The legality of cryptocurrency and cryptocurrency mining varies with geographic location. These variations occur because of the different policies and regulations that govern financial and economic activities.
Due to the decentralized nature of the virtual transaction, it becomes difficult for the central authorities to monitor cyber-terrorism and virtual crimes. This fact, in turn, leaves the majority of the miners exposed and operating in a gaming-like environment.
Conflicting Interests
Since its conception, Bitcoin has threatened the existence of physical currencies. It has also posed some worries to the state governments over the control of financial markets and instruments. It’s for this very reason that Bitcoin mining is banned and rendered illegal in some countries.
Money Laundering and Cyber-Terrorism
The cryptocurrency activities are unregulated, and the government has little or no attachment to its operations, leaving traders and enterprising citizens exposed to online many laundering and cyber-terrorists. This is why many jurisdictions send a red alert to their citizens and educate them on the risks and pitfalls.
Laws and Regulations
There is, however, no single business that should be immutable to the laws of the land. Companies investing in Crypto mining, since mining operations here are legal, would be required to register with FINTRAC. FINTRAC or Financial Transactions and Reports Analysis Centre of Canada is responsible for implementing compliance programs.
In addition, FINTRAC keeps the required transaction records, reports terrorist-related activities, and determines its customers’ protection from all sorts of financial crimes. The law applies further to oversee virtual currency exchanges between foreigners and Canadian customers.
Is Cryptocurrency a Legal Tender
Because cryptos are sometimes used in making digital payments, they are not yet legal tender. In Canada, the Central bank treats Bitcoins and other cryptos as valuable securities.
Not yet considered in the financial exchange markets, since there are still hot debates on the dangers mining activities pose to the environment and the market volatility of these virtual coins.
There is also speculation that many governments would opt to outlaw the crypto mining operations, citing increased speculative trading and financial risks. In North Africa, China, and some Islamic states, mining or trading Bitcoin is illegal.
Taxation on Bitcoin Mining
There is no controversy on whether Bitcoin and other crypto miners should be taxed. The issue has always been the difficulty experienced by revenue authorities in categorizing and classifying rewards earned by solving the hashes and finding the blocks.
Others have since classified Bitcoin as financial securities and taxed them as wealth. For some, crypto mining rewards are classified and taxed as financial assets, and others treat these earnings as income.
There is no clear tax bracket where cryptocurrency proceeds are defined, leaving states like Canada not reaching a consensus on how to go about taxing Bitcoin and other cryptos.
Bottom Line
The issue of legality is a thing to do based on residential state, how they control inter and across the border business activities.
Cryptocurrency and crypto mining Canada is here to stay. Big investors have taken it seriously, investing in heavy equipment, throwing multi-billion dollars in the crypto industry.
With central regulations in the crypto business yet to happen, it is a gold rush for those in business. Maybe in the future, when all central banks and federal reserves will roll out the CBDCs, then there will be clarity in the centralization and taxation of digital currencies.
