- by Staff Writer #3
- Filed: Thursday, 2nd December 2021
Bitcoin trading and investing have increased rapidly over the past years. Most people know Bitcoin as a virtual, digital, or electronic currency with decentralized technology like blockchain as its basis. Any government doesn’t underwrite Bitcoin, and this makes it different from fiat money.While some people use Bitcoin as a currency, others hold it as an investment. Platforms like https://trustpedia.io/ help people understand how to purchase and use this cryptocurrency to pay for services and goods. You can also trade Bitcoin for profit by learning more on this platform.
Despite the rising popularity of this virtual asset, Bitcoin comes with some legal issues. Here are some of the things to know when trading or investing in Bitcoin.
Bitcoin and Cyber Crimes
It’s no secret that many people thought Bitcoin was a form of payment that criminals used in the black market dealings. In the past, many individuals thought Bitcoin was for people that wanted to evade tax or engage in money laundering. Moreover, criminals have used Bitcoin in dark web activities like cyber attacks, hacking, and kidnapping.
Essentially, Bitcoin facilitates the fast, simple, and almost anonymous transfer of funds. And the victims of cybercrimes could be in any jurisdiction. Since tracing back any Bitcoin transaction to an individual is not easy, combating such crimes becomes difficult. What’s more, Bitcoin mixing services complicate things further because even other users can’t follow the transaction trails. Thus, some people think criminals can use Bitcoin to hinder the legal process.
Bitcoin and Information Breach
Data breaching is, perhaps, the greatest weakness of Bitcoin. Cyber security intertwines with assets protection, and no government or bank can regulate or oversee Bitcoin transactions. That means you don’t have a government agency to protect your funds, yet hackers are everywhere.
Today, criminals can use techniques like Bitcoin dusting to gather information about crypto users and then use it for illegal activities. Some crypto trading platforms and digital wallets also lack adequate data protection measures. Thus, criminals can use loopholes in their systems to gather data about innocent users.
Additionally, claiming compensation from such platforms doesn’t follow the usual legal process. And not every Bitcoin user can follow the procedures to get the payment. Any lawyer that wants to help victims of cyber threats requires modern technological know-how.
Bitcoin and Divorce
Bitcoin investments could present legal issues in divorce proceedings. Bitcoin’s non-disclosure protocol raises concerns over misrepresentation. Each party in a divorce should provide accurate information regarding their financial position. With Bitcoin, a party in a divorce can decline to disclose their financial situation thoroughly.
Bitcoin ownership is with the person that has the private and public key to the wallet holding it. And this can lead to further disputes if a party without the crypto wallet access tries to claim ownership of the asset.
Also, Bitcoin’s volatility can make valuing this digital asset during a divorce difficult. Thus, the court could have a hard time trying to divide the crypto assets.
Bitcoin and Inheritance
Another legal issue is about the person that inherits Bitcoin after the owner dies. In most cases, the government and courts treat Bitcoin as property. That means the estate administrator will determine who inherits the deceased Bitcoins. But inheritance tax could also cause legal issues. Also, capital gains tax can be a legal challenge for someone who inherits the Bitcoin if they don’t know how to disclose profits from their crypto investment.
Most legal systems and jurisdictions are not prepared to address Bitcoin legal issues. However, this and other virtual currencies are here to stay. Therefore, the judiciary should find ways to address the legal problems arising from their use and adoption.
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