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The Legality of Crypto Currency

If you are concerned with the legal status of Bitcoin and other crypto currencies, you will find that there are varying rules and regulations from one nation to the other. With different regulatory principles and implementations, the status of Bitcoin (legal or illegal) varies. There are several countries that allow its use and trading options. On the other hand, there are nations that have restricted and even banned the usage of the virtual currencies.

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The policy makers are showing interest in crypto currencies

Before the government authorities got involved in the crypto currencies or undertook cryptocurrency admin, it was quite a difficult task to understand about it. Today, policy makers or regulators across the globe are showing their interest in the crypto currencies which is a sign of inclination towards crypto legal. They are coming up with new rules and regulations or crypto law in respect to the Initial Coin Offerings, crypto currency exchanges and so on. It is becoming a challenging task to keep a track on the legalities involved, and the importance of the tokens in the market.


The rules and regulations vary from one nation to the other

With respect to the laws regarding crypto currencies or rules and regulations of the virtual currencies it varies widely based on the nation you are trading and exchanging the digital currencies. It is for a fact that the legality of crypto currencies depends on also what you wish to do with them. The governments around the world are taking multiple steps based on the pro and anti use of the digital currencies. Some are talking of government crypto currency or government crypto where encryption would according to government cryptography and under this will be carried out government crypto mining of the government crypto coins which will be like fiat coins or notes issued by the government. But this idea is expected to take time to materialize and work is going on in this direction too. It is so much so that job seekers have long before started looking for government cryptography jobs. This happened soon after floating of information about government cryptocurrency UK and its counterpart government cryptocurrency India. A lot has been discussed and new regulations made. This article highlights some of the legal status of crypto currencies or the legalities of crypto currencies across the world, including state cryptocurrency.



The Cryptocurrencies scenario in Asia under Sate Cryptography Regulation

Cryptocurrency in Japan


If you explore the crypto currency trading market in Asia, you will find that the tech-savvy nation, Japan plays a vital role. Last year, in 2017, under Japans state cryptocurrency laws it introduced a legal tender of the crypto currency trading which can also be termed as state crypto. The exchanges of the digital currency are considered legal, only when they are registered with the Japanese Financial Services Agency. It goes without saying that Japan has emerged as the biggest market for Bitcoin trading in the Asian region.

A warning has been issued to Binance, a Hong Kong based agency for functioning in Japan and trading the virtual currency without a license. This is a very common problem in Japan and other countries as well. In order to make things fall in place, Japan was bold enough to initiate a national system so that trading and exchanging of crypto currencies can be regulated easily. It was the first nation to adopt such a step and strive towards avoiding breaches.

The countrys regulators have published punishment notices against several exchanges and even forced the business to stop operating. This was initiated after a $530 million theft of virtual currency from Coincheck exchange was found.


Cryptocurrency in Scenario in Hong Kong, Taiwan and Phillipines


As regards government crypto currency regulation in Hong Kong, the approach towards crypto currency platforms and trading is quite a regulatory one. Nobody is allowed to trade anything if there is no permission as a security parameter. The policy makers in Taiwan are taking an approach where they are waiting and looking for the future. The Philippines regulators have plans to come up with new rules for ICOs by the end of 2018.


Cryptocurrency in Singapore


As long as Singapore is concerned, crypto or digital currencies are witnessing more as an experiment and there is no point to ban trading. Singapore seems to be more lenient and friendly towards the crypto currencies than the other regions nearby. Around 0.02% of the daily international Bitcoin trading volume is handled by Singapore dollar. In fact, Singapore as a country has also popped up as a major hub for ICOs. Out of total 15 coin offerings, two of the largest offerings took place in Singapore. There is an absolutely no case that impels the ban of the digital currency trading and exchanging in Singapore. In January, 2018, the Monetary Authority of Singapore asked people to be extremely cautious and careful while investing in crypto currencies. The public needs to understand thoroughly the risk factors that are present while investing in digital currency.


Token Values of Different ICOs


Seeing such cryptocurrencies as mentioned above, ICOs were launched, many of which earned great sums to investors. Remember that since Bitcoins were the first and the ones with highest value in markets so far, comparisons of token values are made to their value, that is, BTC.

