Virtual coins within a legal context

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Cryptocurrencies are a relatively new market, so an international consensus or a scheme of how to deal with them in the legal aspect hasn’t been set yet. The thing that complicates the situation further is the fact that the digital money themselves can be a quite controversial topic, partly due to the low social awareness on the matter. Because of these reasons the approaches and laws concerning cryptocurrencies can vary greatly depending on the region.

E-coins – where they are and aren’t legal

Although the initial reactions of the governments were very polarized, currently very few countries have a total ban on cryptocurrencies. A total ban was announced i.e. in Nepal and Egypt. It is very hard, however, to speak about their effectiveness, as anonymity was always a crucial component of the whole idea behind digital money. Most other countries, on the other hand, allow for independent cryptocurrency trade by private persons.

Expert opinions also tended to be divided. Some economy specialists or market investors outright refuse to treat cryptocurrencies like a serious matter, claiming it to be a mere trend that will quickly pass and be forgotten. But stances like these are increasingly rare and most experts consider crypto to be a breakthrough technology, which is bound to become an integral part of our future. Private companies and corporations seem to agree, considering how many of them accept payments in crypto and implement crypto-based systems. It also influences the way society and lawmakers look at digital currencies. It’s one of the reasons some countries that initially planned to ban cryptocurrencies, like India for example, are now working on officially recognizing them. Some other countries, however, don’t address the matter of cryptocurrencies at all, not regulating them and not applying any taxes, and many markets or other crypto exchange platforms are registered in such places.

 The approach of the European Union.

The European Union is composed of many member countries, and so they may differ in qualification, solutions and approaches to the topic of cryptocurrency status. And although they are not banned in any of the countries, they may be taxed or require registration in an office. A unifying solution with laws and regulations is currently in the works. The current consensus requires cryptomarket users to go through an identity verification process for safety reasons.

E-coin in Poland

In 2017, the Polish crypto community was shaken by a statement made by the National Bank of Poland (NBP) and the Polish Financial Supervision Authority (KNF). These two institutions warned against buying and cryptocurrency trading by both private persons and companies, listing potential threats.

Despite that, in the same statement NBP and KNF assured, that cryptographic currencies do not break any Polish or European laws, and so are legal. Some Polish economy experts outright disagreed with the warnings, claiming the listed threats are an overstatement. In the end, although cryptocurrencies are not recognized as an official payment method, their trade  is not illegal. One could be even tempted to say it is relatively easy to do in Poland, but it does require settling the tax.

Cryptocurrencies and legal regulations

Settling the tax on cryptocurrency trade in Poland is a fairly easy process. First of all, it is important to remember that this kind of trade is not considered a business activity, so the potential profit is settled only once a year. In the case of such a dynamic market it is definitely an upside, as it doesn’t require settling profits and losses for every month. The other thing to keep in mind is that crypto-to-crypto transactions are not taxed. The payments apply only to fiat-crypto and crypto-fiat transactions, which are taxed at 1% of the transaction worth, as they are considered to be a “transfer of property rights”.

The profit, meaning how much did a person actually earn through cryptocurrency trade after subtracting the costs, should be put in the PIT-38 declaration in the “capital funds” section. From this amount, called a base, a 19% tax is subtracted. It’s a very straightforward process, a detailed description of which can be easily found on many websites discussing the legal matters in Poland.

Although the legal status of cryptocurrencies is not completely clear yet, ownership and trade by private persons is very rarely banned. By observing the declarations of various countries on the matter it’s not hard to notice that they become more positive towards legalizing and regulating the cryptocurrencies as the time passes. And so the first regulations and agreements create a precious precedence which will have a great influence on the way legal matters concerning digital money and assets will be handled and ultimately settled. In the end, it could be said that cryptocurrencies are legal in most countries, but it is important to make sure of the concrete regulations functioning in a country before we decide to try independent cryptocurrency trading.