Cryptocurrency Legality And Taxation
For the most part, the inception of cryptocurrencies into everyday life, trading, and spending has gone pretty well. However, when it comes to cryptocurrency legality and taxation, there are some things that you need to be aware of. Yes, cryptocurrencies like Bitcoin are becoming ever more popular and widely used in the modern wold, but this has not come with a fair share of cryptocurrency legality and taxation issues. Let’s go over the most important things that you need to know when it comes to the world of cryptocurrencies, legalities, and taxation.
Cryptocurrency Legality And Taxation – Legal Issues
Surprisingly enough, there are actually not too many legality issues that you need to know about, but there are some.
- Cryptocurrencies are perfectly legal to use, mine, and trade in most countries. The main exceptions where cryptocurrencies are not legal are the countries of Iceland and Vietnam.
- China has officially banned all financial institutions from using and operating with Bitcoin and other cryptocurrencies.
- Russia has technically made cryptocurrencies legal, but has on the other hand banned the purchase of Russian goods with any other kind of currency except for Russian Rubles.
Cryptocurrency Legality And Taxation – US Taxation
When it comes to cryptocurrencies and taxes, there are some things that you need to be aware of, especially if you live in the USA. It seems as though governments have finally caught on because they realize that these currencies have been going untaxed for a while, but that is not the case anymore.
- Bitcoin is seen as personal property and not as a currency and is therefore taxed in the form of a capital asset.
- Capital gains tax applies to you if you convert Bitcoins or other cryptocurrencies into fiat currency.
- Capital gains include the purchase of goods or services with Bitcoin or other cryptocurrencies.
- Bitcoin and other cryptocurrency mining is seen as a form of income and is therefore taxed as such.
- The expense which ensue from cryptocurrency mining, such as the hardware needed to do so, count as tax deductible.