Europe as a whole is unanimous: cryptocurrencies should be allowed to be kept and spent by individuals, banks and companies, but laws must be drafted to combat anti-money laundering, tax evasion, fraud and the purchase of illegal goods.
In Europe bitcoin is not regarded as money
The countries of European Union have different opinions on this problem. Many European politicians are also involved in taking control of digital currencies, although they do it not so clearly and hastily as in other parts of the world. Governments do not believe that cryptocurrency should be regulated in any way, in the following countries:
For example, in Austria, Bitcoin is legal, but you will have to pay tax from the salary in cryptocurrency. Central banks of the Czech Republic and Croatia believe that cryptocurrency "does not go beyond the law," considering it not money, but an "intangible asset."
Not regarding cryptocurrency as the money is avery popular practice among governments, and, given the diversity of the nature of tokens (and sometimes they look more like company stocks or IOUs), this is quite fair.
Poland and Germany
In Poland and Germany, the authorities are trying to understand the definitions: here, mainly financial authorities issue written comments that, although cryptocurrencies do not violate EU laws, they are not money and carry many risks, and therefore the state will not be able to help if you are robbed by scammers.
Slovakia and Romania
Romania and Slovakia are concerned about the damage that a cryptocurrency can cause to financial system and actively develop laws for taxation, while Slovenia has already gone further - there the tax will have to be paid for mining and the purchase of goods and services for cryptocurrencies.
Interesting position exists in Switzerland. This country has been paying attention to cryptocurrency for many years, so throughout the country there are cautious laws against money laundering. But the cantons of Switzerland are to some extent independent, so the city of Zug, for example, back in 2016 independently allowed to pay utility bills by bitcoins. Also, in Switzerland you can buy a train ticket for cryptocurrency.
The situation in Nordic countries
Interesting rules for trading bit coins were developed in the Nordic countries. The Baltic states (Lithuania, Latvia, Estonia) are actively taking an example from them. At the moment, the bitcoin business has been the most developed in the following countries:
In Denmark and Estonia, tokens are not recognized as currency and do not fall into the legal field, but both countries believe that they should be included there.
Original definition of cryptocurrency is valid in Finland: here bitcoins are regarded as “the contract for difference”, that is a security. Buying goods and services for cryptocurrencies is considered “contract implementation”, so you will have to pay tax for the value added during the transaction. Mining, by the way, is also officially considered to be labor income.
In Iceland, where, as you know, there are large cryptocurrency farms, until March 2017, transactions in the cryptocurrency were illegal. Back in 2014, the central bank of this country decided that “there are no legal grounds for foreign currency in the form of electronic currency to cross the border of Iceland and become a means of payment”.
These bans, however, did not interfere in any way with the miners in obtaining cryptocurrency, and last year the law included amendments to legalize most of the operations in cryptocurrency.
The cryptocurrency legal field in Sweden is also well developed. Here, bitcoin and other assets are officially considered a means of payment. To open a business that works with cryptocurrency and euro at the same time, it will be necessary to fulfill the international requirements of the European Union for customer identification.
Italy, Bulgaria, Malta and Greece have repeatedly issued documents that report risks and damages to financial system, but for individuals, the use of cryptocurrencies in these countries is not regulated at all.
Of all the states of Europe, only tiny Macedonia stands out: here the Central Bank has repeatedly issued warnings that bitcoin is a speculative currency, and the Macedonian denar remains the only legal means of payment.
For the use of any other currency (including cryptocurrency), a prison sentence of six months to five years and the fine up to 10,000 euro is required. This should be known if you are going to go to Macedonia and pay in crypto currency in a cafe.
The situation in Great Britain
Taxes have to be paid to businesses selling goods and services for bitcoin, and also to traders who were able to make money on a cryptocurrency exchange. Among other things, this means that on UK cryptocurrency exchanges it will not be very simple to register: for trading, during the registration you will have to provide online a set of documents allowing at least to identify the user.
In the US, issuing with this problem, the position on cryptocurrency exchanges is quite multifaceted. The same is in Canada, by the way. It’s worth starting, perhaps, with the fact that here, along with the local ledgers and federal laws, there are laws of individual states, and sometimes they can contradict each other. According to the last news, these laws are changing constantly.
Back in 2013, the US Treasury recognized cryptocurrencies as a decentralized form of virtual currencies and one of the payment methods, and in September 2015, bitcoin was granted property status.
The term “legality” also means tough conditions: so, in February of this year, the US supervisory authorities froze AssetCoin’s assets, believing that the project’s ICO does not comply with the requirements of the law. Similarly, the state seeks to “protect investors from deception”: on January 30, for example, the public learned that Bitfinex cryptocurrency exchange and Tetherwere appealed to the court.
Although the United States has not yet fully decided what exactly virtual currencies should be considered and what stance they have (in particular, whether they can be called securities), Facebook and Google decided not to wait for litigation and created the ban for any advertising of tokens. This policy is quite successful.
