With the world finally realizing the immense technology that blockchain technology has, the use of bitcoin and other cryptocurrencies are on a rise. Countries like Germany, France, Sweden, Switzerland, and Finland have recognized the potential in the distributed ledger technology and embraced this technology and have incorporated it across various industries including, Banking, Healthcare, and various governmental establishments.
While bitcoin is the most commonly known and widely used currencies in most of the European nations, it is not the only cryptocurrency in the market. Other cryptocurrencies that are giving Bitcoin a tough competition are Dash, Ethereum, and Ripple. Dash’s main strategy is to give more privacy and offer more user-friendly options to its users. Ethereum is a cryptocurrency on which industries, that are involved in financial services have always had an eye on, mainly due to the automation options that this digital currency offers. Ripple is also a cryptocurrency that mainly connects banks and facilitates financial transactions.
Legality and regulation of Bitcoin and other cryptocurrencies in Liechtenstein
Liechtenstein is a small country in Europe that does not have much of natural resources and have thus laid huge emphasis on banking and finance industry and rely on this industry for their economic growth. This is one main reason why this European nation have embraced the concept of using Bitcoins and other cryptocurrencies.
The taxation of bitcoin and other cryptocurrencies in Liechtenstein is the same as the taxation regulations of the virtual currencies in Switzerland. The taxation authority in Liechtenstein does not believe in getting VAT for bitcoin and other digital currencies from the users as the authority believes that as long as bitcoin is merely seen as a payment method, and not used for the delivery of goods and services, there is no need to pay VAT. Hence, they don’t charge any transaction fees for the use of the cryptocurrencies.
All the transactions that are done using Bitcoin and other virtual currencies are recorded in a block chain (a distributed ledger) which is a centralized internet network so that the records can be traced and monitored easily. But even though all these transactions are recorded and stored in a centralized place, so that they can be traced easily, all the transactions remain anonymous to other bitcoin users.
The Financial Market Authority (FMA) states that while the institutions that produce cryptocurrencies and also the use of the digital currencies do not require any specific license, individual business models are expected to get a license when using these virtual currencies as a payment method. The licensing for these businesses depends on the business model’s design. So before starting any business which involves cryptocurrencies, individuals are expected to get in touch with the FMA to make sure they have the right license and diligence requirements.