Cryptocurrencies such as Bitcoin have become incredible technology that allows users to conduct transactions with any on the internet, without the requirement of an intermediary to handle the transaction.
Because of the permission less characteristics of the systems they operate, there’s a few concerns about whether they will be ever legal.
In fact two of the first instances of use for Bitcoin were the purchase of drugs using Silk Road and getting around the financial restrictions placed by Wikileaks. It isn’t it obvious that governments should not permit the development of such technology?
Bitcoin Can’t Be Controlled
While many governments are opposed to anonymous online transactions due to obvious reasons one of the main reasons for the creation of Bitcoin initially was to circumvent the limitations regarding online privacy.
Although previous methods, like Liberty Reserve and e-gold, were beneficial to people who sought privacy for your online banking transactions, those platforms eventually shut down , and this was easy due to the centralisation of these platforms.
But the main goal in Bitcoin is to create an entirely new and unregulated financial system that can’t be managed or regulated by any government anywhere in the globe.
A General Overview Of Cryptocurrency Legality
In the majority of countries across the globe, it’s entirely legal to use different kinds of cryptocurrency. Although there’s been much discussion about claims of strict laws or even bans throughout the past year, the truth is that the majority of people in the globe can transfer Bitcoin from one device to another without worrying about the police snooping at their door.
However, this doesn’t mean that there aren’t restrictions on the use of crypto. Of course, governments will be keen to impose restrictions on usage of Bitcoin and other cryptocurrency in various criminal activities like money laundering or terrorist acts.
In addition the crossing and exit points for traditional fiat currencies as well as cryptocurrencies are tightly controlled. It has become more difficult for individuals to trade large amounts cryptocurrency with fiat currencies without having to submit an enormous amount of data to local authorities.
In the moment, it’s more accurate to say that cryptocurrency is being increasingly controlled rather than being illegal. This article provides an in-depth diagram of the the legal status of countries regarding cryptocurrency.
It Is Even Possible To Legalize Cryptocurrency?
At the moment it is difficult for a state or a group of governments to declare cryptocurrency illegal in any way. Yes, laws could be passed to prohibit the transfer or use of Bitcoin however, it is very difficult to apply.
If a smartphone is secure and isn’t accessible by law enforcement agencies and security personnel, how can it be established that someone is carrying an Bitcoin wallet in their smartphone?
This is the reason the former U.S. President Barack Obama stated that encryption could allow anyone to carry an Swiss money account within their pockets.
In lieu of creating Bitcoin legal, it could be more sensible for governments to target the network on a technical or a social level. In all honesty it would have been more straightforward to attack Bitcoin in the past.
Now, there’s a more computing power directed towards the network, which makes an attack with 51% probability more expensive, and, quite in reality, not feasible for malicious parties.
What Is The Reason That Some Countries Are Trying To Limit The Use Of Cryptocurrency?
The restrictions on the use of technology like Bitcoin and encryption boil down to the issue of freedom. In countries where the public is usually at liberty to do whatever they wish, the restrictions regarding the usage of Bitcoin are usually limited.
In countries that have a government that is more strict and has a greater degree of control, there are more regulations governing Bitcoin’s use. Bitcoin because of the desire of the government to exert as many control over the currency and financial system of the local area as is possible.
A government, for instance, might not want people to switch to Bitcoin when it has been determined that inflation should be raised to pay for unsustainable government expenditure.
Bitcoin isn’t a great choice for nations who want to put money in the pockets of its citizens. In China it is possible to be penalised automatically via messages sent by security cameras that are intelligent.
It’s not unreasonable to suggest that the next step in this technology will be to remove the fine directly out of your bank account. Bitcoin is the kind of technology designed to block automated and unauthenticated withdrawals from your banking account.
Which Major Countries Are Open To Cryptocurrency?
Many major nations around the globe are willing to accept cryptocurrency at this moment. A lot of these nations are exploring ways to set up regulatory sandboxes that allow startups to enter and test out their concepts without worrying about getting a jail sentence for breaking the rules of the law. The most prominent countries that have opened their doors to cryptocurrency include:
- South Korea
- United Kingdom
- United States
It is important to note that the stances of these countries regarding Bitcoin and other types of cryptocurrency may be changed quite rapidly.
If there was some kind of terrorist attack or incident that was later discovered to be financed with a cryptocurrency, it’s possible that an anti-crypto political climate could take off quite quickly.
Which Major Countries Restrict Or Outright Ban Cryptocurrency?
Although the number of countries that place limitations on Bitcoin is currently very low (and completely bans more uncommon) However, they are there.
But, many of the countries that want to restrict usage for Bitcoin inside their own borders also are developing their own blockchain-related projects one of the most prominent examples being China’s forthcoming digital currency.
The countries that use it adopt an “blockchain instead of Bitcoin” method because it permits them to maintain as well as likely to increase their total control over the regional financial systems.
While the initial idea behind Bitcoin was to create a system which was independent of any state however, the technology could be used to create a surveillance state that former tyrants could only imagine in their nightmares.
A few of the most important countries that are taking a more strict approach to Bitcoin are:
Does Bitcoin Count As Property Or Currency?
The question of whether Bitcoin is considered to be an asset or a currency is contingent on the country in which it is located. For instance, Bitcoin has been classified as property in the United States, but other countries have jurisdictions where Bitcoin is considered to be considered a currency.
Although the classification of Bitcoin as a currency or property could seem to be an insignificant matter at first glance however, the truth is that this issue is extremely important in the way it is assessed.
It’s more difficult to utilise assets that are classified as property an exchange instrument because many transactions will come with tax implications that are associated with these transactions.
Is Cryptocurrency Considered A Legal Tender?
It isn’t considered to be legal tender. It is an official kind of currency that has to be accepted to pay of loans. Most of the time the fiat currency of the country will be the sole form of legal tender within the country.
It is highly unlikely that a country would accept Bitcoin as legal tender since Bitcoin competes directly with every particular government’s control over its local money system. Additionally, Bitcoin is never directly due, it’s owned, further proving it is Bitcoin is property and not money.
Are Businesses Able To Accept Cryptocurrency?
In the countries that Bitcoin is not completely banned, businesses are allowed to accept cryptocurrency. The majority of restrictions and regulations are in place when a person is trading Bitcoin for fiat currencies, instead of goods or services.
If a business decides they want to accept Bitcoin to purchase their product or service, they will be subjected to the laws governing taxes on Bitcoin and other cryptocurrencies. Businesses and merchants should be aware of additional reporting requirements associated with acceptance of Bitcoin as a means of payment.
Are Cryptocurrencies Regulated?
The regulatory environment for cryptocurrency is a thorny one all over the world and the trend of greater regulation is likely remain. By 2020, the majority of the activities related to cryptocurrency is still conducted through exchanges.
This is the place that regulation will have the most impact. Anyone who wishes to purchase or sell cryptocurrency through an online platform will need to give a significant quantity of personal data so that the organisation behind the exchange can confirm person’s identity.
At the technical level of Bitcoin, there aren’t any regulations regarding Bitcoin. In fact, the reason for the invention of this innovative technology in finance was to not require regulation initially.
There could be efforts for regulation of the Bitcoin network on a protocol-level in the near future, however these regulatory intrusions are likely to fail, since they will have to be based on an opt-in basis . This will destroy what makes Bitcoin a valuable asset in the first place.