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Author : Bitconnect
Bitcoin taxation was a widely discussed issue in the U.S. While the U.S classes Bitcoin as a virtual currency, it classes Bitcoin as an asset for tax purposes. If someone has held large quantities of Bitcoin, if they somehow lose their private keys, this is hard to prove and a tax jurisdiction may treat you as still owning those coins as it is difficult to prove otherwise, although over time none of the coins moving on the blockchain would prove the person has not used them, either because they won’t or cannot. Recently the online drugs marketplace silk road was closed down. The marketplace was able to transact without being traced due to the use of Bitcoin, although the sites design caused it to give away the server’s real IP address and eventually after years of investigation resulted in the capture of those running it. They had not properly secured their wallets either, resulting in the FBI being able to seize the coins and auction them. Some corrupt FBI agents tried to steal some of the coins but were caught partially due to the publicity of the blockchain. Due to the one-way nature of Bitcoin transactions, there is little protection from scams with no ability to chargeback if needed, but this can also work the other way, preventing fraudulent chargebacks. This is one area of legal framework which is being considered in some jurisdictions. Bitcoin can be used to legally or illegally hide assets, for example in divorce cases etc. This is very easy to do and if done correctly difficult to prove. It is a legal loophole in some places, illegal in others. Check your local laws if in doubt.
Lack of legal protections can be a problem, especially if you are scammed when using Bitcoin due to the deregulated nature of bitcoin. This should be taken into account when using Bitcoin. These are some of the key recent legal issues that have come to light concerning Bitcoin. The next section will discuss legal status by country. Legal status by country. This section will discuss the legal status of Bitcoin by country. It will discuss unregulated, regulated, restricted, and banned countries. This is the current list as of September 2016 and may not include all countries. Unregulated. Unregulated is where no legal framework is yet in place, or the use of Bitcoin has been deregulated and is free to use in any capacity with no or very few legal restrictions. United Kingdom. Australia. Belgium. Brazil. Columbia. Chile. Croatia. Cyprus. Czech Republic. Denmark. Estonia. Greece. Hong Kong. India (Although many Indian banks do not allow transactions pertaining to them). Indonesia. Ireland. Israel. Italy. Lithuania. Malaysia. Malta. New Zealand. The Netherlands. Nicaragua. Pakistan. Philippines. Poland. Portugal. Romania. Singapore. Slovakia. Slovenia. South Africa. Turkey. Vietnam. Nepal. North Korea (tourists have used Bitcoin on the tourist internet services with no problems, most North Korea citizens have no access to the public internet). Papua New Guinea. Antigua. Barbados. Iran. Iraq. Somalia. Afghanistan. Egypt. Saudi Arabia. Oman. Qatar. Regulated. Countries where Bitcoin use is legal but specifically regulated for tax or other purposes, and in some cases classed as money are: Finland. France. Germany. Japan. South Korea. Jordan. Lebanon. Luxembourg. Spain. Sweden. Switzerland. Canada. Mexico.
Restricted. Countries where Bitcoin use is restricted but legal in some circumstances are: China (Private Individuals may transact, corporations and banks cannot, mining is legal). Iceland (illegal to buy/sell, but mining is legal). Taiwan (legal to buy/sell, transact and trade, but ATMs for Bitcoins are not legal). Banned. Countries where Bitcoin use is banned outright are: Russia (banned outright). Bangladesh. Thailand. Kyrgyzstan. Ecuador. Summary. Most Bitcoin use around the world is legal and unregulated at present. Some countries have incorporated it into their financial system, but very few have outright banned it. Bitcoin has therefore got a great potential to become a global currency. Even in countries where it is banned, it is very difficult to regulate the use fully without internet censorship. It shows there is a great potential for growth and incorporation into legal frameworks and to the existing financial system. The key legal issues surrounding Bitcoin have been discussed and these are the main issues nation states consider when considering legislation for Bitcoin. If Bitcoin popularity increases further, more countries may regulate it, although it does not seem like many are considering banning it. Conclusion. There are likely to be more legal precedents set in the next few years surrounding digital currencies. This document has discussed the key legal issues surrounding Bitcoin, and the current legality of Bitcoin in 2016 in many countries. Further legal developments over the next several years are likely to occur, for both good and ill of Bitcoin and other cryptocurrency.
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