3 legal and regulatory challenges surrounding the use of cryptocurrencies

economictimes.indiatimes.com:

Bitcoin and crypto assets have been around for more than a decade, but there have been increasing efforts recently in terms of regulation and legalization. This is because the spectacular pace of adoption and the rise in market capitalisation of Bitcoin and crypto assets have resulted in them moving from a niche product used by cypherpunks to having a more mainstream presence as instruments for savings and investments. It can often be quite challenging to apply existing regulatory frameworks to crypto assets or developing new ones. For a start, the crypto ecosystem is evolving rapidly and monitoring it can get quite tricky in a global environment with a large number of players Let’s look at some of the legal and regulatory issues that need to be considered: 1. Legal characterization of crypto & taxation Legal characterization of Bitcoin and crypto assets plays a key role in determining how they are likely to be taxed. The main distinction is whether these assets should be defined as a commodity (in which case capital gains rules apply), a currency or given a whole new different category.

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Crypto transactions are also subject to tax like any other asset. For example, in India, Bitcoin and crypto assets are still caught up in a legal limbo — not illegal but with the legality still undefined. The Finance Minister of India, Nirmala Sitharaman, had proposed to tax digital assets last year and this move has