A Cryptocoins News article reported on a current legal battle being duked out in a California court illustrates just some of the many challenges involved in fully regulating Bitcoin and the entire cryptocurrency system.It sheds light on the number of legal concerns associated with this digital currency.This is along with the other main issue of no standardized set of regulations across countries even though the altcoins are being used across territories to pay for goods and services.Disagreements About Bitcoin's Role Is it a commodity or a currency?Can it be both or change roles based on the type of transaction?It's difficult to regulate something where there has yet to be agreement on exactly what role it plays.For example, the California case involved HashFast Technologies, a company that paid for services using Bitcoin and was trying to sue to recover that currency after it had been paid to a physician.The ruling by the bankruptcy court judge concluded that cryptocurrency is not the same as U.S.

currency but was actually considered to be "intangible personal property."This has proved to be a test on what have been termed "clawback" actions, which are intended to recover money that has been disbursed.As part of the judgment, however, the judge did not rule on the ownership issue and will decide later if the physician must return the Bitcoin or an equivalent in U.S.bitcoin solo mining 2017Another argument that had yet to be decided is the exact value of the Bitcoin as it fluctuates.bitcoin to usd bloombergThe difference in repayment could be as $1 million if the decision is made that it is a currency instead of a commodity.bitcoin wallet only 8 connectionsIt would seem that this would need to be first determined in order to properly regulate cryptocurrency.bitcoin uye ol

This bankruptcy ruling also brings up another issue, which is that bankruptcy code and most likely many other legal codes have not been written with Bitcoin in mind.Therefore, before regulating cryptocurrency, many codes would need to be updated to reflect this new way of conducting transactions and involve making specific decisions as to how it should be treated.bitcoin wallet malaysiaDifferent Countries, Different Regulations It's also difficult to regulate Bitcoin when, in actual fact, regulations vary from country to country.buy bitcoin using payzaThe only similarity may very well be those countries where cryptocurrency is banned or restricted.The issue of how it is classified also comes up again when looking at a global view of Bitcoin.In an Investopedia article, a roundup of countries illustrates some of the varied regulations related to cryptocurrency.

Here are some examples of the different regulations: Australia wants to tax cryptocurrency like other commercial transactions but is also cautious after security concerns from losses in 2013.Brazil has enacted a law about electronic currencies and payment systems, leading the way in evolving its regulations.Canada would like to tax Bitcoin but it is currently not recognized as legal tender so as no legal recognition.China restricts its use and does allow financial institutions to conduct any transactions using Bitcoin.The European Union has spent time debating the issue and has found some ways to tie a legal basis for Bitcoin to its existing laws, but the European Banking Authority is still against it until it becomes regulated.Finland has created specific instructions on how it can be used.It also has made any gains from these transactions subject to capital gains tax.India has shut down the country's largest Bitcoin trading platform and currently has no regulatory framework for cryptocurrency.

Russia restricts the use of Bitcoin and is concerned over its potential for use in money laundering or terrorist activities.The UK does not currently regulate cryptocurrency but does subject profits or losses on Bitcoin trading to capital gains tax while VAT is applied to any goods that are sold in exchange for this digital currency.Many more countries are in similar places to these listed here, but these examples illustrate just how far apart the world is on reaching some type of agreement on regulations of Bitcoin.Future Perspectives on Full Regulation for Cryptocurrency Those that see the true potential of Bitcoin are focused on getting others, including international and national government bodies, banking and financial institutions, court systems, business and consumers, to understand as well.According to an article in The Guardian, they are trying to put past issues behind them, such as the high-profile criminal prosecutions of two Bitcoin entrepreneurs, the suspension of trading on the second-largest Bitcoin exchange, and volatile pricing, and move forward with a focus on finding common regulatory ground to stimulate wider adoption.

Therefore, regulatory measures need to focus on security, price stabilization, and a position for Bitcoin (currency versus commodity) in order to revise existing laws and create new ones that govern this disruptive transaction process.Clearly, cooperation among countries and the associated governing bodies will need to happen with many debates and sessions that end in regulatory resolution for cryptocurrencies.Why Bitcoin is Not Regulated was originally published on Due Invoicing by John Rampton.From Our Partners Presented by LendingTreeAs digitalization continues to rise, so do online transactions.Bitcoin was introduced to help ease these transactions.Not only is Bitcoin considered a digital currency but also a great form of investment; because of this many Canadians have been investing in Bitcoin in the recent years.However, Canadian taxpayers should be aware that the Canada Revenue Agency (CRA) considers Bitcoin as ‘specified foreign property’ under Income Tax Act (ITA) Section 233.3 and therefore subject to be reported on Form T1135, Foreign Income Verification Statement.

Bitcoin are a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, they work like any other currency.All Bitcoin payments are digitally signed using cryptography and therefore offer a very secure form of payment for online transactions.Bitcoin can be used to pay for online goods and services wherever they are accepted.With great price swings in the value of Bitcoin, many people hold on to them as commodity investments.Bitcoin is the largest of its kind in terms of total market value.Bitcoin does not have a standard value indicated on them like other currency, each Bitcoin holds a market value.This value increases and decreases on a regular basis like any other investment.Any taxpayer owning Bitcoin, should keep a record of the market value at the time it was received or purchased.Any subsequent disposition will be determined whether the gain or loss is income or capital, and will depend on whether the Bitcoin was held for investment or for active trading.

In CRA Document No.2014-0561061E5 “Specified Foreign Property” (April 16, 2015), the CRA was asked whether digital currency or an interest in a foreign partnership holding digital currency would be considered specified foreign property.The CRA concluded that,  digital currency would be funds or intangible property, and would be specified foreign property if situated, deposited or held outside Canada and not used or held exclusively in the course of carrying on an active business.Canadian taxpayers need to include/consider the value of the Bitcoin to determine if they hold foreign assets worth more than CAD$100,000, and accordingly report the Bitcoin on their annual T1135 Form, also known as Foreign Income Verification Statement.Additionally, an interest in a partnership that owns or holds specified foreign property would itself be specified foreign property unless the partnership was a “specified Canadian entity” (i.e., a partnership where the total of all non-resident members’ shares the income or loss of the partnership for the fiscal period is less than 90% of the total income or loss of the partnership for the period).

The CRA stated that in this case, the digital currency would likely be specified foreign property and the partnership interest would be specified foreign property of the Canadian corporate owner.If you wish to discuss further on the above issue, or have any tax-related queries or need assistance with tax planning or filing please contact AG Tax.Our tax professionals are highly-experienced with U.S.and Canadian tax laws and can provide you the right guidance to handle even your most complex tax situation.Aylett Grant Tax LLP is a full service accounting firm with a dedicated team of experts, who are highly-qualified and experienced in handling situations related to U.S., Canadian, and other international tax laws.To obtain a quote or to arrange for a consultation to discuss your tax related queries, please contact us at: Disclaimer: The information in this publication is accurate as of the time of its publication.AG Tax assumes no responsibility for changes to tax legislation subsequent to the publication of this document.