legal risks for crypto investors

The Risks of Investing in Cryptocurrency – All You Need to Know


Cryptocurrencies are a new and innovative way to transact, but their legal status is still somewhat unclear. This lack of clarity poses certain risks to investors who trade cryptocurrencies. This blog post will explore some of the potential legal risks involved in cryptocurrency trading. Here’s a quick primer for you:

Tax implications

One of the biggest legal risks facing cryptocurrency investors is the possibility of being taxed on their gains. In many jurisdictions, profits from cryptocurrency trading are considered capital gains and are subject to capital gains tax. However, the tax treatment of cryptocurrencies is still evolving and differs from country to country. As such, it’s important for investors to consult a tax professional before trading cryptocurrencies.

Regulatory Risk

Another legal risk facing cryptocurrency investors is the possibility of regulatory crackdowns. Most governments currently do not regulate cryptocurrencies, but that could change in the future as more countries crack down on their use. For example, China has recently banned ICOs and exchanges, while South Korea has restricted trading activities. If you’re thinking about investing in cryptocurrency, it’s important to be aware of the regulatory environment in your jurisdiction.

Custody Risk

When you invest in cryptocurrency, you safeguard your coins or tokens. If you lose your private keys or suffer a hack, you could lose all of your investment. This is known as “custody risk” and is an important consideration for anyone considering investing in cryptocurrency.

But I’m sure you’d appreciate it if we’d dig a little deeper, so let’s do it!

Taxes and Cryptocurrencies: A Love-Hate Relationship

Anyone who’s ever dealt with taxes knows that they can be a headache. And for cryptocurrency investors, it’s no different. One of the most crucial – yet often overlooked – legal considerations for crypto investors is how government tax authorities view cryptocurrency holdings. As the industry matures, tax authorities’ views are evolving. So, crypto investors must stay up-to-date on their latest pronouncements. 

The United States

The Internal Revenue Service (IRS) considers cryptocurrencies property, not currency. That means crypto gains and losses are subject to capital gains tax. The IRS has also said that it will treat crypto “forks” – when a cryptocurrency splits into two – as taxable events. 

United Kingdom

HM Revenue & Customs (HMRC), the UK’s tax authority, has said that Bitcoin and other cryptocurrencies “are not money or currency” but “are assets of value.” Crypto trades are subject to capital gains tax, but HMRC has said it will “not normally charge VAT” on them. 


The Canada Revenue Agency (CRA) has said that cryptocurrencies are taxable as commodities rather than currencies. That means any gains or losses from crypto trading are subject to capital gains tax. 


The Australian Taxation Office (ATO) has said that it will treat cryptocurrencies “like property” for tax purposes rather than treating them as currency. That means any profits or losses from buying, selling, or trading cryptocurrency are subject to capital gains tax. 

The EU

In October 2022, the European Council approved the Markets in Crypto-Assets (MiCA) Regulation – one of the first attempts globally at comprehensive regulation of cryptocurrency markets. The regulation is designed to fill the gaps in existing EU financial rules and provide a level playing field for cryptocurrencies, ICOs and other digital assets. MiCA sets out rules for issuers, exchanges, intermediaries and custodians and includes provisions on anti-money laundering and investor protection. The regulation will come into force in January 2023 and will apply to all EU member states. 

Foreign Bank Account Regulations: 5 tips for staying compliant

Cryptocurrency and foreign bank account regulations may seem like two completely different topics, but they’re actually more closely related than you might think. If you’re a digital nomad or freelancer who uses cryptocurrency, you must be aware of the FBAR (Foreign Bank Account Report) requirements that may apply to you. Here are TheWalletGuru’s top 5 tips for staying compliant with FBAR regulations:

Know the deadline for filing your FBAR

The deadline for filing your FBAR is June 30th. However, if you need more time to gather all of the necessary information, you can request an extension from the IRS.

Include all of your foreign accounts on your FBAR

This includes any cryptocurrency wallets that you have. If you have multiple cryptocurrency wallets, make sure to include them all on your FBAR.

Make sure your bank statements are up to date

Your bank statements must be up to date to include all relevant information on your FBAR. This means that you may need to request new bank statements from your financial institution if yours are out of date.

Gather evidence of your compliance with tax laws

In addition to your bank statements, you’ll also need to provide evidence that you’ve been complying with tax laws to show that your foreign accounts are not being used for tax evasion purposes. This evidence can include records of your cryptocurrency trades, proof of funds in your account, and receipts for taxes paid on those funds.

Keep track of changes in foreign account rules and regulations

The rules and regulations regarding foreign accounts are always changing, so it’s important to stay up-to-date on the latest developments. You can subscribe to TheWalletGuru’s newsletter or follow us on social media.

By following these tips, you can ensure that you’re staying compliant with FBAR regulations and avoid any penalties from the IRS. For more tips on managing your finances as a digital nomad or freelancer, subscribe to TRASTRA’s newsletter and follow us on social media.

Blog Title: Decentralization done right – Cryptocurrency and Decentralization working in harmony

Cryptocurrency and Decentralization

Can they coexist peacefully, or is it a recipe for disaster? Let’s take a look at how the two should work together in a regulated environment to avoid another FTX disaster.

Decentralization vs. Regulation

The problem with decentralization is that it’s often seen as an all-or-nothing proposition. Either something is totally decentralized, or it’s not decentralized at all. This is where things start to break down. When you have a completely decentralized system, no one can oversee it and ensure things are running smoothly. This can lead to disasters like the one we saw with FTX.

