Cryptocurrency has been a buzzword throughout the stock markets recently, with Bitcoin and Ethereum rising in popularity exponentially. This apparent huge potential has inspired many people to invest, whether it be small investments made to gain more money in the future or large ones for financial independence. However, investing in cryptocurrency could leave you needing a lawyer to help you out.
How Can Crypto Leave You Needing a Lawyer?
Cryptocurrency is Not Regulated in Many Places
One of the great things about cryptocurrency is that it’s free from government regulations. This means you don’t have to pay tax on gains made. However, this could also leave your wallet feeling pretty empty if something goes wrong. It doesn’t matter how much you earn or where you live. When investing in cryptocurrency, it’s a good idea to make sure that such investments are legal in your area. You may be breaking local laws, which could result in hefty fines or jail time if sentenced. Although unlikely, there are certain small countries where crypto-related activity is illegal, so beware. If you’re unsure what the legality of your country is with regards to cryptocurrencies, then contacting a lawyer would be a place to start.
‘Too good to be true?’ These three words should ring alarm bells in your head when researching new cryptocurrency-related companies or ventures, as it’s the biggest sign that they’re probably going to scam you! Unfortunately, fraudsters are a part of life. Although many people try to keep their activities out of the media for fear of exposing their identities- there will always be some who get caught, and this could result in fines or prison time. Cryptocurrency-related crimes are becoming more prevalent, with just recently $500m worth of XEM tokens being stolen from Japanese crypto exchange Coincheck due to an alleged hack. Still, other traders have been trading crypto without problems. The best way is to do your research before investing anywhere.
Cryptocurrency Decentralizes Financial Trading
Although this could be seen as a positive for most cryptocurrency users, many centralized groups are unhappy with being unable to control their finances and therefore try to shut crypto down by ‘taking them on.’ One example of this was when Ros Financ in Russia attempted to ban all sales and exchange of Bitcoins within its territory because they thought it would provide a way out of Russian politics. They also prohibited websites related to Bitcoin so that anyone using crypto was breaking the law- leading one man to find himself in court for owing $27 in cryptocurrency. If you’re not voting with your feet, you’re voting with the internet, and if they feel you shouldn’t be doing this, they will come after you.
It is important to note that although governments are unlikely to ban crypto, the idea of decentralized currencies goes against their very own. As a result, many countries have placed legal restrictions on trading and mining due to its newness. There have been cases where people who have mined or traded cryptocurrency without being registered for tax have found themselves facing some hefty fines and even jail time. There are many legal issues surrounding cryptocurrency, and while there will always be people who abuse the system, if you’re careful, it can be avoided.
Cryptocurrency is Not Anonymous
Although Bitcoin or another cryptocurrency may be untraceable regarding safety deposits and their history of being held, it could still be traced back to a person. Once a wallet has been set up on a certain exchange, desktop computer, etc., you will have created a digital footprint that can’t easily be removed. It’s also important to note that law enforcement agencies are now looking into ways to track criminal activity using cryptocurrency. For example, there was recently a case whereby some hackers stole $60m worth of bitcoin after gaining access to the digital wallets linked to a South Korean cryptocurrency exchange. Although there are always going to be issues surrounding law enforcement and crypto in regulating crime, if you’re careful, it can be avoided.
All too often, we see stories whereby people have lost everything due to cryptocurrency scams. For example, recently, some crypto-enthusiasts got scammed out of $1m worth of bitcoin by criminals pretending to be Elon Musk’s brother. At the same time, another group found themselves falling victim to an ICO scam when they purchased a coffee for cryptocurrency only for eight months later the currency not being able to buy a cup of tea. Many cryptocurrency laws and regulations in place offer some protection against crypto scams. However, if you’re careful, it can be avoided.
Cryptocurrency Threats and Hacks
Another reason you should never leave all your eggs in one basket is that crypto-currency could well turn out to be a very volatile investment, making back what was originally invested seem impossible. This is important to realize when people have lost thousands of dollars worth of cryptocurrency due to hackers breaking into their systems and stealing data from them. Although most law enforcement agencies will track down these individuals, they can’t guarantee a 100% success rate, in which case it’s better not to put all your eggs in one basket. Also, Blockchain and the law are still fairly new concepts, and as a result, the legal system could be behind in tracking down cybercriminals.
In conclusion, Blockchain and the law still share a relatively new relationship, which means that there is plenty of time for cryptocurrency enthusiasts and the legal system to catch up. If you’re thinking about getting involved in cryptocurrency, make sure you do as much research as possible before making your mind up.
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