Many countries still don’t give a legal framework for cryptocurrencies and these new technological innovations, even though it exists for almost ten years. There are questions about taxation, the legality of these currencies in different countries, money laundering, legal status, and other issues.
Legality of a cryptocurrency
Depending on the country there are several various aspects to consider. Is cryptocurrency in the same class as other currencies like money. Is it an asset, is it illegal or a specific country doesn’t even have legal frameworks in place.
Russia, Ecuador, China and Bangladesh are for the moment banning Bitcoin as a cryptocurrency. In Iceland, it is banned because of already existing laws. But in many countries such as in the United Kingdom, the cryptocurrencies are unregulated, and there is no legal framework in place. In the European Union, these types of virtual money are exempt from VAT taxes, like gold. These are the countries who consider cryptocurrencies illegal for now: Ecuador, Russia, Kyrgyzstan, Bangladesh, Thailand, Iceland, China.
Taxation on cryptocurrencies
Because exchanging cryptocurrencies is anonymous, it hides assets and can help in reducing taxation. It makes it easy for anyone to bring foreign money past borderlines, and then cash it by bypassing taxes.
Money Laundering is a big problem with cryptocurrencies because you can easily move money between countries, the process is decentralized, and if it is done right, it is also anonymous. But it is risky because of the decentralized ledger – blockchain technology. Money laundering is illegal everywhere in every way, so countries that don’t understand how blockchain and cryptocurrencies work are banning it all together. But because of allowing people to exchange their goods, without the regulations from authorities freely, cryptocurrencies have a great potential in becoming the global currency. Regulating its usage without internet censorships is tough. The fear everybody has about this technology is coming only from not understanding it. If institutions allow themselves to learn about it, they can provide a legal framework that can correct any misusage.
Legal status in countries
Coluntries where the use of cryptocurrency is still unregulated, or it is deregulated for free use with some legal restrictions are: Hong Kong, Czech Republic, United Kingdom, New Zealand, Croatia, Italy, Pakistan, Denmark, Philippines, Australia, Malaysia, Vietnam, Afghanistan, Singapore, Belgium, Indonesia, Brazil, Portugal, Iran, Barbados, Columbia, Greece, Chile, Nicaragua, Romania, North Korea, Papua, New Guinea, Cyprus, India, Ireland, Slovakia, Israel, Lithuania, Estonia, The Netherlands, Slovenia, Malta, Poland, Somalia, South Africa,Oman, Turkey, Iraq, Nepal, Antigua, Egypt Qatar, Saudi Arabia.
Countries, where cryptocurrencies are legal and regulated by the tax are Lebanon, France, Canada, South Korea, Mexico, Spain, Germany, Jordan, Finland, Sweden, Japan, Luxembourg, Switzerland. These type of currencies are legal but restricted in some usage in the following countries: Iceland (mining is legal, but it is illegal to buy/sell), Taiwan (ATMs for Bitcoins are not legal), China (Private Individuals may transact, corporations and banks cannot). These are the countries where cryptocurrencies are banned: Russia, Thailand, Bangladesh, Ecuador, Kyrgyzstan, Summary.