Discover The Facts About How Governments Are Cracking Down On Bitcoin
Anyone who is using Bitcoin or is wanting to start doing so may be worried about some of the recent government crackdowns taking place. Just a couple of weeks ago China closed the exchange outlets in that country. The cryptocurrency exchanges were instructed by government officials to bring they’re trading to a complete stop by the end of September. The American Internal Revenue Service is also seeking to examine all Americans using the currency to see if they’ve been attempting to evade taxes.
How China’s Crackdown Could Affect Bitcoin
China represents 10% of the world’s trading of the cryptocurrency called Bitcoin. With the current crackdown that is taking place there, it is expected to have a significant impact on the overall value of the currency. Part of the problem surrounding this stateless currency is its close association to fraud and the sales of illegal products. Although the majority of those who use the currency purchase legitimate products, some countries like China already have a significant issue with fraud and illegal activities that they’re trying to bring to a halt.
Because of these problems their experts and organizations that are charged with the responsibility of resolving these problems in China, are overwhelmed. For this reason, the officials that have the responsibility of regulating and overseeing Bitcoin activity in China decided that it was better to just close the exchanges to give them more time to implement laws that could protect the country from undue fraudulent activities.
Japan Recognizes Bitcoin As Legal Currency
While some countries such as China are concerned about this type of currency being used for fraudulent activities, countries such as Japan have implemented laws to help reduce the possibility of fraud and has therefore officially recognized Bitcoin as a legitimate currency. Japan was able to put in place capital requirements and anti-money laundering laws that allowed them to feel comfortable enough to recognize the currency and reduce concerns. With countries like China who are shutting down Bitcoin exchanges and the US that is seeking to examine citizens records for their use of this currency, the value has taken a hit. But with Japan’s recognition of the currency as being legal and their implementation of laws to protect against improper use, it has stabilized the currency for now.
How Cryptocurrency Hinders The Chinese Financial System
Many experts are speculating that China’s move on Bitcoin goes far beyond concerns about the sale and purchase of illegal items. Because the government has had a significant issue with money laundering and other financial fraud, they have put into place a government agency charged with the responsibility of reducing those concerns. But that is not its only concern.
For China, the biggest problem is that the open use of this currency can be used for speculative investing. This has had a significantly negative impact on Chinese financial markets. In the recent past, China experienced speculative investing that created an artificial bubble which ultimately burst a couple of years ago. Regulators have been overwhelmed with these issues and some believe that their recent measures to shut down the Bitcoin exchanges is simply a band-aid meant to give the regulators more time to figure out how to enact laws that can protect the country.
The American Internal Revenue Service Ask The Court To See 3 Years Of Data On All American Users Of Bitcoin
The IRS has reported they believe that many users of Bitcoin have either accidentally or deliberately failed to comply with tax laws. Bitcoin is considered a commodity similar to silver and gold and it requires American citizens to report any capital gains on tax reports. The IRS brought forth 3 cases where they say there was proof that individuals or companies had failed to comply with tax laws.
Experts for the cryptocurrency told the court that the IRS had no direct proof and was simply fishing for information. The experts went on to say that the IRS has no direct links that show anyone has committed any type of crime. Bitcoin and other cryptocurrencies are likely here to stay. In time, they will become more mainstream and in the meanwhile, governments will continue to try and manage the regulatory issues.