Cryptocurrencies are becoming a common thing and their investment is on an increase. Furthermore, after Bitcoin and some other digital currencies, many more are available and several are on their way to the market. Therefore, it is extremely important that the Governments should not ignore them.
But merely considering them is not enough. Governments should make regulatory committees and other ways to regulate and manage digital currencies. Apart from the growing popularity, several other reasons demand the proper regulation of digital currencies. Visit askcorran.com if you want to know more about these reasons.
Cryptocurrencies are not a threat
At first most of the countries assumed that Bitcoin and other digital currencies are a threat. Therefore, they made it illegal to buy and sell Bitcoins and do any sort of trading through them. Although the time has changed and the popularity of these digital currencies has proved them wrong, there are still some regions where Bitcoin and other cryptocurrencies have still not got the legal status.
On the other hand, there are countries that have legalized most of the digital currencies including Bitcoin. But with the legal status, they also implemented some sort of regulations. Furthermore, as these currencies are legal, the currency holders must pay the tax on them.
Despite being a taxable asset, the taxation categories differ with regions. For instance;
- In Israel, Bitcoin and other cryptocurrencies come under the category of asset. Therefore, the withholders have to pay the tax accordingly.
- Bulgaria counts the cryptocurrency as a financial asset. So the tax is according to the value of any other financial asset.
- In Switzerland, any form of cryptocurrency comes under the foreign currency category. So you have to pay your tax accordingly.
- If you are a national of Spain and Argentina, you have to pay an income tax on your digital assets.
- In Denmark, cryptocurrencies are considered as an income and therefore, you are bound to pay the income tax. Furthermore, the positive thing is that the Government of Denmark allows the deduction of losses.
- For the residents of the United Kingdom, every sort of digital currency is considered a real-world asset. Whether you are an individual or a company, you can do trading through digital currency. Therefore, if the corporations have their digital assets, they have to pay corporate tax. While the businesses that are incorporated, have to pay their income tax. While the individuals have to pay the capital gains tax.
3 types plans by different Governments
All this started as a result of the decision made by the European Court of Justice (ECJ). In 2015, the ECJ said that the monetary benefits gained through cryptocurrency trading are nowhere to be beneficial for the state. Afterward, agencies took the survey from several countries and the results showed that no one pays any tax on their cryptocurrency.
Only the Russian government had made the rule to apply tax over a certain amount of mining. Furthermore, it was also found that in the municipality within Ticino and in the Swiss Cantons of Zug, cryptocurrencies are accepted as payment. Furthermore, these were not the only regions but Mexico and the Isle of Man also accepted this payment.
In addition to this, the governments of Barbuda and Antigua also supported the ICOs. This was similar to the thing that Governments fund projects by selling the different Government bonds.
These were the three ways that showed the acceptance of cryptocurrency around the globe. Afterward, the legalization and taxation system got active. Therefore today, several countries allow Crypto mining as well as trading. Furthermore, various companies like Tesla and Uber are also buying Bitcoin to increase their assets.
Governmental regulations in different countries
The National Constitution of Argentina allows the Central bank of the country to issue the legal currency. But Bitcoin is not one of them. Although their regulatory authorities have not yet legalized the use of Cryptocurrency, it is used on a massive level.
Brazilian Government strictly prohibits the use of any digital currency. Furthermore, even its acquisition and trading are illegal. The Federal Reserve Bank of Brazil issued a notice on 16th November 2017. Notice number 31,379 states the risks involved with the custody of virtual currencies.
In addition, they also aware the citizens of the consequences that they will have to face in case they are involved with this trading. Therefore, if you are a citizen of Brazil, you will have to encounter several problems.
The Canadian government is open to the use of cryptocurrencies and this also includes Bitcoin. Furthermore, the Financial Consumer Agency of Canada also has a webpage, especially for digital currency. This page clearly states that “you can buy goods and services by using digital currency”. This is possible on both internet pages and stores that accept it as payment.
In addition, open exchanges also allow trading in cryptocurrency. Therefore, you can easily buy and sell them without any problem.
Despite all this acceptance, the digital currency has yet not received legal status from the Canadian Government.
But even with the not-legal status, all of these assets are subject to taxation and can be openly used. Therefore, it is called a commodity and not the governmental currency.
4. EU Member States
The European Union also presented their legislative proposal for the proper regulation of virtual currency. This was done to deal with the terror financing and money laundering issues.
In addition to this, in 2018, the European Commission also created an Action Plan. This plan enabled the European countries to take benefit of the blockchain and digital assets. Therefore, it is not illegal to deal with them if you are in any European State.
Furthermore, it should also be noted that “Mario Draghi” (President of the European Central Bank) used the term “very risky”. This showed that they also consider it quite volatile.