Cryptocurrency in India

As far as India is concerned, crypto currency trading is not considered as a legal tender in the country. In fact, the policy makers and regulators are planning to outlaw the crypto currency dealings as a whole within the payment system of the country. Furthermore, the government is also planning to appoint a regulator who can oversee the digital currency exchanges and take stern actions if necessary. The Indian government is very vocal about taking serious actions or steps against any illegal digital currency activities within the countrys payment system. The Tax department of the country is found to sent notices to thousands of its citizens after a $3.5 million was found to be illegal.

Cryptocurrency in China

China was once a global centre for cryptocurrency trading. But, today, China has forbidden the use of ICOs and digital assets. The country is considering trading crypto currency or virtual currency and its exchanges as illegal. Hence, there has been a blocking of online accessing of overseas crypto currency platforms and Bitcoin miners have no place in the Chinese market as well.

It was in 2017, when the Chinese government completely banned the use of digital currencies as a means of trade and exchange. This was done in order to raise funds for the start-ups. The new digital currencies were sold and henceforth there was a shutdown of the domestic crypto currency exchanges. Mining is actually an alternative medium via which the virtual currency related activities are carried out in China. There are reports that the policy makers are looking out for ways to end the practice as well.

Cryptocurrency in South Korea

There are reports that South Korea is also working towards a comprehensive set of rules and regulations and plans to impose restrictions on digital currency. In 2017, the country became quite a popular region for crypto currency activity. Though there are restrictions imbibed on the digital currency operation, the exchanges are allowed and the operation is still on. Out of the total trading in South Korea, Bitcoin makes up to 4% of the daily volume. South Korea is considered as the fourth largest economy in Asia that has become indeed a hub for digital currency trading. But regulators and policy makers of South Korea have mixed feedbacks and reactions to the same. Back in 2013, Bitcoin and other virtual currencies didnt have any legitimacy. In fact, there have been plans to completely shut down the crypto currency exchanges in the nation.
In response to it, there was a petition signed to hold back the decision. Following 28000 signatures, the government announced that it will not stop its operation, but will take stern actions against the illegal activities of crypto currency trading in the country. In 2017, the Financial Services Commission banned the local financial firm from Bitcoin trading. In fact, the anonymous bank accounts for crypto coin trading was also banned.
The South Korean Government is vocal in saying that it will not put a ban on the Initial Coin Offerings (ICOs) and the Bitcoin exchanges, but everything will be under strict scrutiny and evaluation. There are still no records on the way the government will regulate virtual currency or crypto currency. There are no conclusions yet, and we have to wait and see what the future holds for digital currency trading and exchanges taking place in the country.

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Cryptocurrency in USA and Canada

In 2013, the Bureau of the Treasury Department, FinCen announced that the crypto currencies dont have any legality in any US jurisdiction. Things have changed a lot in the last six years. Around 26% of the volume in Bitcoin is handled by the US alone. Moreover, the rules and regulations regarding Bitcoin and other crypto currencies in the US are considered in a different light. Depending on the state or jurisdiction, the policy on digital currency exchange varies.
The crypto currency is viewed as a security, by The Securities and Exchange Commission. In early March, 2018, The Securities and Exchange Commission indicated that it is increasing its evaluation and looking for the inclusion of the security laws and regulations starting from crypto exchanges to the digital asset storage, known as wallets.
According to the Futures Trading Commission, Bitcoin is a commodity. Furthermore, the IRS regards crypto currency not as an actual currency. In 2014, IRS defined crypto currency as a property and also published a guidance on the way the digital or virtual currency should be taxed. IRS is quite vocal about curbing the use of crypto currency for illegal activities. We have to wait and watch how things unfold in America with respect to the regulations of the digital currencies in the years to come.
In Canada, the ICOs are considered as a security, by the policy makers. Anything that is associated with the digital currency is treated as highly risky. The stock exchanges of the nation have emerged as a popular place for crypto currency stock exchanges and tradings.
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The regulations about Cryptocurrency in Europe or European Union (EU)

