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Are Bitcoins Legal

author
Maria Johnson
• Monday, 07 December, 2020
• 8 min read

India banned banks from dealing in bitcoins and left the overall legal status of cryptocurrencies unclear. In the U.S., the IRS has taken an increasing interest in Bitcoin and issued guidelines for taxpayers.

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Contents

Bitcoin has serious flaws for those seeking anonymity, so illegal activity is moving to other cryptocurrencies. In the United States, the IRS has taken an increasing interest in Bitcoin and issued guidelines.

In 2014, the agency issued IRS Notice 2014-21 to provide information on the tax treatment of virtual currencies. Bitcoin exists in a deregulated marketplace, so there is no centralized issuing authority.

Bitcoin addresses do not require Social Security Numbers (SSNs) or other personal information like standard bank accounts in the United States. In its early years, the perceived anonymity of Bitcoin led to many illegal uses.

It was a section of the so-called dark web where users could buy illicit drugs. Competing cryptocurrencies, such as Monera and Cash, now provide much better privacy protection.

The digital currency known as Bitcoin was created in 2009 by a person or organization using the alias Satoshi Nakamoto. There are no physical bitcoins that correspond with dollar bills and euro notes.

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(Source: teenmodels4bitcoin.com)

That is partly because speculation often drives the price, but also because bitcoins have a relatively small market compared to traditional currencies. Legal The European Union has passed no specific legislation relative to the status of bitcoin as a currency, but has stated that VAT/GST is not applicable to the conversion between traditional (fiat) currency and bitcoin.

In October 2015, the Court of Justice of the European Union ruled that “The exchange of traditional currencies for units of the 'bitcoin' virtual currency is exempt from VAT” and that “Member States must exempt, inter alia, transactions relating to 'currency, banknotes and coins used as legal tender '”, making bitcoin a currency as opposed to being a commodity. The European Central Bank classifies bitcoin as a convertible decentralized virtual currency.

In 2016 the European Parliament's proposal to set up a taskforce to monitor virtual currencies to combat money laundering and terrorism, passed by 542 votes to 51, with 11 abstentions, has been sent to the European Commission for consideration. Familiarity with Bitcoin is at an all-time high, but trust remains a problem, and much uncertainty still surrounds the legal status of the world’s most popular cryptocurrency.

In 2013, the US Treasury Department’s Financial Crimes Enforcement Network (FIN CEN) guidelines stated that it’s legal to invest in Bitcoin and to use it as a form of payment, as long as the seller of the goods or services is willing to accept it. Texas was the first state to publish a memorandum declaring that no money transmitter license was needed to sell Bitcoin or other digital currencies.

But some states, including New York, New Hampshire, New Mexico, Florida, and Connecticut are more hostile toward Bitcoin, requiring money transmitter licenses for cryptocurrency operators. Last year, for example, Nevada unveiled new requirements for crypto ATM owners, obliging them to obtain a transmission license.

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Promoting cryptocurrency markets can be illegal if the activity is construed as a pump-and-dump scheme, which the CFTC defines as “coordinated efforts to create phony demand (the pump) and then sell quickly (the dump) to profit by taking advantage of traders who are unaware of the scheme.” Jake Chervinsky, a lawyer and general counsel to decentralized finance startup Compound, recently warned that such activity is equally risky with cryptocurrencies as with stocks and shares.

And, since there is no unified law governing cryptocurrencies, it often comes down to individual states whether a money transmitter license is required. The US is considered one of the leading countries in issues of cryptocurrency regulation, so it sets the pace for much of the world.

The cryptocurrency is not legal tender in Canada, and dealers in digital currency are regulated and licensed as money services businesses. The UK, for instance, appears to be in no hurry to regulate, and Russia is yet to publish its draft law on cryptocurrencies.

Exactly what those steps are, are unclear; nevertheless, the fact that the report highlights the “transformative potential” of cryptocurrency suggests that an outright ban on Bitcoin is off the cards. Brooks also promised “a lot of good news for crypto” by the end of Donald Trump’s term in office.

In a December 2019 Coin desk op-ed, Gentler described Bitcoin as a “catalyst for change,” although he also highlighted that crypto markets have been”rife with scams, fraud, hacks and manipulation.” In July 2020, the CFTC stated its aim to “develop a holistic framework to promote responsible innovation in digital assets” within its strategic plan for 2020-2024.

