Can I Go to Jail for Using Bitcoin?
Law abiding citizens just looking to make a couple bucks in the cryptocurrency market are often afraid to dabble in it. They’re worried about getting tied up in something messy or possibly illegal for trading such high amounts of money to a seemingly invisible source. While there are some instances where crimes can be committed involving Bitcoin, most people are perfectly safe.
Have People Been Arrested for Bitcoin?
When Bitcoin was still new, people were arrested for selling or transmitting it. This was back before the government had fully decided whether or not Bitcoin was money, or what to classify it as. It wasn’t such a popular phenomenon then, and it appeared on the surface to be some kind of financial crime. This used to happen before Bitcoin exchanges held themselves to high standards. It’s not something most people should worry about in current times.
Legal Versus Illegal Bitcoin Use
The only time using Bitcoin is illegal is when it’s used for illegal things. Since Bitcoin (and all cryptocurrency) is optimized for anonymous use, criminals often use it to conduct activities they don’t want to be traced. Purchasing drugs or anything that would need to come off the black market is a lot easier when Bitcoin is used. As long as you aren’t trading Bitcoin for nefarious purposes and you’d be happy to freely report what you’ve purchased with it, you aren’t using it illegally.
Bitcoin Tax Crimes
Failure to pay taxes on Bitcoin is the same as failing to pay taxes on anything — you’ll face IRS penalties and be forced to comply. It only becomes a tax crime when you’re using Bitcoin to launder money, or laundering Bitcoin profits through a legitimate business venture in order to avoid paying the proper amount of taxes. To avoid tax problems, report all Bitcoin related earnings as soon as they occur and pay the amount recommended by the IRS or your accountant.
