The blockchain technology is one of the most promising technologies in the past two decades. It uses a distributed ledger, to store users’ transactions. Due to emerging technology of blockchain and cryptocurrencies together, differences of the blockchain technology and cryptocurrencies could not be understood well. The blockchain is a technology, behind of the cryptocurrencies.
Cryptocurrency is just a small part of the main driven technology of the blockchain. To date, most countries in the world are trying to regulate the cryptocurrency relations and settle them, focusing mainly on the issues related to licensing operations with cryptocurrencies, taxation, as well as countering the legalization of proceeds from criminal transactions and financing of terrorism. Another legal issue on the cryptocurrency is possible using of cryptocurrency transfers with the purpose of criminal activities.
At the same time, more and more individuals and entrepreneurs in different countries recognize the effectiveness of using cryptocurrency. In most cases, cryptocurrency is defined as one of the known and regulated objects of civil turnover.
Also, it should be noted that the European Union is actively conducting research on issues related to cryptocurrencies. However, despite numerous statements and reports from various government organizations, including the European Central Bank, the European Commission, the European Parliament, none of the EU regulatory authorities has adopted specific regulations on cryptocurrency activities. At the same time, in early 2016, the European Commission announced its intentions for tighter regulation of crypto-exchange platforms and companies representing cryptocurrency wallets.
Any cryptocurrency is an encrypted information in the form of a cryptographically protected record designating a certain value and certifying the possessor’s ability to use this value at his own discretion. From this position, cryptocurrency is similar to non-documentary securities that certify property rights. Since cryptocurrency itself symbolizes the value that comes from the economic costs of using the computing power of computers in the blockchain network, it can also be considered as a commodity. However, by its functions, cryptocurrency is closest to money.
Nevertheless, many countries do not prohibit the use of cryptocurrencies but are trying to establish a legal foundation for it. There are considered the following variants of a cryptocurrency substantiation: commodity, a financial instrument, foreign currency transactions, means of payment. Meanwhile, practice shows that the cryptocurrency is used both as a commodity and as a means of payment for goods and services. The main feature of alternative means of payment is that their use is not covered by currency-legal and monetary rules. Nevertheless, today in many countries of the world cryptocurrency is not recognized as an official means of payment, and electronic money. This is very important, since at the taxation the appropriate cryptocurrency transactions can’t be classified as remittances. In this connection, a legal position was outlined, according to which cryptocurrencies are not money from a legal point of view.
Bayan Emrooz Law Firm renders services to foreign and Iranian natural and legal persons in the field of cyber and financial law. Having an experienced and specialized legal staff, Bayan Emrooz is ready to provide the needed legal services in respect to financial matters in Iran.