On the other hand, regulation stifles innovation and creativity. It puts a stranglehold on progress. So, how can we have the best of both worlds? How can we have a system that is both decentralized and well-regulated?

The answer lies in finding the right balance between the two. We need to create a system that is decentralized enough to allow for innovation and creativity but which also has enough regulation to prevent complete chaos. That might seem like a tall order, but it’s not impossible. In fact, it’s exactly what we need to create the perfect environment for cryptocurrency and decentralization to thrive.

The Importance of Cryptocurrency Registration and Licensing

Cryptocurrency registration and licensing are essential for several reasons. It helps to ensure that businesses dealing in cryptocurrencies are legitimate and it helps to protect consumers from scams. Besides, it ensures that businesses comply with anti-money laundering laws and gives businesses a way to show they are serious about following the law. Finally, it provides clarity for businesses operating in the cryptocurrency space. 

A license is proof that a company is legitimate and has met specific requirements set forth by the government or financial institution. A license protects consumers by ensuring businesses comply with anti-money laundering laws and know-your-customer regulations. Furthermore, a license allows businesses to show they are serious about following the law. Finally, licensing clarifies businesses operating in cryptocurrency by specifying which activities are allowed and which are not. 

Fraud and Money Laundering in the Crypto Space: How to Protect Yourself

If you’re considering getting involved in the crypto space, it’s essential to be aware of the risks to protect yourself. Let’s take a look at some of the most common ways that people are defrauded or have their money laundered in the crypto space, and we’ll offer some tips on how to avoid becoming a victim.

Pump and Dump Schemes

One of the most common scams in the crypto space is the pump-and-dump scheme. In a pump-and-dump scheme, a group of people buys up a large amount of a low-priced coin, then promotes it heavily on social media and other channels. This causes the coin price to “pump” up, at which point the group sells off their coins at a profit. These schemes are often orchestrated by so-called “bitcoin celebrities” who have a large following on social media. If you see someone promoting a coin heavily without disclosing that they own a lot of it, be very wary.

Another variation of this scheme is when an exchange lists a new coin that turns out to be worthless. The exchange will often buy up a large amount of the coin before listing it, then sell it off to unsuspecting investors at an inflated price once it’s listed. If you’re considering investing in a new coin that’s being listed on an exchange, be sure to do your due diligence first. Many websites track which exchanges have been known to engage in these practices.

Phishing Scams

Phishing scams are another common type of fraud in the crypto space. In a phishing scam, someone will send you an email or message that looks like it’s from a legitimate source (such as your wallet provider or an exchange), but is actually from a scammer. These messages will usually contain links that lead to fake websites designed to look like the real thing. Once you enter your login credentials on these fake websites, the scammer will then have access to your account and can steal your funds. 

To protect yourself from phishing scams, always be suspicious of any unsolicited emails or messages you receive related to cryptocurrency. If you’re unsure if an email is legitimate, check the sender’s address and look for any typos or grammatical errors (scammers are often non-native English speakers). You should also never click on any links in these emails or messages; instead, type in the website address to ensure you’re going to the actual website. And finally, always enable two-factor authentication on your accounts whenever possible. This will require you to enter an additional code when logging in from an unrecognized device, making it much more difficult for scammers to gain access to your account. 

Malware Scams

Malware scams are another common type of fraud in which scammers send malicious software that installs itself on your computer without your knowledge. This software can then be used to steal sensitive information such as login credentials or private keys from your computer. It can also be used to hijack your computer’s processing power to mine cryptocurrency for the scammer’s benefit (this is known as “cryptojacking”). 

To protect yourself from malware scams, always be suspicious of any unsolicited emails or messages containing links or attachments. Never click on any links or download any attachments from these emails or messages unless you’re absolutely sure they’re legitimate (as we mentioned before, scammers are often non-native English speakers and may use the poor grammar). You should also install an anti-malware program on your computer and keep it up-to-date; this will help catch any malicious software before installing it. 

And finally, don’t forget about good old-fashioned physical security! Just because cryptocurrency is digital doesn’t mean criminals won’t try to steal it from you in person. Be sure to keep your wallets and devices safe from pickpockets and thieves by keeping them close at all times when you’re out and about.


What are the risks associated with investing in cryptocurrency?

Cryptocurrency is a highly volatile asset that may not be suitable for all investors. Cryptocurrencies risk significant losses due to their decentralized nature, lack of regulation, and potential for price manipulation or fraud. Additionally, there are technical risks associated with cryptocurrencies, such as exchange failures, security risks, and the risk of loss due to hacking or other malicious activity. Potential investors must be aware of these risks before investing in cryptocurrency.

Are there any regulatory risks associated with cryptocurrency?

Cryptocurrencies are decentralized assets that operate outside of traditional banking regulations. As a result, there is little to no consumer protection available for investors in case of a dispute or fraudulent activity. Additionally, various countries have different regulations regarding cryptocurrency and digital assets, so it is vital to be aware of local laws before investing.

How can I mitigate risk when investing in cryptocurrency?

The best way to mitigate risk when investing in cryptocurrency is to research before investing. It’s essential to understand the technology behind different cryptocurrencies and how they function and familiarize yourself with relevant laws or regulations. Additionally, it can be beneficial to diversify your investments across multiple coins and exchanges to reduce your overall risk exposure. Finally, if possible, it’s a good idea not to invest more than you can afford to lose.

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