As per the reports, almost 4% of the daily volume of crypto currency are done in Euros. Depending on the EU nation, the legal status varies with the crypto currency exchange policy. But a European nation, who is not a member of the EU, cannot come up with its own digital currency. The main concern with virtual currency trading and exchange looming over the EU states are the money laundering and the financing of the illegal activities. The regulators within EU believes that digital or virtual currency exchanges and the wallet functioning must be executed under the Anti-Money Laundering Directive. The Commission is believed to keep an eye on the market along with the EU stakeholders and at different levels of the world. France has announced a list of 15 exchanges that will be blacklisted from March, 2018. The nation proposes to join hands with Germany and come up with the regulation of the Bitcoin market.
The Blocs regulatory framework is still under a review of the EU for the digital currencies the European Securities and Markets Authority has come up with the restrictions on the derivatives that is linked with the virtual currencies for the retail investors. Moreover, they are also scrutinizing the new MiFID II rules of the EU that applies to the virtual assets. There is one regulation that is already in practice. The crypto currencies meant for the conventional money needs to verify the identities of their customers.
Cryptocurrency in Switzerland
When it comes to digital assets or crypto currencies, the Swiss regulators are considered as one of the most convenient ones in the world. Out of the 10 largest ICOs, 4 of them have taken place in the country. Zug, a town located at the South of Zurich is regarded as the Crtypto Valley. In fact, the town is a home of the Blockchain organizations like Ethereum and Cardano, which is a crypto currency wallet company. Zug is a small municipality, but has emerged as one of the reputed hubs for the Blockchain based organizations and related services.
In order to trade and exchange crypto currencies in Switzerland, it is very essential to register with the Swiss Financial Market Supervisory Authority. There are clear guidelines and regulations for the Initial Coin Offerings (ICOs) as set by the Swiss Financial Market Supervisory Authority. Cryptonation is the term that is often used by the journalists and other experts in the field in Switzerland.
Cryptocurrency in UK (United Kingdom)
In the United Kingdom, Bitcoin is not considered as a legal tender. It is only Sterling that is considered as legal. Furthermore, in respect to the crypto currency exchange policy it is legal only when you register with the Financial Conduct Authority. Similar to any other financial organizations, the anti-money laundering counter terrorism standards need to be catered. The increase in the price of crypto currencies is super crazy.
It is the right time when the digital assets need to be given the similar standard of reputation and importance like the rest of the financial system. But, this also means with extreme privileges, there are high levels of responsibilities. Crypto currency is not used as a medium of exchange, even though it is spread in the whole world. In a way it wont be wrong to say that virtual currency or digital currency has failed in the mainstream financial ecosystem.
There are several crypto currencies that are trying to withdraw the British pounds. It is only Sterling that is considered to be legal in the United Kingdom. The Financial Conduct Authority has regarded the crypto or digital assets as high risk and have even issued warnings to the consumers while investing in it in November 2017.
Cryptocurrency in Russia (take on the crypto currency Legality)
There has been a draft legislation by the Russian Finance Minister regarding a ban on the crypto currency payments. But the government will allow the ICOs and the digital currency exchange into a traditional way. There has been a long hold discussed new legislation for crypto currency and the government is hopeful to pass it very soon.
At present, there are two different draft laws on crypto currencies, one from the Ministry of Finance, Russia, and the other from the Central Bank of Russia. On both the draft laws, there is a similarity of using crypto currencies for crowdfunding. But there are still reports of contradictory opinions on the status of the digital currency exchange operations. Despite this, there are escrows who help in maintaining faith of the currencyin the location.
As per the draft law of the Finance Ministry of Russia, it seeks to put an entryway on the ICOs, or the Initial Coin Offerings for enabling every crowdfunding activity within a regulated environment. If reports are to be believed the Central Bank of Russia doesnt want to provide the domestic investors a chance to get exposed to the legal crypto currency trading.
The Central Bank of Russia is absolutely against any legalization of the virtual currencies that have the capability to get exchanged. In such a scenario, the public can start investing in any digital assets in an active manner, without understanding or realizing the possible risks related to the crypto currency investments.

Cryptocurrency in Africa (African scenario)

In majority of the African nations, the crypto currency regulation is a gray area. Let us have a look at the scenario of crypto currency legality at some of the major economies in Africa.

