Regulation of Bitcoin: 2020
2020 almost certainly promises to be the year of bitcoin regulation – something that crypto enthusiasts are none too happy about. While the concept of bitcoin goes back to the early days of the 2000s, regulators are just now starting to take note of the infamous cryptocurrency and what it could mean to their financial infrastructures.
Bitcoin was the first peer-to-peer payment system that was fully decentralized when it debuted. Meaning that it exists outside of government regulation, or rather it did. With the dawn of a new decade upon us, governments across the globe are starting to wise up to the potential problems that bitcoin could cause. Because of this, governments around the world are starting to crack down on how bitcoin trading platforms, like a top platform for all newcomers to the market https://bitvavo.com/en/, and bitcoin finance works.
With no central authority or middleman, governments are figuring out just how difficult bitcoin can be to regulate. Especially if it’s freely traded. Fearing that the currency could be used to circumvent tax payments or mandatory income reporting laws. Or perhaps even more terrifying- it could be used to destabilize or undermine the authority of central banks.
The Real Fears of Bitcoin Adoption
While many regulatory bodies love to spin cautionary tales about how the online currency could be used for illegal activities like money laundering, human trafficking, or terrorist funding- the reality is that should bitcoin become widely adopted and used, it could completely circumvent the known fiat universe.
The problems this could pose to economies as we know them are virtually boundless. Governments use fiat systems to create or destroy money as necessary to keep an economy thriving. They artificially inflate and deflate the price of goods and services when the need should arise. This monetary policy is conducted through central banks in order to influence the economy. Without centralized banking, this tight grip on control is completely lost.
New Regulations for 2020
For many countries, striking a comfortable balance between loss and gain in bitcoin markets is a shaky slope. On one hand, governments can poise to profit from the acceptance of bitcoin, encouraging economic competitiveness and benefiting from fringe technologies and markets. One the other- too much freedom and people may begin to further lose faith in fiat.
Because of this burly juxtaposition, countries have come into 2020 with widely varying reactions to bitcoin and it’s proposed regulation. In countries like the US, federal regulation of the crypto coin has been fairly laid back, leaving individual states to choose how they handle bitcoin and only strictly outlining mandatory reporting and tax schemes. Requiring that bitcoin holdings be reported as capital gains to the IRS and that holdings be taxed as property.
Europe has taken to bitcoin and its associated technologies quite amorously, as the coin seems almost purpose-built to coincide with recent transparency laws concerning information and shared technology. Blockchain dovetails brilliantly into centralized banking schemes, to the point where the European Parliament is building its own decentralized ledger to monitor ongoing events. The European Union seems to spend more time and money on the adoption of bitcoin than on the condemnation of it, leaving individual countries to decide how best to regulate it which in their borders.
Asia, however, is a bit of a hornet’s nest when it comes to new bitcoin regulation. With reactions and regulation ranging from favorable and flourishing to utterly illegal with harsh consequences. Following a carefree adoption and intense trading and mining, Chinese government officials have come down hard of bitcoin this year after concerns over how much revenue was leaving the country via cryptocurrencies. Imposing harsh and sudden regulations that still have investors reeling.
What This Means for Bitcoin Investors
For investors, the safest way to trade bitcoin while still staying firmly on the ground of legality is by using a reliable bitcoin trading platform. These platforms, like Bitvavo, allow traders to only create wallets and transact bitcoin in accordance with the laws that govern their country. Such as integrated identification verification when setting up an account in the US, that automatically gives reporting agencies, like the IRS the knowledge that you indeed own bitcoin.
These platforms will also disallow any traders from creating an account who hail from countries in which bitcoin is now illegal. With each platform tailoring their services to remain in the legal framework of each country the site is accessed from. Meaning that they make it simple for you to stay in the good graces of your government while still enjoying the thrill of a trade well done.