Bitcoin is the first widely known and accessible cryptocurrency. However, there are still a lot of questions about the long-term viability and legality of the now-infamous digital currency. Here are 13 things everyone should know about the legality of Bitcoins before buying or selling them.
1. It Is Not Illegal To Own Bitcoins
Owning Bitcoins is absolutely legal. Numerous government agencies have repeatedly made this claim. Some have even praised the technology for its innovation and potential. The usage of Bitcoin is, however, rendered illegal in Bolivia, Bangladesh, Ecuador, and Kyrgyzstan.
2.You Are Legally Required To Pay Taxes On Income Generated In Bitcoins
Even though Bitcoins are not technically legal tender, any income received in Bitcoins is still legally required to be declared. The American government views Bitcoin as property rather than currency, considering Bitcoin transactions on par with buying stocks, for example.
3. Bitcoin Is Not Completely Regulated By Any Governing Body
Although government agencies have expressed possible interest in regulating Bitcoin, none have done it so far. This is due, at least in part, to the fact that it is nearly impossible to regulate the entire Bitcoin network. Sporadic acts were created, trying to legislate Bitcoin in some aspects, and guidelines were issued, but Bitcoin is still not completely regulated on a global scale.
4. Bitcoin Was Used To Buy And Sell Millions Of Dollars Of Illegal Goods
Bitcoin did receive some bad press in 2013 when the online black market exchange Silk Road was shut down, with reports that Bitcoin was the exclusive method of payment on the website. However, it appears as though most authority figures refrained from blaming Bitcoin itself.
5. FinCEN Has Posted Virtual Currency Guidelines That Affect Bitcoin
The Financial Crimes Enforcement Network, or FinCEN, has issued non-binding directives for Bitcoin users and operators, primarily centered on Bitcoin exchanges registering with the government.
6. The CFTC Has Claimed Jurisdiction Over Bitcoin
CTFC announced Bitcoin regulations back in 2015 while settling charges against Coinflip.
7. The Actual Mining Of Bitcoins Is In A Legal Gray Area
Some government agencies say that Bitcoin mining should be a regulated and licensed activity. However, this will be nearly impossible to enforce given the nature of Bitcoin.
8. Bitcoin’s Value Is Based On The Belief That The Government Won’t Interfere In The Future
Bitcoin’s current value is at least partially based on the belief that the US Federal Government won’t interfere in its workings in the near future. A US Government hearing in November 2013 on Bitcoin caused the price to surge over 27% in one day. If the current perceived legal standing were to change, the value of Bitcoins would likely drop substantially.
9. Some US Politicians Are Accepting Campaign Donations In Bitcoin
We can see this trend not only in the US but also in Russia and Hong Kong.
10.The US Senate Has Already Held At Least One Hearing About Bitcoin
The US Senate held a hearing titled Beyond Silk Road: Potential Risks, in which the overall sentiment was positive.
11. Most Bitcoin Companies And Exchanges Are Not Registered
Only a small number of Bitcoin exchanges have followed the non-binding FinCEN regulations by registering their businesses.
12. Some Countries Are Restricting Or Banning The Use Of Bitcoins
Although Bitcoins are legal in the United States and many other countries, we still have outstanding bans in Bolivia, Bangladesh, Ecuador, and Kyrgyzstan, as we already mentioned.
13. The US Government Is Considering To Accept Bitcoin Payments For US Visa Application/Payment Fees
Before you get all excited, note that this is just a start. Namely, the change will refer to entrepreneurs who want EB-5 visas and are ready to fund specific projects in order to qualify for Bitcoin payment.