Legal Status of Cryptocurrencies

Bitcoins, ethereum, and other cryptocurrencies, commonly known as "digital gold", are gaining exposure globally through various media outlets even though very few countries officially recognize cryptocurrency as legal currency. Official national-level regulatory positions relative to cryptocurrency may be separated into three main groups: totally against, legalized, and uncertain. The most interesting situation is uncertain because of the market basis at stake if governments turn away from digital gold.
  • The majority of "uncertain" countries where no regulation is implemented do not recognize cryptocurrencies as a legal means of payment and have expressed concern about the risks the currencies present, even if they have not prohibited the use for a personal medium of exchange. Such countries include Indonesia, Lithuania, Malaysia, the Philippines, Slovakia, South Africa, South Korea, and Thailand. The governments of Lithuania and Malaysia do, however, characterize cryptocurrencies as perspective technology worthy of future investment.
  • In contrast, some others, such as Denmark, Ireland, and Colombia, have asserted that bitcoins are not a currency and the governments will not regulate a digital currency market. Brazil, Hong Kong, and Pakistan view the cryptocurrency market as too nascent to regulate, regardless of the official positions on these types of currency.
  • Still others prefer to take no official position on cryptocurrencies, including Chile, Cyprus, Greece, Malta, Nicaragua, Portugal, and Turkey. 
For those countries with some official recognition of cryptocurrencies, several approaches for regulating the market are being tested with varying levels of favorability toward fostering the growth of digital currency*. No consensus approach has yet emerged from amongst early regulators, including India, New Zealand, Poland, and Switzerland, among others.
  • Some countries, such as the United Kingdom and Italy, are following a model under which business operations based on cryptocurrencies are taxed as such.
*Regulations evolve rapidly, so the analysis can differ from recent developments.

No comments:

Post a Comment