The use of cryptocurrencies in exchange for goods and services has been explicitly prohibited in some jurisdictions. However, many countries have not made the usage of cryptocurrencies themselves illegal. In these countries, businesses that deal with cryptocurrency are required to follow standard money laundering regulations and report suspicious transactions to government authorities. Most countries have not released official statements on the legality of cryptocurrencies; however, the U.S., Japan, Estonia, Kyrgyzstan, and Australia have all clearly defined digital currencies as money under their respective anti-money laundering statutes. [1]
Despite the recent interest shown by governments across the world towards regulating or banning digital currencies such as Bitcoin, there’s no denying that we’re still very early in this technology’s life cycle, and its full potential has yet to be realised. As there is a huge amount of potential in crypto trading, you need to learn authentic tips and tricks for choosing the right cryptocurrency for you. Teslacoin is one that can help you in this regard.
What if cryptocurrencies are made illegal?
If all cryptocurrencies were broadly banned by the governments of major economies, it would certainly spell bad news for the market value of digital currencies like Bitcoin. However, blockchain technology could still develop without the financial incentives provided by virtual currencies, as it will continue to be useful even if no tokens or coins are attached to it. Another possibility is that existing cryptocurrencies may still survive underground, much like how cannabis survived after being outlawed during alcohol prohibition in the U.S. This doesn’t mean their prices would recover from any decline caused by a worldwide ban on cryptocurrency trade; instead, they’d likely just continue depreciating as more and more people quit using them.
What if cryptocurrencies are legalised?
While there could be market fluctuations in either scenario, the worst-case scenario for cryptocurrencies is that they’re made legal but taxed to death. If every transaction involving cryptocurrencies was taxed as it would be under a normal money laundering scheme, then that would certainly do serious harm to their value proposition relative to fiat currencies. The best-case scenario for digital currencies is that they continue existing under the radar without being regulated or taxed too much so that other startups can capitalise on their decentralised nature by developing innovative blockchain-based solutions for other use cases besides currency speculation/trading. For example, Ethereum is implementing smart contract technology to secure “ethers” against tampering, which promises to increase the fungible nature of cryptocurrency even further.
Have you ever wondered whether cryptocurrency is legal or not?
Cryptocurrency, better known to the general public as Bitcoin, has gained tremendous popularity in recent times. The latest estimates by coinmarketcap.com which tracks the capitalization of cryptocurrencies show that over $27 billion US dollars’ worth of Bitcoin has been traded since its inception in 2009.
However, despite gaining recognized status in many countries around the world, the legality of cryptocurrency is still very much unclear in numerous regions – due to its decentralised nature and widespread availability across borders, it does not fall into any one state’s jurisdiction.
The lack of regulation surrounding Bitcoin allows for pseudo-anonymous transactions, opening the door to criminal activity.
The use of Bitcoin can be traced on the blockchain – a public ledger that keeps records of all Bitcoin transactions that have ever taken place. But due to this fact, many criminals still view bitcoins as “clean money”, despite their ability to be traced. According to Europol’s report, virtual currencies are increasingly being used by organised crime groups for drug trafficking and money laundering purposes because they offer greater anonymity than other forms of traditional money transfer.
Despite this danger, some governments are beginning to acknowledge the potential benefits cryptocurrencies could provide, with Japan recently recognizing Bitcoin as legal tender, shortly followed by Canada. On June 1st, 2017 South Korea announced that it would end capital gains taxes on cryptocurrencies, hoping to prevent a potential cryptocurrency bubble from forming.
In December 2016, the Russian government announced it will legalise the trading of Bitcoin and other cryptocurrencies on approved exchanges. However, in January 2017 Russia banned the use of any type of crypto-currency as a payment system in the country. The ban was imposed due to fears that investors could be vulnerable to frauds related to speculative operations with virtual currencies.
On February 1st, 2017, India’s finance minister Arun Jaitley stated in a budget speech that “The Government does not consider Cryptocurrencies legal tender or coin and will take all measures to eliminate the use of these crypto-assets in financing illegitimate activities or as part of the payment system“.
