In its current form, Bitcoin presents three challenges to government authority: it cannot be regulated, it is used by criminals, and it can help citizens circumvent capital controls. Until the time that Bitcoin's ecosystem matures, it will continue to be viewed with distrust by established authorities.
Governments are wary of Bitcoin because it threatens their control over the money system. Decentralization is at the heart of Bitcoin; therefore, the technology involved denies governments the ability to wield central control over transactions.
In the end, some governments do not want to lose control over currencies because they cannot track down illegal activities that individuals will carry out with the cryptocurrency. Therefore, some economies fear this virtual currency.
Cryptocurrencies are unregulated in India but in Budget 2022, the government announced a flat 30 per cent tax on gains from cryptocurrency transactions as well as a tax deducted source (TDS) of 1 per cent. “RBI is of the view that it should be banned.
Digital or virtual currencies are a medium of exchange but are not regular money. Unlike dollar bills and coins, cryptocurrencies are not issued or backed by the U.S. government or any other government or central bank.
The Australian Government has indicated that it intends to introduce legislation to improve regulatory frameworks around cryptocurrency in 2023.
But crypto is not legal tender in Australia and is not widely accepted as payment. Most people don't use it for everyday transactions. It is not the sort of investment to use to build your savings. Once you invest there are no regulatory restrictions on how your funds are used.
P.M. Mishra, the founder of Finlaw, a law consultancy firm, said the exchange of funds between banks and cryptocurrency exchanges would cease if the government outlaws cryptocurrencies. Mishra added that "you won't be able to purchase cryptocurrency using local cash" and "you won't be able to cash them in."
According to the U.S. Library of Congress, as of November 2021, a total of nine countries have banned cryptocurrency completely. These countries are Algeria, Bangladesh, China, Egypt, Iraq, Morocco, Nepal, Qatar and Tunisia.
Greater regulatory guidance, if well targeted, could help reduce speculation among crypto assets. Less speculation can lead to higher investor confidence, which could draw in more long-term investors who have so far said no thanks to a highly speculative, volatile crypto market.
Cryptocurrencies are highly volatile and trading in them, without a proper understanding of the market dynamics, can be risky, as is the case with many other assets. Advertising, particularly those promoting specific crypto products or companies, can prompt people to start trading impulsively, which can lead to losses.
Banks make the integration of crypto into the traditional financial system difficult by preventing the easy day to day usage of your money and assets held in crypto. Going in and out of crypto, and reaping its rewards, is held back by high fees, complex transactions and slow processing times.
While Bitcoin is welcomed in many parts of the world, several countries are wary of its volatility and decentralized nature. Some also perceive it as a threat to their current monetary systems while being concerned about its use to support illicit activities like drug trafficking, money laundering, and terrorism.
“No, crypto doesn't threaten the financial system — the numbers aren't big enough to do that.
In short, no government can kill Bitcoin on its own. To even have a chance to stop Bitcoin, every government in the world would have to successfully coordinate simultaneously to shut down the entire Internet everywhere and then keep it off forever.
Should cryptocurrencies take over entirely, new infrastructure would have to be developed in order to allow the world to adapt. There would inevitably be difficulties with the transition, as cash could become incompatible quite quickly, leaving some people with lost assets.
While there are plenty of factors affecting crypto's overall volatility, the main source of this sudden crash is the downfall of FTX, one of the most prominent crypto exchanges.
The RBI has been pushing for the prohibition of crypto in India while the finance minister, Nirmala Sitharaman, has said any decision on a crypto ban will need “significant international collaboration”.
Despite its decentralized nature, transactions on most cryptocurrency networks are very secure — as long as crypto users take precautions. The underlying blockchain technology is inherently secure.
No single entity like a government, an organization, or an individual can hack or even shut down Bitcoin. That's because of the technology that underpins Bitcoin. Blockchain technology is a highly-secure technology that applies a unique set of measures to prevent hacking or shutting down by a single entity.
As with other CGT assets, if your crypto assets are held as an investment, you may pay tax on your net capital gains for the year. This is: your total capital gains. less any capital losses.
In Australia your crypto investment is generally subject to Capital Gains Tax. You report capital gains and losses within your Income Tax Return, and pay Income Tax on any net gains.
According to a report by The Independent Reserve Cryptocurrency Index (IRCI), 28.8% of Australians own or have owned cryptocurrencies as of December 2021.