Cryptocurrency law can be a real headache. Like cryptocurrencies themselves, the laws surrounding cryptos can be volatile and changes quickly. Even more frustratingly, sometimes the laws themselves are unclear or even contradictory! However, in this article, I will be going the hard yards and diving into the legal side of crypto. I hope to answer the question where is cryptocurrency legal, by looking at the latest legal announcements from governments.
Start simple – cryptocurrencies are legal and incredibly popular in the USA. The US is home to many of the biggest crypto entrepreneurs, as well as silicon valley, so it is unsurprising that the US is comfortable with the idea of cryptocurrency.
In America, any crypto you own is treated like property for the sake of tax. This means that you pay capital gains tax. It is important that you do file your crypto returns, as the IRS has recently stated that it is closely monitoring crypto trading.
Cryptocurrencies are legal right across the EU. Although there is considerable national variation in the fine details of crypto law, every EU country allows for trading and purchasing with crypto. While the legality of owning crypto is settled, the status of crypto varies between European countries. For example, in the UK crypto is treated similarly to how it is in the US, with it counting as an investment (not currency) and therefore subject to capital gains tax. Check out the guide on Total Crypto if you’re looking to buy crypto in the UK including Ethereum.
In contrast, France’s view of cryptocurrencies is that they should be treated as a zero coupon bond. It should be noted that many European governments are currently in discussion about developing cryptocurrency laws, so expect changes over the next few years.
China has a strange relationship with cryptocurrency. It is probably still the world’s largest ‘producer’ of Bitcoin, with most of Bitcoin mining taking place there. And a few years ago, Chinese exchanges like BTC China were some of the largest in the world. However, the Chinese government cracked down on Bitcoin, and declared cryptocurrencies illegal in 2017.
This is made more complicated by the fact that blockchain technology is being heavily pushed and invested in across China.
So, in summary, cryptocurrencies are illegal in China, but blockchain technology is alive and well there!
Australia and New Zealand
Cryptocurrencies are legal in both Australia and New Zealand. Both countries are keen to attract and develop tech scenes in their major cities, something that may play a part in their relatively relaxed approach to cryptos. Tax wise, it is a little unclear, although it seems that both countries are following the US’s approach of applying capital gains tax to profits made trading or buying with cryptos.
It can be complicated to get a straight answer regarding how a government treats cryptocurrency. Still, hopefully this article has helped clear up the current state of affairs.
The simple truth is that the world of cryptocurrency moves much, much faster than the political worlds of taxation and regulation. This means that the cutting edge of crypto will probably always exist in a financial grey area as law makers struggle to keep up. Perhaps that’s what makes it so exciting for investors!