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(Source: www.coindesk.com)

Disclaimer The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice. Bitcoin, the world’s first decentralized digital currency, is attracting attention across the globe.

When acknowledging that it is also the first borderless, apolitical form of money in history, it’s hard to avoid the topic of whether it can be used legally. It’s worth noting that no matter who says you can’t use bitcoin, its decentralized nature ensures that nobody can actually stop you from using it.

Other countries, like China, have shifted their view on bitcoin, banning and unbanning the currency in various ways over the last few years. But, by and large, it is legal to send, receive, mine and generally use bitcoin in most countries around the world.sized protocol.

Some first world countries, like the United States, Canada, and most of Europe, have taken a “wait and see” approach to bitcoin by not outright banning it, but they are slow to regulate it as a legitimate financial technology. The problem arises when each regulatory body has their own viewpoint on what classification the digital currency falls under.

As for why this is, YouGov surveys have found that 29% of EU and North American respondents believe that Bitcoin is used predominantly by Dark Web criminals. For the most part, lazy news media is to blame for concerns over the legality of Bitcoin.

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(Source: www.reddit.com)

During both bear and bull markets many, therefore, recycle Dark Web myths which have already been debunked several times over. As a result, countries like Vietnam have become go-to places to set up Bitcoin mining operations.

Contrary to popular opinion, Bitcoin is not the cryptocurrency of choice for Dark Web users. In fact, Bitcoin is the worst form of currency (crypto or otherwise) to plan on using in illicit transactions.

Because of this, Dark Web criminals prefer to use dedicated privacy coins when wheeling and dealing. World governments are, therefore, collecting more tax and working with institutions to find ways to regulate cryptocurrency better.

However, it is worth noting that previous attempts to ban Bitcoin in countries like China and Russian have only led to increased rates of black market adoption. In this case, there is a strong argument to be made that banning Bitcoin would be significantly counterproductive for countries like the United States and Europe.

Bitcoins aren't just an abstract financial instrument living somewhere in the digital ether anymore. They're now a physical currency capable of taking a ride in your pocket or scratching off your lottery tickets.

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The existence of things like the Cassius Bitcoin POS system, which is based on a Verizon point-of-sale unit that we're all familiar with, might not completely make the case that Bitcoins are a competing--and therefore illegal--currency, but it sure seems like a sophisticated means of circumventing the official currency if nothing else. The long-term viability of Bitcoins has been in doubt since one of the exchange servers was hacked earlier this year, causing the value of the currency to plummet.

So last Thursday, while waiting for a flight to Nashville, I pulled up a popular application called Coinbase that can be used to buy and sell bitcoin. The virtual currency had hit $10,000 for the first time a couple of days earlier, before retreating somewhat.

Warren Buffett called bitcoin a mirage in 2014 and warned investors to “stay away.” Earlier this month, one college friend casually told me over drinks he'd made tens of thousands of dollars investing in another cryptocurrency.

When I saw the price of bitcoin fall to $9,500, I pressed buy, defying the wisdom of two finance titans and my wife. By this week, it was up to $12,000, and then it really took off: The price topped $17,000 on some exchanges Thursday, and $18,000 on at least one. Other cryptocurrencies have seen similar spikes, though they trade for much less than bitcoin.

Dozens of new hedge funds have launched this year to trade cryptocurrencies like bitcoin. Others, like Simon, have said it's even worse than the Dutch tulip mania from the 1600s, considered one of the most famous bubbles ever.

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(Source: arstechnica.com)

As Buffett put it back in 2014, “the idea that has some huge intrinsic value is just a joke in my view.” Bitcoin is not backed by a company's earnings, or the strength of a government and rule of law.

Right now, I can use my bitcoin holdings to pay for purchases at Overstock (OS TBP), or book a hotel on Expedia (EXPEL). Rather than a currency, bitcoin is being treated more like an asset, with the hope of reaping great returns to the future.

Today, the leading exchange is offered by Coinbase, a startup that has raised more than $200 million from a number of top tier venture capital firms. There are also bitcoin ATMs in scattered bodegas and convenience stores around the country, through companies like Coin source.

The ATMs let you exchange bitcoin for cash, or vice versa by scanning a QR code from the digital wallet application on your phone. As with other stock trading applications, you pay a small fee for each transaction, buying and selling.

My original $100 bitcoin purchase won't officially be completed on Coinbase until Friday, more than a week after the transaction.

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(Source: teenmodels4bitcoin.com)

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