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The Legality of Crypto Transactions

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Cryptocurrency popularity has been on the rise for quite some time now, since Bitcoins conception people have been talking about using cryptocurrency as a safer method of transaction and a lot of people hail it as a method of transaction that people might end up using more and more in the future when the world becomes even more digitized. Like all things in life, everything has a dark side and cryptocurrencies do have issues, since the idea is a relatively new one, to use a completely arbitrary form of currency was already a lot to get around and now that more and more people are using bitcoin and Ethereum we have to understand what the problems are surrounding cryptocurrencies.

Cryptocurrency works in a decentralized environment where nodes exist all around the globe, so then the question would be, how would you create a set of rules and laws for something that is run in different parts of the world. Every country has its own different laws and jurisdictions and very different approaches regarding Blockchain and Cryptocurrency. The issue right now is that these 2 ideas are so new and fundamental for future use that countries and legal systems are doing all they can to regulate and create borders with which companies can operate and move.

DOAs and Smart Contracts

There are many ways to go around this for the time being, for example, one being Decentralised  Autonomous Organisations or DAOs for short, this is a legal system where both individual and organizations participate. They are run on smart contracts. Smart contracts are simply lines of code and protocol where they digitally facilitate, enforce and authenticate a contract. Smart contracts allow the performance of honest transactions without the need of any third party. A lot has been said about smart contracts and how everything would work without any form of a third party. The ability to cut out the middle man means cost would decrease significantly, but given the fact that smart contracts are also just computer code, would they fit the definition of a contract in the more traditional sense? How enforceable is a smart contract is a court of law? Right now we do not know, because it is too early to say, the more we use them the more we will find out what happens with them.

Regulatory Issues

As I mentioned before regulation is imperative to create a legal and safe environment for crypto to live and grow. As crypto markets capitalize governments are taking an increased level of interest so they can jump on the train and come out with a profit. Some governments have also threatened to make cryptocurrencies illegal within their borders. Countries like Russia, Vietnam, Columbia, Ecuador, Iran and more. On the other side, the complete lack of regulation where Bitcoin is legal can lead to Market Manipulation. Market manipulation is a form of market abuse where there is an attempt to meddle and interfere with the free and fair operation of the market. People who manipulate can create artificial, misleading appearances with regards to prices of products, commodity and the currency itself.

Cryptocurrencies in Malta

Cryptocurrencies currencies in Malta are currently unregulated under Maltese law and exchanges done with cryptocurrencies are treated the same as commodity trading. A company who uses virtual currencies under Maltese law is not required to have a license from the Malta Financial Services Authority (MFSA), unless it qualifies as a collective investment scheme or carries on the business of a financial institution or payment service provider, in that case, the company would need to be licensed in terms of the Financial Institutions Act. Cryptocurrency has done a massive deal for Malta in the iGaming sector, it became so big that it provides around 12% of Malta’s GDP. If you click here you will find a bitcoin poker guide.

Conclusion

In conclusion, virtual currencies are still a fairly young niche that still yet to be explored further and expand more and more. The world is heading into an age of digitization and blockchain and cryptocurrency seem to be already waiting for us. Countries still have not yet accepted this change and made crypto illegal and in some rare cases arrested people who were in possession of a cryptocurrency. When it comes to Malta, virtual currencies are still unregulated and treated the same as normal online transactions.