bitcoin private key online makes it much easier to bring money past border checkpoints, where you can cash it out when in the country, effectively bypassing taxes of this kind. For legitimate taxpayers, Bitcoin income can be declared at the current exchange rate in most places, although good record keeping of Bitcoin to fait transactions and vice versa is recommended, depending on the tax laws in your jurisdiction which should be researched. In countries where it is illegal, taxation has typically not been considered in the law as it is supposed to be banned. It is typically illegal to avoid taxes, although some countries have legal loopholes. Ensure that you are paying the correct taxes on any Bitcoin income by researching the tax laws under your jurisdiction, some countries may class Bitcoin and crypto currency as an asset not a currency so the tax situation may differ. Money Laundering. Money laundering is typically considered for designing legal framework when Bitcoin is discussed.

Bangladesh bans Bitcoin outright under existing Money Laundering statutes. Money Laundering is a key legal problem with Bitcoin due to the ease of moving money between countries, in seconds with no monitoring. While it can trace Bitcoins bought through banks, when cash or other hard to trace methods are used to obtain the coins, they can then be moved. Using it to launder money on a large scale is risky, due to the publicity of the blockchain ledger. More advanced police forces are learning how to analyse the public Bitcoin ledger to work out where funds went. Money laundering is typically illegal in virtually all jurisdictions, regardless of how it is done, although some have loopholes. Countries such as South Korea have given legal advice that they would not outlaw Bitcoin, but that any illegal activities of this kind involving Bitcoin will be prosecuted. Other Legal Issues. Other key legal issues of recent times include the following: Large thefts of Bitcoins prompting industry action. EU court hearings on weather VAT applies to Bitcoin, the courts ruled Bitcoin is VAT free. Banning of Bitcoin in certain countries. Bitcoin taxation in the US, eventually declared Bitcoin as an asset. Loss of Bitcoin private keys hard to prove. Online drugs marketplaces. Chargeback ability and scams. Hiding assets. Lack of legal protections. Large thefts of Bitcoins such as the exchange Mt. Gox resulted in pressure for regulators to regulate Bitcoin, the deregulated nature of Bitcoin can make this very difficult during large thefts. There was a recent court ruling in the EU, allowing Bitcoins to be transacted without VAT being applied, in a manner similar to gold. Bitcoin has been banned in certain countries, the list is above.

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