How legal is Bitcoin and Crypto Currencies?

28 Sep 2017

global regulation

 

The legality on Bitcoin and other crypto currencies depends on where you are and what you wish to do with it. Governments the world over are trying to get to grips with its risks and rewards, playing the game between consumer protection, anti-criminal activity and encouraging innovation. The risks for Governments can vary, most emerging markets are either heavily anti or pro the use of digital currencies such as Bitcoin but in general western economies are using soft touch principle based regulation to encourage innovation. Regulation is a patchwork of different opinions the world over but see below to get the latest on which governments are thinking what.

Holland – In June 2013 the Dutch Finance Minister released a report that gave Bitcoin the status of an item of barter meaning it needed no specific licensing or compliance requirements. He described Bitcoin as “Bitcoin is not a financial product as defined by law, purchase or sale of bitcoins is not a financial service either, so the financial services act does not apply”. The Dutch Ministry of Economic Affairs has taken a dimmer view through its think tanks and sponsored articles – attempting to encourage its regulation.
Norway – The general of taxation declared at the end of 2013 that “Bticoins don’t fall under the usual definition of money or currency” and therefore making them subject to the usual capital gains tax laws.
Germany – The German Government released a report in August 2013 saying that Bitcoins should be treated as a trading activity and therefore be subject to capital gains taxes unless they were held for a year or more. The German Federal Ministry of Finance further clarified their position by saying that Bitcoin should be treated as a unit of account and private money and should therefore be subject to sales taxes and VAT.
Bulgaria – Bulgaria declared in April 2014 that Bitcoin was a hybrid currency asset that should be subject to a 10% tax when it is used as a currency or sold to and from a fiat currency.
Slovenia – Slovenia took a middle road in Dec 2013 in declaring that Bitcoin was neither a financial asset or a currency and should be taxed based on the circumstance it was used whether it was via trading profits or through mining.
UK – The UK is probably one of the most considered and thoughtful regimes in terms of fostering future industry for Bitcoin and crypto currencies. Their initial knee-jerk reaction to slap a VAT tax on Bitcoin ining was scrapped in March 2014. The HM Treasury has also made a call for information on the digital and crypto currency landscape to determine where and when regulation should be introduced and by whom it should be monitored. This declaration by the UK not to add VAT on Bitcoin services and treat it as a currency rather than an asset has meant a few other Governments are making a volte-face as the UK’s jurisdiction is now the global minimum in terms of cost. In all aspects the United Kingdom’s approach has been one of impeccable caution to play the balance between consumer protection and creating a solid base of support for a nascent industry to thrive in the hope of future tax revenues.
Ireland – The Irish Central Bank has not made any moves towards regulating Bitcoin but has declared that it foresees a dual economy of digital currency and state based fiat currencies – whit various businesses and products being bought or sold in either depending on preferences of the user or producer.
Belgium – has refused to issue any stance regarding Bitcoin and along with a whole host of other countries is waiting for European wide guidance. They have issued a public warning that there is no Government oversight.
Portugal – Again have issued a warning to the public that Bitcoin and digital currencies do not have any Government oversight.
Greece  – Another country waiting for a European wide approach to regulation having issued a warning to the public that there is no government protection or oversight of the industry.
Hungary – Again has issued a public warning that there is no Government oversight of Bitcoin and Digital currencies.
Croatia – A further country that is taking a wait and see approach, having issued a public warning that there is no government oversight.
Luxembourg – has taken a hard line with respect to digital currencies and Bitcoin through declaring that as digital currencies operate like money but are regulated in their issuance by the developers, that they should comply with all standard regulation.
Italy – There has been concerted pressure from various organisations to encourage regulation and oversight to curtail the use of digital currencies in facilitating criminal activity.
Ukraine – In July, despite vague Government regulations and the turmoil in Crimea and the East of the country, a major bank announced the ability to purchase Bitcoins in any of its ATM terminals throughout the country.
Poland – The Polish Government refused to recognise Bitcoin as a currency in July 2014 but did declare that options or futures contracts based on a specific underlying index of the Bitcoin price should be declared as financial instruments and subject to those regulations.
Latvia – The Government issued a warning about Bitcoins and other digital currencies a day after the national carrier announced that it would accept Bitcoin as an alternative payment method for flights.
Estonia – The central bank of Estonia warned that central virtual currencies could be a ponzi scheme but two months later the tax authority declared that Bitcoins and digital currencies could be declared as an alternative payment means subjecting them to capital gains liabilities and VAT.
Finland – Te Finnish regulatory body has declared that Bitcoin should be treated as an asset and be subject to VAT and Capital Gains although the capital gains losses would not be deductible.
Lithuania – The Lithuanian government has declared a wait and see policy as the regulatory landscape evolves across Europe.
France – The French Government has placed onerous regulation and a form of Green listing on the industry. This came after the French police raided and exchange and seized over 200 thousand Euro’s worth of Bitcoin. There idea is that any exchange or wallet should hold data linking the specific person to the addresses and therefore removing the anonymity that Bitcoin can provide. The French Government has otherwise declared its intention to recognise Bitcoin as a currency but also impose transactions on various transaction types.
Switzerland – The Swiss moves towards regulation are positive but their actions have been little if not hostile. The Government declared that Bitcoin should be treated as a foreign currency as it could help to catalyse innovation in the financial sector. This general message having been conveyed oin late 2013 the Government then forced a Bitcoin broker and ATM provider to suspend activities across the country in mid 2014. The Company was later able to apply for a money transmitter license, but the nature of Swiss virtual currency regulations stands on a knife edge.
