From an emerging technology to today’s market, digital currencies and blockchain technology have seen a rapid rise in both up-take and ease of use. The rapid advancement in usability has seen the user base grow around the world, but now that governments around the world are taking more of an interest in digital currency activity, there are some potential issues to be vigilant about. While control and income are the focus, staying the right side of legislation for those making use of cryptocurrency means keeping up to date with the latest changes, but how important is it?
Read the full story below.
From the early days of digital currency to now, there have been many barriers to using cryptocurrencies but over time these barriers have started to disappear. Where once it was complicated for a new user to buy or sell Bitcoin, now in some places, you can do both in the high street, while online services have made transferring fiat money into Bitcoins a simple, user friendly process. These changes have accompanied a rise in popularity of the cryptocurrency concept, with more and more people all over the world using some form of digital currency of the blockchain technology.
For the most part, this rise in both popularity and ease of use has happened without interference from state authorities, allowing the systems to develop worldwide and be tailored towards the needs of users as they became clear. However, with such growth it was inevitable that over time local governments would begin to look at the digital currency market and seek to exert control over it in some way. In general, that control has been focused on finding ways to extract funding from digital currency use, but in some cases has actually criminalized people for simply using an existing digital currency facility.
This is why it is now vital to be fully aware of any local legislation that could be applicable to a transaction using digital currency. It is important to always remember that cryptocurrency transactions may be anonymous, but they are traceable and authorities do have a funding trail to follow if they wish to enforce legislation that you fall foul of.
A good example of this is the recent changes in legislation found in New Hampshire in the United States, which has reclassified bitcoin sellers as being money transmitters. This may sound somewhat innocuous, but it actually has some serious consequences. Money transmitters within the state must be licensed and bonded as such under state law, and all of the costs that accompany it. The law states that anyone selling digital currency is considered such a money transmitter with no lower limit to the amounts involved, which in theory also applies to bitcoin miners, creating a major issue.
Understanding the restrictions in place by such legislation is essential to stay on the right side of local laws when using any cryptocurrency. As the user base broadens and transaction amounts grow, this can only become more and more important as local governments seek to take some control, and income, from the activities of those using digital currency.