Opinion of the Securities and Exchange Commission
As for officials, the US Securities and Exchange Commission reports that it has not yet approved any initial cryptocurrency project traded on the stock exchanges, nor has it registered a single ICO. The Commodity Futures Trading Commission stated that Bitcoin is a property, and therefore any fraudulent actions with respect to cryptocurrencies fall into the area of attention of this body.
Tax Office Opinion
The US Internal Revenue Service also believes that cryptocurrencies should be treated and taxed not as a currency, but as part of the property. Transactions at the same time can cause losses or bring profit to the holder, which means that they should be charged with income tax or value added tax. And on February 10, the state of Arizona started accepting tax fees in bitcoin.
In China, the capital of mining, where the ICO is now completely prohibited, in January there was information about possible cancellation of the ban. But in early February, the situation changed again: it became known that the Chinese agencies might intend to stop any type of transfer of tokens by blocking websites and eliminating the software linked to exchanges or ICO. So, enforcement of the ban took place.
Persecution of bitcoins in China
Chinese people give a negative answer to the question is bitcoin trading legal. Technical capabilities for this are already available – previously, similar mechanisms blocked Facebook with Google in China. At the end of February, the information was confirmed: on the 27th, Bloomberg wrote that China "... opens a new war front with crypto currencies, aiming at platforms that allow residents of the country to trade tokens on foreign exchanges. The source, who wished to remain anonymous, said that the country's financial departments are planning to freeze the accounts of entities of privacy suspected of receiving profit from offshore crypto currency transactions.”
Back in September 2017, in China, cryptocurrency exchanges were banned. However, in response to this, citizens only began to more actively conduct transactions on foreign exchanges bypassing locks. The recent steps of the Chinese government are designed to eliminate this small but annoying “drawback”.
In South Korea, the government is still deciding how to act with bitcoins and what methods of work to use: according to the authorities, the local market "remains vulnerable and open to threats such as money laundering."
A complete ban on cryptocurrency as anti-money and related exchanges in Korea, most likely, will not happen - lawmakers in this matter can not agree in opinion. But negotiations are underway, and the Korean situation should be closely monitored - decisions made in the large domestic market of this country, to a large extent, influence the global turnover of cryptocurrency, the speed of mining, the work of various services and contact of these services with each other.
In Japan, where cryptocurrency exchanges must undergo special state certification, changes have also recently taken place. After Coinscheck’s hacking in January, two groups of companies in the field of cryptocurrencies decided to restore trust in the blockchain together: in April of this year they plan to create a new organization that will unite the Japanese Blockchain Association and the Association for Cryptocurrency Business. Bitcoin is legal, but there are some restrictions in its usage.
Monetary authorities of the country do not give an unambiguous definition of digital currencies, considering them as a cross between an exchange asset and ordinary money. The activities of companies buying, advertising and selling bitcoins and altcoins are subject to a 7 percent tax, a similar principle applies when dealing with cryptocurrencies for physical goods or services. At the same time, long-term investments of individuals in virtual currencies are not subject to tax accounting.
In July of 2014, the monetary authorities of Singapore issued a series of decrees to prevent money laundering using cryptocurrency and bitcoin mining. Intermediaries who exchange bitcoin for fiat money are required to verify customers and send information about suspicious transfers to government agencies.
In June 2017, the Singapore Monetary Authority announced plans to use Ethereum blockchain to digitize the national currency on local markets. Due to the regulator's report, tokenization is considered as one of the ways to reduce costs in settlements between banks and corporations.
Russia, among other countries, does not stand out with particular rigidity in relation to cryptocurrencies. The situation, as in many countries, is ambiguous: until separate regulatory laws for this industry have been developed, the old ones have to be adapted to the needs of the time, and they do not always work. Tax authorities and the government are trying to find the most suitable decisions.
Opinion of the Central Bank
Back in 2014, the Central Bank of the Russian Federation warned about the risks of using digital money and hinted at the illegality of their use. He hinted: documents of this kind usually contain an indication that the release of cash surrogates in Russia is prohibited, but there is no direct prohibition on bitcoin operations, because its status is not defined and controlled by the law.
There were a lot of statements, regulators and public signals, they came from different networks and groups and often mentioned contradictory things: first, the Prosecutor General’s Office, the State Drug Control Service and the Ministry of Finance in 2014 expressed concern about fraud with cryptocurrency, and then the Central Bank in 2016 comforts traders: there will be no criminal liability yet.
Since then, cryptocurrencies have been discussed in the press and in the State Duma or mentioned at meetings with the president and his advisers, but the tone of the discussion has softened: more often the authorities apply for creation of a legislative framework for cryptocurrencies as the payment for goods or services, rather than to ban them all.
In October 2017, Russia even announced the Russian association of the blockchain and cryptocurrency - its job would be to develop an agenda for dialogue with legislators and ultimately to legitimize cryptocurrency as the payment for goods and services. The legal tender was well-accepted.
