The Ecuador Rules for Cryptocurrency
In the past five years, cryptocurrency has taken front and center stage on a global scale. And, some countries have embraced cryptocurrency more than others (El Salvador and the Central African Republic use Bitcoin as legal tender). In most countries such as the United States, cryptocurrency is still considered an asset and not currency per se since it is not backed by the federal government. A common question becomes whether cryptocurrency is legal in a particular country where a person resides — and it if can be used to acquire assets as a form of payment.
Is cryptocurrency legal in Ecuador?
Let’s take a look at some of the basic rules involving cryptocurrency in Ecuador.
Worldwide Income First
The United States is one of only a few countries in the world that taxes individuals on their worldwide income. Therefore, if you are a Green-Card Holder/Legal Permanent Resident then you will be taxed just as if you were a US citizen. As a result, whether or not you reside in the United States or outside of the United States, you are required to file a US tax return. Moreover, whether or not the income you earn is sourced in the United States or outside of the states, does not matter for income purposes; in other words, you are required to report all of this income on a US Tax Return. Thus, if you are a US Person residing in Ecuador, and you earn crypto income, it is still taxable by the US government.
Crypto is Not Legal Tender
As in most countries, cryptocurrency is not considered legal tender in Ecuador. In fact, in Ecuador, the government has made it known that Bitcoin, Ethereum, and other types of cryptocurrency are not official forms of currency. With Ecuador, the crypto rules are a bit ambiguous because while cryptocurrency cannot be used as a payment tool, they are also not currently prosecuting taxpayers in Ecuador under this rule. But, a formal statement was issued by the central bank of Ecuador back in 2018 which provides the following.
Article 98 of the Organic Code on Monetary and Financial Matters
- “The Central Bank of Ecuador informs the public that bitcoin is not an authorized means of payment for use in the country. Bitcoin is a cryptocurrency that has no backing, since it supports its value in speculation. Financial transactions carried out through bitcoin are not controlled, supervised, or regulated by any entity in Ecuador, which is why its use represents a financial risk for those who use it. It is important to note that the purchase and sale of cryptocurrencies -such as bitcoin- through the Internet is not prohibited; however, it is emphasized that bitcoin is not a legal tender and is not authorized as a means of payment for goods and services in Ecuador, as established in article 94 of the Organic Monetary and Financial Code.”
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