Turkey – The Turkish authorities have issued guidance saying that Bitcoin does not meet the standards of electronic money and that the volatility leaves users with a high level of risk. The usual taxation regime is expected to apply.
Singapore – The Singapore government, in early 2014, declared Bitcoin as a good purchased to purchase goods and therefore subject to a specific tax. The Monetary Authority of Singapore then required exchanges and ATM providers to Green-list, or de-anonymise their users to allow whilst simultaneously declaring that virtual currencies such as Bitcoin are not securities and not subject to regulation.
Thailand – Thailand has probably made one of the harshest reactions to Bitcoin by declaring the use of Bitcoin as illegal in 2013. In 2014 they modified their position by declaring Bitcoin as not illegal but a risky form of electronic data that has no self worth.
Indonesia – Indonesia is another mixed bag with respect to Bitcoin regulation – a rather confused deputy Governor of the central bank said the currency broke rules but that they had no plans to regulate it.
Vietnam – The Vietnamese have issued a warning that Bitcoin could have consequences due to its volatility and prominent collapses of various industry players.
Philippines – The Central Bank of the Philippines has issued a warning regarding virtual currencies but also stated that they are not subject to any regulation.
South Korea – The South Korean Government has not recognised virtual currencies as legal tender, but have been looking into green-listing various types of involved businesses to ensure compliance with anti money laundering laws.
Hong Kong – Having taken the mantle from China in volume of trading Yuan to Bitcoin – the Hong Kong authorities have said they are in a state of monitoring and fear that digital currencies could form speculative bubbles and manies – whilst also providing a means for money laundering and other illicit activities.
India – India is also in a state of wait and see, again trying to measure the benefits against the risks.
Japan – Japan is another of the more friendly regimes towards Bitcoin despite being the Nation hot to one of the worst Bitcoin exchange disasters with Mt Gox. In March 2014 they declared that Bitcoin should be treated as a commodity and subject to no specific laws. The Japanese Financial Services Agency declared in June 2014 that Bitcoin should be self regulated at present and that Japan should become the world’s safest place to run a Bitcoin business, and that the industry should not be bogged down by excessive compliance and red tape. They also pushed for a reversal on the commodity taxation treatment of Bitcoin and just impose a set of taxes on certain forms of transactions. The JADA, or Japanese Authority of Digital Assets was formed to provide a principle based or code of conduct format for Bitcoin only platforms.
Australia – The Australian Government is positive towards Bitcoin. This is despite numerous Australian banks pulling their support and commercial banking facilities for Bitcoin related businesses. The use, trading and mining of Bitcoins is considered legal and the Australian Taxation office has announced its intention to incorporate guidelines on capital gains tax and VAT taxes.
New Zealand – The Kiwi stance to Bitcoin can be gleamed from the Governor of the Central Banks belief that digital currencies have the potential to supplant cash.
Colombia – The Colombian government has taken a hands off approach to Bitcoin and said the risks are for the individual partaking in the industry.
Bolivia – The Bolivian Government has banned the use of Bitcoin in the belief that it will allow tax evasion and monetary instability.
Argentina – The Argentinian anti money laundering agency has declared that all business using digital currency must declare all transactions related to the industry.
Ecuador – The Ecuadorian Government has banned all Bitcoin use in the hope of promulgating their own digital currency based on the principles of Bitcoin.
Mexico – The Mexican Government has taken a similar stance to Ecuador, however they have not outright banned the use of alternative digital currencies but instead are in talks with Government regulators to try and introduce their own form of Bitcoin and their own block chain specific to Mexico.
Brazil – The Brazilian Government has declared that Bitcoin is not a currency but an asset and therefore subject to 15% capital gains taxes above a threshold.
China – In late 2103 the China Central Bank barred financial institutions from partaking in digital currency and Bitcoin transactions. They do however allow individuals to trade as they wish – Chinese Yuan to Bitcoin is the most traded daily fiat to Bitcoin pair.
Canada – In November 2013 the Canadian Revenue Agency declared that Bitcoin payments should be treated as barter transactions. The Canadian Federal Government also announced its intention to regulate Bitcoin through its anti money laundering and counter-terrorist financing legislation.
Denmark – The Danish Government and Financial Services Authority have announced that Bitcoin businesses will be taxed in a normal manner and individuals will not be subject to taxation from trading. The FSA has suggested amending the present legislation so that virtual currencies and regulation come under their remit.
Iceland – After the fallout of the financial crisis and collapse of Icelandic banking strict financial foreign exchange controls were imposed on the Icelandic Krona. As such Bitcoin trading in Iceland is illegal although there are some grey areas with respect to this conclusion.
Israel – The Israeli Government is considering a tax on Bitcoin – with its history of financial and technological innovation all bets are on a soft landing for the digital landscape in Israel.
Kyrgyzstan – The Kyrgyzstan Government has completely banned the use of Bitcoin within its national borders.
Lebanon – The Lebanese Government has issued a warning the public regarding volatility and other risks involved with digital currencies – they also pointed out that e-money was illegal under an act issued in the year 2000 suggesting their stance is potentially hostile.
Malaysia – The Malaysian authorities have issued a statement declaring a hand’s off attitude towards digital currencies and Bitcoin. They have warned their citizens of the risks involved.
Russia – The Russian approach to Bitcoin is negative. They do not allow individuals or legal entities to use Bitcoin or any digital currency. The Deputy Finance Minister announced in September 2014 that a law would be introduced in early 2015 banning their exchange to real money. This is a consequence of the present economic malaise in Russia and the weak Rouble due to Western economic sanctions.
Taiwan – The Taiwanese Financial Supervisory Commission have stated that they have banned Bitcoin ATM installations as Bitcoin is not a currency and therefore should not be accepted by banking institutions or individuals.

 

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