Despite the positive position of the authorities, three people were detained for transferring cryptocurrencies into rubles in 2017. A lawsuit was filed against them under the article on illegal banking activities, but in what exactly this activity was expressed, the Ministry of Internal Affairs did not indicate the message. As many users decided on the Internet, the detainees could have been associated with criminal circles, which was the real reason for the persecution.
New law project
Finally, at the end of January 2018, the Ministry of Finance together with other institutions prepared a bill on cryptocurrencies and other digital funds, the purpose was to shed light on the situation. The law basically prescribes strict definitions of the blockchain, cryptocurrency, and everything else, but there are also more interesting provisions.
For example, just as easy as in Switzerland, paying with bitcoin will fail. Cryptocurrencies, as it established in the bill, are not a legal means of payment on the territory of the Russian Federation, and therefore they are only allowed to be stored or exchanged for traditional money if necessary.
Not everyone can legally exchange rubles for bitcoins too: this right is supposed to be given only to legal entities that have passed a special state audit. Being a private person, you can only buy assets worth no more than 50 thousand rubles, and these coins can only be stored in the account of the operator authorized by the state (with all the ensuing consequences).
From the other provisions: in compliance with the law, the mining and investing in bitcoins is equated in the bill to entrepreneurship, and the cryptocurrency wallets of the state can be opened by the operator only after checking its owner in accordance with the federal law “On Countering the Legalization of Proceeds from Crime and Financing of Terrorism”.
In practice, this means that for ordinary citizens, especially for the beginners, digital currency anonymity will become a luxury: the state is required to monitor where you get the tokens and what you spend them on. Of course, this is not only about passive surveillance, as Google account keeps track of you: in case of need with such a law it will be easy to stop money transactions of criminals or undesirable persons, cutting them off from money.
Legal status of bitcoin in Colombia
According to the Coin.Dance service, cryptocurrency turnover in Colombia has doubled over the past four months. If you look at the period from January 2017 to the current moment, you may find that the weekly turnover rate increased from an average of 135 to 364 bitcoins. At the same time, over the last week of 2018, the turnover jumped to 759 bitcoins, showing that it is not only a matter of weakening the country's monetary unit.
More and more Colombians are ready to consider buying Bitcoins as one of the New Year personal gift options. By the way, the same situation is in Ecuador. The Colombian peso lost 15% of its value against the US and Canadian dollar in 2018, but the local population fears even stronger devaluation, bearing in mind past anti-records. At the end of 2015, the peso became the most heavily depreciating monetary unit of the world (-70% of the value to the US dollar).
Is bitcoin trading legal in Venezuela
Venezuela, according to the recent review, is in a more unstable economic situation - the rate of inflation in 2018 was 1,300,000%. The demand for cryptocurrency increased from 11 BTC in the first week of January 2017 to 190 BTC as of the beginning of January of the current year. As in Colombia, the last week in Venezuela was the peak for the sale of bitcoins (with the index of 252 BTC). The authorities of Bolivia have taken another step towards integration with cryptomere by starting to accept tax payments to the budget in the form of cryptocurrencies.
Prospects for the legal regulation of cryptocurrency
At the moment, most states prefer to observe the development of virtual currencies from outside, without creating separate laws to regulate this sphere. Supervisors intervene in a situation only in extreme cases when it comes to protecting large sections of the population from fraud. Given the unpredictable development of the cryptocurrency market, this position looks reasonable, but it creates additional inconvenience for FIN TECH startups and individuals exchanging digital coins for fiat money.
Countries where cryptocurrencies are allowed receive additional advantages in attracting startups developing products based on the blockchain technology. Some experts believe that such a model with some relevant data can help lagging states to become top global financial centers and attract large investments in the economy.
Further development of the blockchain technology will inevitably lead to the improvement of the legal framework in this area. The decentralized nature of digital currencies poses a complex task for states in finding a balance between anonymity and ensuring the safety of citizens. Today, this issue is becoming the subject of research by financial institutions, economists and IT-specialists, the results of which will determine the nature of the regulation of virtual currency in the future.
To sum up, he current situation in Russia is quite similar with the situation in other countries of Europe. It is unclear what these initiatives will lead to: the project has just been published by the Ministry of Finance on its website; the State Duma has not yet considered it. One way or another, it is quite possible that, when considering the toughest points of the law, they will be removed, because the Ministry of Finance “historically” occupied a tough position with respect to cryptocurrencies, and the department has serious opponents in this sense.
In Russia, the problem is bitcoin trading legal is being discussed actively. So far, cryptocurrencies in Russia, by and large, do not fall into the legal field, and therefore a person cannot be convicted for them (only if he has committed crimes with the help of cryptocurrency). At the same time, cryptocurrencies are not a legal means of payment, so from the point of view of the law, any payments in Bitcoins that accept fashionable anti-cafés are gifts: they give a customer a product or service, and in return he gives some digital property that has a price. It is worth remembering this when paying with cryptocurrency.