Finances

The Risks of Using Virtual Currency When Traveling

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Written by Michaell Walling

The term Cryptocurrency translates to digital coins and they were first introduced to the world around ten years back. While various enforcement agencies, tax authorities, etc. are still debating on whether cryptocurrencies are worth investing in or not, one pertinent question that people want to know the answer to is: Are these coins safe to be used while traveling?

These digital coins are not issued or regulated by any central bank like the fiat currencies are. Instead, they are created through a computer-based process called mining. Moreover, these coins are completely unrelated to any government, laws, and regulations. Also, they use a peer-to-peer transaction system that has no physical existence. All these reasons contribute to the fact that many countries have banned the use of cryptocurrencies.

Around 2017, several governments from across the world noticed the increasing popularity of bitcoins. They feared that with the adoption of these currencies, the valuation of the fiat currencies will decrease and as a result, the country’s economy will collapse. The bans were imposed to avoid the loss of power from the monetary authorities and to decrease the spread of illegal activities concerned with these digital coins.

Cryptocurrencies provide greater ease to buy services and goods from online retailers. If you are also interested in crypto trading, make sure to check out https://immediate-edge.co. At a glance, bitcoins might appear to be a well-established monetary system however, there are no uniform international laws that regulate these coins.

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Countries Where Bitcoins Are Allowed

Bitcoin transactions can be done anonymously between your account to anywhere across the world. As a result, it is viewed as a potential weapon to spread terrorism. Moreover, many terrorist organizations and criminals have claimed to use bitcoins as a money transfer method. Also, people may use these digital coins to sell or buy any illegal goods such as weapons or drugs.

With such a potential threat, many countries have banned the use of bitcoins. With so many advantages and yet so many disadvantages, the governments are not able to clearly determine whether or not they should legalize the use of bitcoins. Instead, they wish to wait and see for the time being.

Some countries have indirectly refused to acknowledge the bitcoin payment system. In today’s times, El Salvador is the only country that acknowledges these digital coins as legal tender.  Some other countries that have allowed the use of bitcoins are as follows:

The United States

The US has taken a positive approach to these digital coins. However, several government agencies are working to reduce or prevent the illegal use of bitcoins in their country. Prominent organizations like Subway, Microsoft accept payment in the form of bitcoins.

Canada

Just like its neighbor, Canada also has a positive approach towards cryptocurrencies. This country has also employed numerous government-based agencies to see to it that these digital coins are not used for any illegal means. LiBitcoin is considered a commodity by the CRA (Canada Revenue Agency).

Thus, these digital currencies are viewed as barter transaction systems, and the income generated via these transactions is considered as business income.

The taxes levied on such business depends on the fact that whether the owner has a buying-selling type of business or only deals with investments. However, some of the major banks of the country have banned the use of their debit or credit cards for carrying out bitcoin transactions.

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Australia

Just like Canada, Australia is neutral to the use of bitcoins. It neither considers bitcoins as a legal form of payment nor a foreign currency. However, the Australian Taxation Office (ATO) has ruled it as an asset to reduce the taxes levied on the capital gains.

The European Union

The Central Board of Taxes of Finland has given these digital coins a VAT exempt status and classified them as a financial service. As a result, cryptocurrencies are treated as commodities and not as currencies.

In Belgium, the Federal Public Service Finance has also exempted bitcoin from VAT. However, in Cyprus, cryptocurrencies are neither controlled nor regulated by the government.

In Bulgaria, the National Revenue Agency has taken cryptocurrencies under its existing tax laws. Countries like Germany and other European countries have accepted bitcoins with open hands. Cryptocurrencies are considered legal in these countries however the taxes levied are subject to the fact that whether the government is dealing with miners, enterprises or exchanges.

El Salvador

As discussed above, El Salvador is the only country in the world that has considered bitcoin as a legal tender. In June ‘21, the government formally accepted cryptocurrencies as a payment method.

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Countries Where Bitcoin Is Not Allowed

While cryptocurrencies are welcomed with open hands in many parts of the world, a few countries are concerned about their decentralized nature, volatility,  the threat it poses to the present monetary system, and its link to various terrorist organizations.

As a result, these countries have either banned the use of these coins or have cut off any support to these coins from the country’s financial system that is necessary for its effective functioning.

China

Bitcoin is officially banned in this country. All financial institutions be it government-run or private are prohibited from using bitcoins for any purpose. Bitcoin exchanges are banned as well. The government has traced all the miners and has taken legal action against them.

Russia

Bitcoin is not banned in Russia however, its use as a method of payment is considered illegal.

Vietnam

The Vietnamese government considers bitcoin as an illegitimate method of payment.

Bolivia, Columbia, and Ecuador

These countries have banned the use of cryptocurrencies. Any transactions made using these digital coins are considered illegal as well.

Final Word

Bitcoin has its fair share of advantages and disadvantages. Overall, these coins are in the legal gray area for the majority of the countries. While travelling to various parts of the world, make sure you use bitcoins as a payment method only in those countries that have accepted these digital coins as a method of payment. Making payments using bitcoins in the countries where it is banned, may land you in legal trouble.

About the author

Michaell Walling