Questions about legality of bitcoin application have been in the spotlight since its emergence. While platform presented a new, independent payment entity free from shackles of financial and regulatory authorities which administer full control over traditional money, Bitcoin has still gained quite a hefty amount of unfavorable criticism – with some claiming it to be a bubble and others calling it an outright fraud.
Nevertheless, it works in an apparently dark area with regards to regulation. In any case, a significant share of those worries come down to false impressions or absence of substantial rules that govern Bitcoin, rather than a clear infringement of the law. The question regarding the connection between Bitcoin and the law indeed relies upon how the cryptocurrency is being used.
Ever since the now-outdated Silk Road garnered reputation, regulators have been worried about Bitcoin’s semi-anonymous and decentralized nature. In the U.S., and also in different nations, experts expect that the platform could be used for illegal tax avoidance and the buy of unlawful commodities without being traced.
What really didn’t help Bitcoin’s reputation with specialists was its pervasiveness as a payment service for the Silk Road, an advanced commercial center where clients could buy illegal goods.
However, the fact that people use Bitcoin as a means of partaking in explicitly unlawful exercises doesn’t make the cryptocurrency itself illegal. In any case, even when bitcoin is utilized for honest and legitimate purposes, rules are somewhat more mind-boggling.
As indicated by the U.S. Treasury Department’s Financial Crimes Enforcement Network, utilizing bitcoin to buy well-natured commodities and services isn’t illegal.
However, the people who mine bitcoins and exchange them for fiat cash or operate exchanges where bitcoins are purchased and sold are tagged “cash transmitters” and could be liable to special laws that govern that kind of action. Up until now, those laws have been occasionally used to crackdown on bitcoin-related operations. Recent examples of similar laws implementation include attempts to ban bitcoin mining in china.
Regarding tax assessment, the IRS( International Revenue Service in the US) sees bitcoin and other digital currencies as property for federal tax purposes, like stocks and bonds, and federal tax law states that buyers and sellers must regard it as such.
The view on bitcoin legality may differ from country to country, yet generally, it remains moderately safe to use as long as it isn’t linked to illegal buys or activities.
Here is a list of countries where bitcoin is legal:
- The United States
- The European Union
- Saudi Arabia
- Hong Kong
- United Kingdom
Many nations have issued statements demonstrating that bitcoin and other forms of cryptocurrency are not regulated and don’t exist as formally authorized currencies: a status that could put users in danger yet would not have them break any laws. Bitcoin is downright illegal in some countries such as Vietnam, Iceland, Bolivia and Ecuador.
Depending on how and where you use bitcoin, it is vital to stay updated on the most recent regulations concerning the cryptocurrency. As the platform gains popularity and laws change across borders and governing bodies, matters on bitcoin’s legality will continue to be raised.