Are you a cryptocurrency enthusiast who wonders about the effect laws and regulations might have on the long-term and short-term prospects of the crypto markets? If so, you are certainly not alone, because millions of crypto investors, traders, and users have been paying close attention to recent developments in various nations. Some governments are working hard to rein in the freedom loving, independent cryptocurrency marketplace. In many cases, local and national laws are in place that restrict citizens, tax their trading, and otherwise put a chokehold on alt coin activity. Can laws really have a major effect, over the long-haul, for this new, decentralized economy known as the crypto market? Here are some key points to consider if you have any interest whatsoever in holding, buying, selling, or using any of the alt currencies.
Taxation is probably the number-one concern for anyone who is interested in the alt coin marketplace. That’s because every nation has its own way of dealing with the asset class. Some national governments treat cryptocurrency assets, like bitcoin and ethereum as property, not as cash. This simple rule has a profound effect on investors because if they make a large profit on a sale of ethereum or dogecoin, for example, they have to pay short-term capital gains rates on the sale. Right now, any government’s ability to tax its citizens, is the single biggest control factor that legislators have over the ownership and trading of cryptocurrency.
Government regulations are powerful forces when it comes to the various cryptocurrency exchanges and how they operate. For instance, some nations simply ban exchanges from doing business within their borders. Anyone interested in crypto trading needs to learn about local laws, which vary from nation to nation and region to region. In dozens of countries, legislators are in the midst of crafting new laws that both recognize and control what they consider a threat to their national currencies. It’s important to realize that some politicians view alt currency as a threat to sovereign national forms of money. That’s just one reason it can be tough for crypto exchanges to take root in particular jurisdictions.
If you day trade some of the exchange traded funds (ETFs) that are tied directly to the alt coin markets, you need to be careful about being classified as a pattern trader. In many cases, people who do more than three round trip transactions in a business week have to abide by stringent account balance requirements as well as other rules.
What if you live in Turkey, India, Nigeria, or Bolivia? Unfortunately, those nations have either enacted or are threatening to enact total bans on the buying and selling of crypto coins. Ecuador, Algeria, and Nepal have equally stringent regulations, with Nepalese citizens actually facing jail if they take part in crypto transactions.
On the other hand, there are several countries whose governments view crypto money as a positive influence on the world and local economies. For example, if you live in Gibraltar, Argentina, Switzerland, Malta, or Singapore, you’ll find local regulations on the crypto-currency space to be exceptionally lenient.