Is Cryptocurrency Property? Analysis Of The Current Legal Status
Over the past few years, thousands of people acquired massive wealth by choosing to buy Bitcoin. Due to this, regulatory frameworks are now trying to place the assets in this industry under a certain type of label. By doing so it is easy to implement tax measures, and better understand how individuals should deal with it.
To this day, however, there has not been a statutory definition. Every country creates its own rules for it, and its legal status is still uncertain. So, is cryptocurrency property, and what is its current legality status?
In this article, we take a look at the countries that consider cryptocurrency as property and offer more information to continue your research.
Cryptocurrency as property – UK and NZ (US too?)
First off, let us explain what exactly a “property” is. In short, properties are “all things in action and any interest gained on real or personal property”. Although this definition is somewhat vague, it does showcase the difference between personal and real property. It is also important to understand that the latest two are subdivisions of the former.
The status of a cryptocurrency does not only solely depend on the country you’re in, but also based on the different government departments. This can easily be seen when looking at the United States. While the FCEN sees Bitcoin as a money transmitter, the IRS sees it as property. Therefore, you’ll need to list it as a property in your annual tax form.
In England (UK) there have been many discussions about the topic as well. Since the law defined properties as “liquid possessions”, it only makes sense for cryptocurrencies to be treated as such. Late last year, the UKJT (UK Jurisdiction Task Force) addressed the issue by publishing a Legal Statement on Cryptoassets and Smart Contracts. According to the statement, crypto assets are to be seen as properties.
But England wasn’t the only country that published this type of statement. During the recent liquidation of the Cryptopia exchange, NZ authorities (where Cryptopia was located) were forced to look deeper into the topic to understand how users should be refunded. After exploring all the relevant definitions, the court of New Zealand decided to label cryptocurrencies are property too.
As the regulatory frameworks “clear up”, we expect to see more countries publicly announcing the status of cryptocurrencies and taxing it likewise. While this may still take a while, we believe that we are in a good direction to complete this process within the next two years.
Legality status of cryptocurrencies
If you wish to further research the topic and understand where your country stands when it comes to crypto, there are several things you can do.
Check the legal status of cryptocurrencies in your country
The following map will help you get a clear overview of the legality status of Bitcoin. By exploring this, you will be able to understand which countries have an implicit, or absolute ban at the time of this writing.
Check the current regulatory framework for crypto
Apart from its legal status, cryptocurrencies are also “burdened” by strict regulatory frameworks. The following map will help you understand which countries apply tax laws, which apply AML & ATF laws, and which implement both.
Countries working on national or regional blockchain-based currencies
You may have heard that China started testing its very own blockchain-based currency, the digital Yuan. However, it is not the only country that does so. By checking the following map you will see a list of all the countries that are currently working on national cryptocurrency solutions.
How does the future look like?
The unique nature of cryptocurrencies has made lawmakers scratch their heads, trying to find solutions to their legality status. While new laws are being drafted, there is still a haze of uncertainty hanging above us. What will happen if Bitcoin and its peers become too powerful? Will they be banned completely?
One thing is for certain: As long as you make transactions from your private wallet and try to involve the banking system as little as possible, you should be completely fine. Obviously, this is not a permanent solution, but it does allow us to prepare for the eventual clarity on the fundamental status of cryptocurrency.
As long as crypto assets are treated as properties, and given the strong anti-money laundering systems put in place, there is little to no chance for Bitcoin to be used for criminal purposes. Due to that, it is also highly unlikely that the popular cryptocurrency will be globally banned any time soon. At the moment, all we can do is wait and see how this growth curve develops. And while the undergoing shift is taking place, it might good to educate our peers on the use cases of cryptocurrency.