The Future of Bitcoin And Other Cryptocurrencies In Sweden
Many nations are finding it hard to implement cryptocurrencies or digital currencies as they are not able to form a legal framework to regulate the use of these currencies. United Kingdom, Australia, Belgium, Hong Kong, India, Malaysia, and Singapore are some of the countries where the use of bitcoin and other digital currencies are not regulated or have very little legal regulations. Countries, where the use of bitcoin is entirely banned, include Russia, Thailand, Bangladesh, Ecuador, and Kyrgyzstan.
There are also countries like Sweden, Germany, France, Finland, and Japan, where the use of Bitcoin and other cryptocurrencies are encouraged for tax and other purposes. In these countries, the use of Bitcoin and other digital currencies is strictly regulated. Among these countries, Sweden is one of the leaders in the bitcoin market.
Legality and Regulation of Bitcoin and other cryptocurrencies in Sweden
The tax authority of Sweden has laid a legal framework for declaring income gained from the mining of bitcoin and other cryptocurrencies. In the process of bitcoin mining, the transaction records are added to the public ledger of Bitcoin and other virtual currencies of past transactions. The ledger which contains these past transactions is referred to as the blockchain. This block is updated from time to time and it is shared with anyone who participates in Bitcoin mining.
The Swedish Tax Law classifies income into three categories: income from employment, income from capital and income from the economic activity. The income from employment also includes the income that is obtained from personal hobby activities. Income from economic activity includes income that is strictly related to professional or business activities. As the potential for gaining profits from using Bitcoin mining as an economic activity keeping in mind the cost of the equipment that the person would have to pay for, Bitcoin mining is not likely to be considered as an activity for economic purpose. But if the bitcoin mining activity for a professional purpose is managed efficiently and promises to produce a surplus of above 25 bitcoins in a year, in this case, it can be considered as a potential economic activity.
The costs that are related to hobby activities or employment are subject to deduction for up to 5 years, the previous year the activity is expected to give a surplus. When bitcoins are used for a trading purpose, they are taxed as capital gains.
The tax authority in Sweden has, however, prohibited the use of bitcoins for buying and also selling of waste or scrap metals as they were finding it hard to trace and monitor Bitcoin and other cryptocurrency transactions.
Recently, Sweden, a cashless nation, was in the limelight when it announced that it has laid new regulations for monitoring the use of Bitcoin and other cryptocurrencies in their Stockholm cryptocurrency conference which took place in September 2017. The speakers in the blockchain conference laid emphasis on implementing this technology in various important industries like banking industry and energy and utility industry, healthcare industry and governmental institutions.