  • In South Africa, policy makers or regulators dont consider the need to administer any digital asset and crypto currency exchanges. But the Central Bank has proposed that it will investigate and thereby come up with necessary policy guidelines and regulatory framework.
  • In Zimbabwe, crypto currencies are used for trading and exchanging of the remittance payments under their payment sevices. But the authorities and regulators in charge have warned the presence of risk factors like fraud, tax evasion, financing terrorism and money laundering via crypto currency trading and exchanging.
  • Similar to Zimbabwe, the situation with digital currency is same in Africas most tech savvy country, Kenya. Bitcoin and other crypto currencies have gained immense popularity in the country, but there are warnings issued for trading them.
  • In Nigeria, there is no regulatory control on the entire crypto currency market. But the Central bank has intervened and proposed that things will change in the crypto currency market of Nigeria, that seems to be trading Bitcoins and other digital assets more for gambling.
  • 2018 is witnessing a new era of crypto currency policies
    With a rise in demand for crypto currency, there has been a division in the global regulators and policy makers. Majority of virtual or digital currencies are not backed by any Central Government. This means that every nation has a distinct standard. 2018 seems to be witnessing a new era of regulations and legislations for virtual or crypto currencies around the world. Every small announcement made on the same has affected the price of Bitcoin and the value of other crypto currencies as well.
    The event of the G-20 meeting
    At the G-20 meeting, that was held in March, 2018, the Central Bank Governor of Argentina have asked the task forces to submit their respective proposals by the end of July 2018, regarding the legality of crypto currency. According to the Central Bank regulator of Italy, there are no doubt several risks involved with crypto currencies, but there is no point in banning or outlawing it. The global watchdog for G-20 financial regulation economies, The Financial Stability Board raised caution and demanded some nations to limit the use of digital currencies.
    As per the initial judgement of The Financial Stability Board, the digital assets didnt pose any risks to the international financial stability currently. But the International Monetary Fund or the IMF had a different stand. As per the IMF reports, crypto currency pose a potential threat to the economy as a money laundering consequences and terrorism financing. IMF has demanded for the protection of the consumers, similar to any conventional financial sector.
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    Legal Issues associated with the Crypto currencies

    The Taxation Issues
    Taxation seems to be the primary legal issue that comes up with digital assets. If Bitcoins anonymity is used in the correct way, you can help in the tax reduction. Hiding your digital assets is not a challenging aspect, especially when you follow every rule and precaution meant for it. Bitcoin is considered as an asset for tax reduction in several nations, the most prominent being the United States of America.
    When you bring a large amount of foreign currency into a nation, there can be taxation issues. But things are easier and simpler when you store the amount in the Bitcoin wallet and bring it. Since the whole process is online, you dont have to be concerned with any border check points and other regulations that you might have to abide by.
    Using Bitcoin and other crypto currencies for avoiding taxes is basically illegal. But there are nations that come up with a legal way of doing so. If you own Bitcoin assets or other digital currency assets, it is recommended that you execute your research work regarding the tax laws of the jurisdiction you reside. You have to understand that there are nations that classify Bitcoin and other crypto currencies as an asset and not as a currency. Hence, the whole procedure of tax will be completely different.
    The issue with money laundering
    Money laundering is one of the prime legal issues which is forcing many nations to ban Bitcoin and other crypto currencies. One such example is Bangladesh that has banned the Bitcoin trading and exchanging because of a high money laundering situation. The convenience and the ease of transferring money from one country to the other within seconds without any monitoring and evaluation is a grave issue.
    In every jurisdiction out there, money laundering is considered as an illegal activity, regardless of the method involved in it. A country like South Korea has been quite vocal about their take on crypto currency and the illegal activities involved, alomng with unlicenced crypto currency loan sevices. They have proposed that the Bitcoin and other crypto currency will not be outlawed, but in case of any illicit activity, there will be a prosecution and banning of the crypto currency.
    Some other legal problems involved with the digital currencies

    1. Lack of any legal protection
    2. A possibility of hiding the assets
    3. The problem of growing online drug market
    4. Loss of Bitcoin private keys and you have nothing to prove as your own asset
    5. The complete ban of crypto currency trading and exchanging in several countries
    6. The VAT application for Bitcoin is based on the EU court hearing. As per the court hearing Bitcoin is VAT free.
    7. Thefts of Bitcoin and other crypto currencies

