Note: I’m sure there will be more changes and updates from ATO and AUSTRAC in 2018, so I will keep this post updated with the most up-to-date information.
In today’s digital age, what seemed to be too futuristic ten years ago is now made possible. This applies to the concept of cryptocurrency. Who would have thought that assets could also be acquired, kept, and transferred digitally?
Bitcoin has been the game changer because it’s the first decentralized cryptocurrency. And while it continues to grow and transform financial markets, legislators are now left wondering: Is bitcoin legal?
Before you join the bandwagon, read on and review the risks you might have to take.
On Legal Issues
Australia is one of the initial players in the field and many of its people continue to join the controversial surge. Consequently, the country has taken the initial steps in strengthening their anti-money laundering laws.
AUSTRAC, a financial intelligence regulator, is now given the power to regulate all cryptocurrency exchanges within Australia. This means Bitcoin and all other digital currencies have to sign up on a specified currency register.
However, even with the new laws, legality is still questionable in some ways. It is a currency that isn’t printed out and is essentially floating. Practically speaking, it can be counted as anonymous. So, it all boils down to how the currencies are used.
Bitcoin’s legality has been questioned multiple times since it boomed. There were even controversies in the past that involved illegal purchasing activity. Some people used it to pay for illegal products online.
And then there is bitcoin mining. Mining means managing the currency by verifying and compiling all its transactions with the use of a block chain. This process is also questionable for some regulators as it can be a venue for illegal trading and exchanging.
Still, money laundering concerns don’t end because the governing laws differ from one country and state to another.
On Fears and Safety Issues
As the bitcoin market constantly changes directions, more risky concepts arise. People who are new to the idea ask, “Are bitcoins safe?” “Are there any laws that support counter terrorism in terms of financing? “Does bitcoin abide by the general rules on tax?”
Perpetrators always find a way to ruin a shared system especially when it involves assets. Take hackers as an example. Cryptocurrency may not be exempted from such a nuisance.
With bitcoin, there is always a possibility for terrorist acts to thrive. Terrorists can do illegal transactions by moving funds from one country to another. This is why regulation is being held in several countries today.
The UK and the USA propose to regulate all bitcoin transactions that are currently running. They want everything reported in detail and block any anonymous activity. This plan has been carried out since 2017 and is expected to remain in place this 2018, even when the value of bitcoin slides down.
And what about taxes? In the US, when bitcoin assets are used to purchase goods in the local markets, the equivalent capital gains tax is being charged. Other transactions within the bitcoin scheme, such as selling bitcoins to a third party, will also incur taxes. So generally, taxes are being monitored while the bitcoin players count huge profits
In Australia, the ATO or Australian Taxation Office thinks that cryptocurrency in general cannot be considered as a real currency. However, the necessary laws have to be applied to prevent any illegal and unsafe activity.
So, is bitcoin legal? Based on the laws that govern the top-playing countries, there is not enough evidence to call it illegal.
Bitcoin is a largely different paradigm that created its own niche in the global market. It has shifted and changed how people buy, sell, invest, and withdraw assets. And you can only predict the next big thing that’s going to happen to it.