The Legal Status of Bitcoin and other cryptocurrencies

Is Bitcoin Legal?

Bitcoin is legal in many countries in Europe, Asia and the USA. However, the legislation of some countries prohibits or restricts the use of cryptocurrencies. In some countries, cryptocurrencies can be traded but not mined while other governments prohibit opening cryptocurrency bank accounts or paying for goods and services with digital coins. In this article, you will find out what prospects Bitcoin has. We will also tell you residents of which countries should refrain from working with digital assets.

The legality of Bitcoins in the UK and elsewhere

In EU countries, cryptocurrencies are also treated differently. In early 2020, the British government decided the fate of assets in Bitcoins form in a court hearing. Digital cash cannot be attributed to things or actions. By a court resolution, Bitcoin was admitted as a pecuniary possession. The resolution was made based on the ensuing clauses:

• The existence of digital possessions is confirmed by cryptographic records in a distributed ledger.

• BTC belong to the owner who possesses the private and public keys to the digital wallet (a record of the number of coins and the transaction date must be posted at the specified address).

• BTC is a stable asset, as they do not suffer physical wear and tear.

• The owner may be identified through transactions.

In general, EU countries comprehend Bitcoin as a digital currency. Governments do not prohibit citizens from using this asset. However, banks do not conduct business deals using cryptocurrencies. Also, the ownership of Bitcoins is not subject to VAT. Most countries adhere to one of the following four positions regarding all cryptocurrencies:

1. Digital coins are allowed and fully legal.

2. Cryptocurrencies may be introduced, but banks do not conduct transactions in exchange for fiat money.

3. Digital money can be stored and used, but not mined.

4. Cryptocurrencies are interdicted at the state level and equate to counterfeit cash.

The legality of Bitcoin and other virtual currencies in each country can be checked on the following page.

India attempted to ban Bitcoin in 2018. The currency was not considered legal, however, transactions at the state and international levels were banned in order to prevent money laundering. However, the deployment of Blockchain and smart contracts has been encouraged. As a result, the country’s Internet and Mobile Association filed a lawsuit with the court to appeal the government’s decision. Bitcoin became completely legal in 2020. Cryptocurrency in Pakistan has been strictly banned since 2018.

Starting in 2013 and ending in 2018, China has been systematically banning cryptocurrency. Initially, commercial and state banks were banned from carrying out transactions in digital tokens. The government then forced financial institutions to close all cryptocurrency accounts within two weeks. For a long time, China has been the leader in Bitcoin mining. This activity was banned in 2018. However, there have been no criminal prosecutions for the possession of cryptocurrencies in the country.

Cryptocurrency regulation in the USA differs from state to state. Each state government makes decisions based on the local situation and the political party that is currently in power. In general, the status of all cryptocurrencies is defined as legal. However, there are some amendments. Companies that wish to exploit digital assets must fulfill three conditions:

1. Register as a fiscal services company.

2. Develop an anti-money laundering policy.

3. Regularly send replies to FinCEN about accounts of clients with suspicious activity.

A detailed description of the legal condition of cryptocurrencies and Bitcoin is available here.

Bitcoin Determination

Bitcoin is a digital currency that is an entry in the Blockchain distributed ledger. The existence and ownership of coins is determined using cryptographic keys, and the veracity of transactions is confirmed by network participants. Lack of centralised management avoids inflation and fraudulent transactions. Until now, the Bitcoin network has never been hacked. This would require equipment capacity of at least 51% of the entire network.

To store BTC and carry out transactions, you must have a cryptocurrency wallet. Wallets can be in the form of hardware, software, mobile, web (with cloud storage), and paper wallets. To sell coins, they still have to be withdrawn from paper to digital form with internet access.

Bitcoins can not only be purchased, but also mined. For checking transactions on the network, a user who is the first to guess the new block obtains a reward. From May 11, 2020, this reward is set at 6.25 BTC. On average, this value is halved every four years. Mining requires specialised hardware called an ASIC. The profitability of mining depends on the capacity of the equipment and the cost of electricity. Bitcoins can be bought and sold not only in whole, but also in parts. The minimum fraction is one Satoshi, which is equal to 100 ppm of one Bitcoin.

Is buying Bitcoin legal?

Investing in Bitcoin is not legal in all countries. At the same time, governments and banks cannot track digital wallets. Coin holders can use them on the black market. In countries where digital currencies are legal, you can even make bank transfers using them. However,  the issues related to taxation and insurance of such assets still remains unresolved.

Is Bitcoin trading legal?

Is Bitcoin legal in the UK? Yes. To work with this asset, it is convenient to use a cryptocurrency exchange. By choosing a reliable resource, an investor will not only be protected from fraud, but will also always receive up-to-date information about the cryptocurrency market and their legal status. Also, trading operations can be carried out in any country where it is permitted by the government.

One of the most reliable platforms is the EXMO exchange. It was created in 2014. Since then, the site has attracted many investors and has earned an excellent reputation. The administration of the exchange is constantly expanding the functionality of the site and adding new tokens to the list of available ones. The company also has its own EXM token, allowing owners to receive discounts and bonuses when trading.

EXMO advantages:

• The platform has never been hacked.

• The interface of the site is simple even for beginners in trading.

• Technical support answers users’ questions around the clock.

• Flexible commissions make trading profitable for everyone.

• 190 trading pairs.

• Transactions can be carried out using fiat currencies (USD, EUR, RUB and five others).

• The exchange is officially registered in London, UK and has representative offices in Moscow and Kiev.

EXMO has 1.8 million registered, regular customers.

Conclusion

If a person asks a question: can I buy Bitcoins? They should consider the country they reside in. Cryptocurrencies are a relatively new concept, so there is still no clear legislative framework. Also, various countries have not yet arrived at a consensus regarding the legal status of cryptocurrencies. Before buying any cryptocurrency, you need to make sure it is legal, as well as check whether or not you need to pay tax on purchase or storage.