Legal Contradictions of Cryptocurrencies Across the Globe
This article will discuss the legal contradictions that revolve around cryptocurrency usage around the globe.
Contractual Contradictions
Cryptocurrencies and blockchain technology operate on self-executing smart contracts. A contract is a legal document that contains sets of promises agreed upon by the parties. They show the validity of a transaction. Smart contracts are, therefore, the digital format of these transactions that act as a basis on which parties fulfill their contractual obligations.
Smart contacts ensure that the parties are paid immediately after performing their duties. Smart contracts are complex and inherently unique and thus do not fit into traditional orthodox contract law paradigms. There is no legislation or provisions that cater to some of the elements that pop up from these forms of contracts.
Many states do not currently have any laws that govern the application of smart contracts or their validity. This may result in lengthy litigation measures as the courts try and interpret the scanty existing laws.
Jurisdiction Contradictions
The technology underpinning cryptocurrencies involve ledgers that one cannot pinpoint to a specific location. Cryptocurrency transactions offer more privacy than that offered by traditional platforms. The nodes on the blockchain technology are found in different jurisdictions, which may cause conflict on which legal framework will apply to them.
The ledgers do not also have a specific jurisdiction to which they belong, making it difficult for the authorities to determine the best applicable law for this technological development.
Furtherance of Criminal Activities
As with any other technological advancement that offers anonymity, there are raising concerns about the users who may use them to advance their illegal activities. Blockchain technology offers anonymity since no personal information is required in these transactions. This feature may entice criminals who may want to use crypto wallets to further their criminal activities.
This creates contradictions for the law enforcement officers required to ensure that all platforms that aid and abet in the furtherance of criminal activities are inoperable in their states.
Dispute Resolution Mechanisms
The decentralized nature of cryptocurrencies means that the laws of the land may not be applicable in disputes where this technology is involved. The courts may not use the existing provisions in the litigation process. Disputes involving such provisions also present numerous challenges for the prosecution in presenting their evidence, as many transactions are anonymous. It is unclear which laws may be applied where the legislature has not yet formulated provisions to deal with the same.
Tax Implications
There is an ongoing debate on whether, for income tax purposes, cryptocurrencies are currencies or property. In the united states, cryptocurrencies are regarded as property. Therefore, the holders of these coins cannot use them as functional coins. Investors must pay taxes on the profits they acquire from crypto transactions.
This applies when the investors purchase their crypto from the United States and other jurisdictions. Investors who purchase their crypto on foreign exchange platforms may not require to fill their additional requirements when filing taxes as the law is still ambiguous and thus contradictory.
Intellectual Property Law
Cryptocurrencies are categorized as intellectual property and are slowly ginning popularity in this field. Intellectual property law has numerous contradictions, and the new blockchain technology does not improve the situation. The growth of cryptocurrency globally raises various concerns about its distribution, ownership, tracking, enforcing intellectual property agreements, and distributing licenses. There is a lot of uncertainty about who owns cryptocurrencies and blockchain technology.
Regulatory and Legal Concerns
Cryptocurrencies are not regulated by any central authority, nor do any intrinsic goods black them up. Their value depends on how many other owners ascribe to them. With their decentralized nature, investors have few legal avenues to lodge their complaints if any issue arises from crypto ownership and transactions.
Conclusion
Various technological advancements have presented numerous challenges for the traditional legal systems as they try and accommodate the overwhelming array of loopholes that come with these developments. The decentralized nature of cryptocurrencies presents the hugest challenge in their application, causing numerous contradictions with preexisting legal principles.
The government and other law enforcement mechanisms are crippled in performing any action against these transactions despite the obvious breaches experienced herein. The contradictions and challenges mentioned in this article are likely to advance since there are no authorities or intermediaries to settle the disputes that may arise within these transactions.