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FAQ: Crypto Basics: Is Crypto Legal? and other Legal questions.
This post covers the legal questions that most new people ask about crypto. When you are telling your friends and your family about crypto you can use these resources to help explain that extra $100/month in your childrens college savings, or those nice date nights you can take your sweetheart to now with the extra income from crypto.
We will be going more in depth in this Subcategory, please comment and add your own comments and thoughts and questions, and even answers if you have some.
Here are the questions answered in this post:
- Is crypto legal?
- Is it safe & secure?
- Isn’t it used for illegal activities?
- Can it be regulated?
- How about taxes involved?
- How about consumer protection?
1: Is Crypto Legal?
Owning and gambling with cryptocurrencies is completely legal in most countries, however there are a few countries around the world who has prohibited their citizens to own different coins. If you are not from India or China, then you will not need to worry about any legal issues from owning the cryptocurrencies, as the rest of the world has accepted them and started to work with the virtual currency and not against it.
Download the app’s “ETHNews” & “BTCNews” on your smartphone for updated information as soon as it comes in.
2: Is It Safe & Secure?
Just like most other things online, cryptocurrencies are not 100% safe (but banks, stock markets and even credit cards aren’t fully safe…) However if you protect yourself by having a difficult password you don't use many sources to login to your accounts, have a good antivirus program and take other safety precautions, then you will not have to worry about anything when you “gamble” with cryptocurrency online. The sites for utilizing cryptocurrencies take all the necessary security measures as well, to ensure that hackers and other bad people will not be able to infiltrate their system and take any funds or data.
Bitcoin, for instance, has a strong track record for security and privacy, thanks to its protocol and cryptography. With private keys, individuals’ wallets are kept secure. The only way this would not be true is if users lose this information.
3: Hasn’t it been used for illegal activities before?
Bitcoin & Cryptocurrency is money, and money has always been used both for legal and illegal purposes. Cash, credit cards and current banking systems widely surpass cryptocurrency in terms of their use to finance crime. Cryptocurrency can bring significant innovation in payment systems and the benefits of such innovation are often considered to be far beyond their potential drawbacks.
Cryptocurrency is designed to be a huge step forward in making currency more secure and could also act as a significant protection against many forms of financial crime. In example, bitcoins are completely impossible to counterfeit. Users are always in full control of their payments and simply cannot receive unapproved charges which happens with credit card fraud.
Cryptocurrency transactions are irreversible and immune to fraudulent chargebacks. Cryptocurrency allows currency to be secured against theft and loss using very strong and useful mechanisms such as backups, encryption, and multiple signatures.
Some concerns have been raised that Cryptocurrency could be more attractive to criminals because it can be used to make private and irreversible payments. However, these features already exist with cash and wire transfer, which are widely used and extremely established. The use of Cryptocurrency will undoubtedly be subjected to similar regulations that are already in place inside existing financial systems, and cryptocurrencies are not likely to prevent criminal investigations from being conducted.
In general, it is common for important breakthroughs to be perceived as being controversial before their benefits are well understood. The Internet is a good example among many others to illustrate this.
4: Are Cryptocurrency Sites Regulated?
Most cryptocurrency sites are not regulated by any regulatory authority like the gambling industry is. (www.Bovada.lv currently accepts Bitcoin currency).
However, this is simply due to the fact that the regulatory authorities do not support sites that only accept the virtual currencies, making it impossible for them to actually become regulated. There are some sites that accepts regular funds as well as cryptocurrencies, who all have licenses to operate in the respective markets. Many businesses, especially online business such as Amazon are now accepting Bitcoin which will likely be followed by other forms of cryptocurrency.
5: What are the cryptocurrency & taxes involved?
Bitcoin and other cryptocurrency is not a fiat currency with legal tender status in any jurisdiction, but often tax liability accrues regardless of the medium used. There is a wide variety of legislation in many different jurisdictions which could cause income, sales, payroll, capital gains, or some other form of tax liability to arise with Bitcoin, but at this current time, there is none.
6: How about consumer protection?
Cryptocurrencies are freeing people to transact on their own terms. Each user can send and receive payments in a similar way to cash but they can also take part in more complex contracts. Multiple signatures allow a transaction to be accepted by the network only if a certain number of a defined group of persons agree to sign the transaction. This allows innovative dispute mediation services to be developed in the future. Such services could allow a third party to approve or reject a transaction in case of disagreement between the other parties without having control on their money. As opposed to cash and other payment methods, cryptocurrency transactions always leaves a public proof that a transaction did take place, which can potentially be used in a recourse against businesses with fraudulent practices.
It is also worth noting that while merchants usually depend on their public reputation to remain in business and pay their employees, they don't have access to the same level of information when dealing with new consumers. The way cryptocurrency works allows both individuals and businesses to be protected against fraudulent chargebacks while giving the choice to the consumer to ask for more protection when they are not willing to trust a particular merchant (since the transaction is one time and instant).
special thanks to kyle for his contributions
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