Cryptocurrencies, including bitcoin, is a virtual currency that has some value attached to it. They are used in lieu of physical currency and the use of the same is gaining momentum. Some countries have banned using cryptocurrencies and whereas some others have given some value to it. Even in the countries who haven’t banned its usage have refused to consider it as a legal tender. Some experts say it is going to have an infinite expansion. Some others have a foreboding about the future of Cryptocurrencies. They hold the opinion that digital currency is going to face a crisis in the near future.
Even though, it is highly lucrative as the value for this e money is increasing steadily and fast, some countries have out rightly banned it. The main argument put forth to support this cynical approach is due to the belief that it will disrupt the whole financial system due to the lack of a central agency to oversee its functions. For example, countries like Bangladesh and Bolivia have legally prohibited the cryptocurrencies believing that it might encourage the terrorist activities as it hides the real identity of the persons involved in the trade. It might also lead to tax evasion and double entry of monetary transactions. It is particularly difficult because this virtual system allows transborder transactions and keeping track of a huge number of them is close to impossible.
Lately, many governments are in favour of this form of currency by imposing many regulations to regulate these types of transactions. The US has widely accepted transactions using these cryptocurrencies and has multiple pieces of legislation to prevent fraudulent transactions. The US financial crime enforcement Network is continuously keeping a check on the working of digital currency by issuing appropriate legislation from time to time.
In addition to this, Bank Secrecy Act monitors this peer-to-peer money transaction by compelling those who transact to maintain transparency by record keeping of the transactions involved and report to them as and when necessary. According to the taxation laws of the US, the profit gained from the buying and selling of cryptocurrencies attract capital gains as they are considered as commodities and not as physical coins.
In Canada, cryptocurrency transactions are accepted as barter system and attract tax on the revenue generated out of them. The whole system is brought under the ambit of Canada Revenue Agency that keeps an eye on the transactions to prevent money laundering activities that can prove to be dangerous to the economy. Just as the companies are required to get registered on stock exchanges, these bitcoin exchanges are also required to be registered FINTRAC to identify illegal transactions, promptly.
The Europen Union has not said no to it completely. Instead, every country has separate legislation to control them. In Finland, Bulgaria and the UK, buying and selling of digital currencies are regulated by tax legislation. Germany is also favourable to bitcoins and has given legal status to transactions involving virtual money.