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Several countries have acknowledged the benefits of Bitcoin and legalized the digital currency. Read on to know more about those countries and how they are regulating Bitcoin use.
Making its debut in 2009, the digital currency of bitcoin has now been around for over a decade. Although bitcoin has proven to be a revolution in the cryptocurrency universe, it has also given a headache to regulators, enforcement agencies, and tax authorities, who are still not clear about the best practices.
However, a relevant question is whether bitcoin is legal or illegal, and the answer is that it depends on your location and activity.
In this article, we will take a look at the countries that have given bitcoin the nod.
Governments that are legally backing Bitcoin:
1. The United States:
Although the United States has had a generally positive perspective about bitcoin, there are several government agencies trying to make sure that the cryptocurrency is not used for illegal transactions. Many renowned businesses, including the Microsoft Store, Subway, and the Dish Network, are happy to receive payment in bitcoin. The currency has also managed to establish a presence in the U.S derivatives markets, which speaks volumes about its legitimate existence.
Since 2013, the U.S Department of Treasury’s Financial Crime Enforcement Network (FinCEN) has been issuing bitcoin-related guidance. According to the Treasury, bitcoin is more of a money services business (MSB) than a currency. According to this definition, bitcoin falls under the Bank Secrecy Act, thereby requiring payment processors and exchanges to stick to specific responsibilities such as registration, reporting, and record-keeping. Moreover, the Internal Revenue Service (IRS) categorizes bitcoin as a property for taxation purposes.
2. Canada:
Canada is following its southern neighbor in establishing a pro-bitcoin stance while simultaneously making sure that the cryptocurrency is not used to launder money. The Canada Revenue Agency views bitcoin as a commodity and hence, categorizes bitcoin trading as barter transactions. Moreover, the income generated from bitcoin trading is also considered business income. How bitcoin is taxed depends on whether the individual is merely involved in bitcoin investing or has a buying-selling business.
Again, like the U.S, Canada sees bitcoin exchanges as money service businesses, bringing them under the compass of anti-money laundering (AML). It is mandatory for all bitcoin exchanges to be registered with the Financial Transactions and Report Analysis Centre of Canada (FINTRAC). Besides, the exchanges need to adhere to the compliance plans, keep certain records, and report any suspicious activity or transactions. Furthermore, several major banks in the country have decided to ban credit and debit cards for bitcoin transactions.
3. The European Union:
On the 22nd of October 2015, the European Court of Justice (ECJ) passed a ruling that declared that the purchase and selling of digital currencies to be a supply of services. This means that digital currency trading is exempt from VAT (Value Added Tax) in every EU (European Union) member state.
Some countries have established their own stance towards bitcoins. Finland, for instance, has defined bitcoin as a financial service and granted a VAT exemption – in other words, Finland views bitcoin as a commodity rather than as a currency. A similar stance has been adopted by the Federal Public Service of Finance in Belgium. In the United Kingdom, the Financial Conduct Authority is supportive of bitcoin and believes that the government should support the digital currency. Germany, too, has declared bitcoin to be legal, but the taxation methods are different, depending upon whether the authorities are dealing with enterprises, exchanges, miners, or users.
To conclude, bitcoin continues to gather popularity as more and more countries are being convinced that the pros of the digital currency outweigh its cons. For more information regarding the legality of bitcoins, please feel free to visit immediate-edge.co.
