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Cryptocurrencies are one of the newest and most popular trends in investing because they can yield gargantuan returns. The downside to cryptocurrency is that it’s an unregulated industry, which brings about a number of legal complications.
If you are intending on investing in cryptocurrencies but are concerned about the legality of doing so, then it is essential that you conduct online research, specifically into your country’s rules regarding crypto. This post will simplify your research a bit for you, by telling you about some legal aspects of working with cryptocurrency:
Unregulated Industry
Crypto is an unregulated industry, meaning that no central government dictates how crypto is used. With that said, according to an article on the SEC and crypto lending industry, the U.S. government is taking steps to regulate crypto lending, but not the entire crypto industry. The SEC wants to regulate crypto lending so that peoples’ investments can be protected from fraud, and so lenders comply with international financial laws. Other countries are taking similar steps, like Japan for example, which has the world’s strictest crypto rules and regards crypto as a person’s legal asset.
Exchange Services
In the United States, crypto exchange services are completely legal. However, in other countries, they are not. If you want to invest in crypto, then the first thing that you need to do is to research your country’s specific rules regarding the use of cryptocurrencies. An exchange is a platform where you purchase, trade, and store cryptos. Nearly all exchanges are used by people from a broad range of countries and are not exclusive to certain places. It’s still good to use an exchange that’s hosted in your country however because it can grant you some legal protection if the site steals your money.
Domestic Legality
As mentioned in the previous section, it is essential that you research your country’s specific rules regarding cryptocurrency. Unfortunately for many people, trading crypto is simply impossible. This is because many countries have actually banned it. If you are found to be trading crypto in a place where it’s banned, you can have your crypto seized and can actually be arrested. Other countries on the other hand have actually taken steps to legalize crypto and recognize it as an official currency, giving owners the same rights they have over their fiat currencies.
Untraceable Fraud
The downside to cryptocurrency is that it’s inextricably connected to the crime. Digital criminals use cryptocurrencies to launder money, buy weapons and drugs, and commit fraud. While cryptocurrencies have blockchains, they can still be stolen and made disappear. If you are intending on trading crypto, then you should be aware of this. You need to take steps to prevent yourself from falling victim to sophisticated online fraud. One of the main ways of doing this is using a VPN whenever you trade and always storing your crypto in a secure wallet.
Other Important Things
Finding an Exchange
The legality of crypto isn’t the only thing that you need to think about. It’s also important that you find an exchange that’s reliable and trustworthy. The best way to find an exchange, as mentioned previously, is to first research exchanges that are hosted and owned by somebody who lives in your country. Once you have a list of different exchanges, then read their reviews and ask other traders which ones they recommend. You can find a lot out about exchange by reading their reviews because they will give you a clear idea of what’s going on inside a platform’s users’ heads.
Researching Currencies
Before investing a dime in crypto, you need to be clear about what cryptocurrencies are worth investing in. A lot of traders give absolutely no thought to currencies, instead choosing to blindly invest their money. Researching cryptocurrencies is essential if you intend upon trading them. There are lots of online journals, blogs, and financial magazines that you can read and use to find out about the most promising cryptocurrencies available. In addition to using online learning resources, it’s essential that you ask other traders with whom you have a relationship for recommendations. Always watch out for pump ‘n’ dump scams when you are asking people for their advice.
Financial Charts
If you intend on trading crypto, then you need to learn to read financial charts. Financial charts can tell you a lot about a currency, as well as predict any downward or upward trends. Learning to read financial charts can be difficult, especially if you do not have any experience in reading charts. There are lots of online guides and tutorials available for you to use for this purpose. It might also be worth asking a friend of yours who trades (if you have any) for their help in learning to read charts. You can also use a forum or chat room to ask for an experienced trader’s help if you do not know anybody in real life.
Careful Trading
You need to be as careful and meticulous as possible when you are trading cryptocurrency. Unfortunately, a lot of people treat crypto as though it’s a roulette wheel. While for some people this works out, for the great majority it doesn’t. Crypto can be extremely unpredictable. Treating crypto flippantly and not taking trades seriously can result in one’s money being lost. You need to be especially careful if you are going to be leverage trading.
Avoiding Fraud
As mentioned earlier on in this post, fraud is a problem. If you don’t take the steps to protect yourself against it, then your entire investment could be stolen. The most effective way of protecting oneself against fraud is using a VPN, a secure wallet, and a reliable exchange. The most robust and secure type of wallet is an offline wallet. Make sure that you don’t store your wallet’s password on your computer, either. Saving your wallet’s password on your computer makes it easy for hackers to access—all they have to do is to get into your device, and they can take it. Write your password down on a piece of paper.
Crypto trading is one of the most lucrative ways of making money online. However, just because it’s lucrative does not mean that it’s easy to get started with. Crypto is incredibly complex and needs to be treated as such. If you follow this post’s guidance and implement the tips outlined in the second half, then you should be able to get started effectively and safely.