    Nations with unregulated crypto currency

    When you are talking about unregulated crypto currency, it means that there is complete or absolute legal framework. Moreover, the use of Bitcoin and other crypto currencies are free to be used with a very few or no legal restriction. Some of the nations are:

  • Australia
  • Brazil
  • Belgium
  • UK or United Kingdom
  • Chile
  • Columbia
  • Croatia
  • Czech Republic
  • Cyprus
  • Denmark
  • Greece
  • Hong Kong
  • India
  • Estonia
  • Israel
  • Ireland
  • Lithuania
  • Italy
  • Malta
  • Malaysia
  • New Zealand
  • Pakistan
  • Netherlands
  • Poland
  • Philippines
  • Romania
  • Portugal
  • Slovenia
  • Slovakia
  • Singapore
  • Nepal
  • Vietnam
  • South Africa
  • Turkey
  • Nicaragua
  • North Korea
  • Iran
  • Iraq
  • Somalia
  • Barbados
  • Antigua
  • Papua New Guinea
  • Egypt
  • Afghanistan
  • Oman
  • Saudi Arabia
  • Qatar
  • Oman
  • Nations with regulated crypto currency

    There are countries where the use of Bitcoin and other crypto currencies is legal. But there are no specified regulations for the tax. Some of the nations with regulated crypto currency include the following:

  • Switzerland
  • Sweden
  • Spain
  • South Korea
  • Mexico
  • Canada
  • Jordan
  • Japan
  • Germany
  • Finland
  • France
  • France
  • Lebanon
  • Luxembourg
  • Nations with restricted use of crypto currency trading and exchanges

    There are nations where the use of crypto currencies is restricted, but are legal in certain situations. The nations include:
    1. In China, any private individual is not allowed to transact digital assets. Even banks and corporations are not allowed. It is only mining that is considered as a legal tender in the country.
    2. Taiwan is one such nation where it is absolutely legal to transact or trade and even buy and sell Bitcoins and other crypto currencies. But the use of ATMs for digital currencies is not regarded as a legal aspect.
    3. In Iceland, the mining of crypto currency is considered to be legal. The buying and selling of crypto currencies are not legal.

      Nations that have banned the trading and exchange of crypto currency

      The following are the countries where the use of crypto currencies has been banned.
    4. Bangladesh
    5. Russia
    6. Thailand
    7. Ecuador
    8. Kyrgyzstan

    9. The above scenario as regards nations vis--vis crypto currencies keeps changing with time.

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      The present legal status of the digital currency is not defined in the global financial system

      If you explore the worlds Bitcoin and other crypto currency usage, their status is still not definite. Some have legal tenders, while others with illegal tenders. In fact, there are countries that consider crypto currency as regulatory, while some as unregulated. There are several nations that have included in their financial ecosystem. It wont be wrong to say that Bictoin and other crypto currencies have a potential to become an international currency and used as a means of trade and exchange in the future.
      In countries where the use of the digital currency has been banned, it is a challenging task to completely regulate them without the use of the internet censorship. The digital assets have shown a great caliber to grow into a legal framework incorporation and also to the current financial system. The world now has to wait and watch where does it stand in the years to come by finding solutions to the concerns. With the rise in the popularity of crypto currency, more and more nations will regulate them, and banning will be a less phenomenon.
      We can expect to see more legal regulations on the crypto currencies
      From the current scenario and the importance of crypto currencies in the financial ecosystem, we can expect to witness more legal regulations and legislations surrounding Bitcoin and other crypto currencies operating in the markets across the globe in the next few years. Several legal developments will pop up in the coming future, which will prove both good and bad for crypto currencies, and investors.
      It wont be wrong to say that 2017 seemed to be the year of the ICOs. 2018 is the year that has come up with new regulations and legislations for crypto currencies and digital assets. There are heated discussions held all across the globe regarding the legality of crypto currencies, and how it should be treated. There are nations that are welcoming the digital assets as a part of their financial economy, while others are issuing warnings to the investors of digital currencies. There are also some nations that are very harsh on the concept of digital currency as a whole.

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