Are Cryptocurrencies Legal?
As of February 2020, Bitcoin is legal in the U.S., Japan, the U.K., and other developed countries.
However, in emerging markets, the legal status of Bitcoin varies. China restricted Bitcoin without criminalizing the holders of Bitcoin, while India has banned banks from dealing in Bitcoin and left the status of cryptocurrencies unclear.
If you are interested in Bitcoin or cryptocurrency and are not sure it’s legal within your specific country, you need to check and do your own due diligence.
In countries where Bitcoin is indeed legal, many of the laws apply to it as they do with other assets such as FIAT currency.
Cryptocurrencies and Taxes
Tax laws are the area where many people end up in trouble, as Bitcoin and Cryptocurrency are treated as property and not currency.
In the United States, the IRS has issued guidelines for Bitcoin since 2014. Specifically, the IRS Notice 2014-21, where they provide information on the tax treatment when it comes to virtual currencies.
Virtual Currency is the term used by the IRS to describe cryptocurrency. That being said, in 2020, the IRS created a new tax form that requires taxpayers to declare if they engaged in any virtual currency transactions in 2019.
Keep in mind that bitcoin exists in a deregulated marketplace and there is no centralized issuing authority. Bitcoin addresses do not even require Social Security Numbers or other personal information in the way bank accounts do.
However, Bitcoin does create a permanent public record of all of the transactions. When a person links to this address, that person is essentially connecting to all of the other transactions used on that address.
There are however some altcoins such as Monero and Zcash that provide privacy protection in a better way than Bitcoin does.
Make sure you pay attention to your tax liability when you are trading or using Cryptocurrencies. As these currencies become more mainstream, Governments continue to try to make sure they keep track of your investments.
OK.. so now that we have discussed the legal landscape, let’s talk about the most popular Cryptocurrencies available today…