Bitcoin users find themselves in a conundrum these days-- the more bitcoin is adopted, the better its long term prospects and the more their investments are worth. However, with increased public awareness and adoption comes increased regulations and taxes. How can you put yourself in a position to reap the benefits of increased adoption without having your bitcoins counted by the state or private blockchain analysis firms?
Of course, regulations vary by country and we encourage our readers to seek out information on the legal status of bitcoin and bitcoin mixing in their home countries. For the purposes of this article, we will be examining notable recent developments in the United States and Europe, since they are considered global leaders in cryptocurrency regulation an other countries are likely to follow their example when they adopt legal restrictions. Here are the most significant developments in bitcoin regulations so far in 2020. We will update this article regularly to reflect new announcements.
- Treasury Secretary Steven Mnuchin announced in February that U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) is preparing "significant new requirements" around cryptocurrencies and we'll "be seeing a lot of work coming out very quickly.”
- Currently the IRS defines cryptocurrencies as property and subject to capital gains tax.
- On January 1 2020, EU member states adopted the Fifth Anti-Money Laundering Directive, meant to prevent money laundering and terrorist financing.
- In the UK, Bitcoin is treated like foreign currency
- In Germany, Bitcoin is not subject to capital gains tax, but sales are taxed as income if held for less than a year.
- In all EU countries and Switzerland and Liechtenstein, cryptocurrency sales are exempt from the VAT
Different countries treat Bitcoin very differently, and it’s important that you are informed and know where you stand. In some places it isn’t legal to own, some countries take no particular stand and it is not regulated, and in some countries it is highly regulated and a tax liability. Just like bitcoin itself, the same goes for bitcoin mixing. Currently no country has passed a law that explicitly forbids mixing Bitcoin, and we can find no examples of legal repercussions to someone for using a bitcoin mixer. However, the regulations are rapidly evolving and require ongoing attention to understand. We will continue to follow upcoming Bitcoin regulations in our blog, and we encourage you to find reliable sources of information as well.
The world is still a long way from cryptocurrencies replacing fiat currencies and creating a financial realm free from government interference, so for now, make sure your assets are secure. If you want to protect what you've earned from government scrutiny, you need to make sure your real-life identity is never connected to your digital holdings. This means protecting not only your wallets, but also all of your transactions. That's where we come in! Using a tumbler like Bitcoin Laundry is an essential step in your routine for anonymizing your coins. Bitcoin regulations will only be getting tighter in the coming years, so take care now to keep your assets private, anonymous, and squeaky clean!