Cryptocurrency payment system. Legalization

The growth of the cryptocurrency market is attracting more and more traditional businesses. Many entrepreneurs are now considering, or have already launched, a cryptocurrency payment system on their online sales platforms so that they can receive payment for goods or services in cryptocurrency.

At the same time, operating such services has a number of pitfalls, including legalization and taxation of the income received. In this article we look at the pros and cons of crypto payment systems (crypto acquiring) for business. We also consider alternatives: creating and legalizing your own crypto payment gateway, and registering it legally.

The world does not stand still. Those who have the knowledge and respond quickly to the challenges of our time will find success and prosperity. So, let’s look at the details.

Payment systems for cryptocurrencies

Payment systems that work with cryptocurrencies let users make transactions and send money in digital assets such as Bitcoin, Ethereum and others. They usually offer faster transactions for a fixed percentage fee, plus extra features such as anonymity. As a rule, they are connected through exchange services.

However, cryptocurrency payment systems also carry certain risks, such as price volatility and a high risk of fraud. As always, it is important to do your own research and read the terms and the security measures of each payment system carefully before you use it.

It is especially important to pay attention to the legal status of the payment service (crypto acquiring). Most often these services are not legally formalized and operate on the “dark” side of crypto, which is absolutely unacceptable for a legal online business.

Crypto acquiring for business

With the global crypto boom, crypto acquiring providers that accept payments appear on the market actively, and they also disappear quickly. What factors drive this, and what should an entrepreneur look at when choosing a crypto service for their marketplace?

Crypto acquiring, that is, accepting payments in cryptocurrency, can become a target of various fraud schemes. For example:

1. Fake transactions: Fraudsters can create fake transactions to get cryptocurrency or services without making a real payment. This may involve creating fake wallets or making purchases with stolen credit cards.
2. Identity theft: Fraudsters may try to get hold of the identities of users of crypto acquiring platforms and use this data for fraud, including theft of cryptocurrency. Such cases increase after crypto acquiring is connected.
3. Fake platforms: Fraudsters can create fake crypto acquiring platforms that look authentic in order to get cryptocurrency or users’ sensitive information. As a rule, such a site has no information about the legal entity behind it and no permits.

Based on the above, no crypto acquiring provider guarantees protection against fraud, which is unacceptable for a legal business. In addition, many crypto services disappear after an “exit scam” that takes a share of the marketplace owners’ funds, and it is impossible to find them without the help of law enforcement agencies.

Cryptocurrency payment gateway

So how can an entrepreneur set up and legalize cryptocurrency payments on their website? To protect against fraud in crypto acquiring, we recommend creating your own crypto payment gateway for a specific online marketplace, with direct integration into the blockchain network.

Here is how it works. Under the selected product on the marketplace, the customer chooses the “payment in cryptocurrency” option and is asked to choose BTC, ETH or USDT. The crypto gateway then generates an invoice for payment in the selected cryptocurrency. The customer makes the payment, and the money goes to a wallet that the entrepreneur has created, for example in MetaMask (a wallet for storing and transferring cryptocurrency, not an exchange wallet).

The received crypto funds are converted into fiat currencies manually.

This kind of crypto gateway has the following advantages:

• no acquiring fees;
• payment acceptance through the crypto gateway keeps working as long as the crypto network exists;
• the entrepreneur (the owner of the marketplace) controls all transactions.

To order an individual turnkey payment service, please email us: info@sion-ip.com.

Legalization of a cryptocurrency payment gateway

Legalization of a cryptocurrency gateway is a process in which government agencies take measures to regulate and supervise transactions with cryptocurrencies through gateways that allow users to receive cryptocurrencies, and to exchange them for fiat money or the other way round.

Today, approaches to legalizing cryptocurrency gateways differ from country to country. Some countries and regions, such as the United States, Japan, Switzerland and some EU countries, have developed specific laws and regulatory frameworks (licensing requirements) for cryptocurrency gateways. These laws often include licensing and registration of platforms, customer identification requirements, and rules against money laundering and terrorist financing.

Other countries may take a tougher stance toward cryptocurrencies in general, and so they have not developed specific laws or regulatory frameworks for crypto gateways. In such cases, the operation of cryptocurrency gateways may be limited or prohibited.

Legalizing cryptocurrency gateways has its own benefits, such as more trust, protection of users from fraud, and compliance with anti-money laundering regulations. However, it also requires compliance with strict rules and regulations, which can be difficult for some companies.

Thus, whether a cryptocurrency gateway can be legalized depends on the legislation and on the approach of each country or region to cryptocurrencies.
To check whether crypto payments can be legalized in a specific country, please email us: info@sion-ip.com.

Legalization of income from cryptocurrency

Many entrepreneurs in legal business do not consider cryptocurrency a payment instrument at all. At the same time, the legislation of many countries already defines crypto as a payment instrument and/or an investment. In some countries, crypto operations are prohibited, while in others, such as Portugal, citizens are exempt from crypto taxes. In general, the state does not prohibit the use of crypto, but it does not guarantee compensation for lost funds.

You can legally receive cryptocurrency in the Caribbean, Vanuatu, Sweden, Australia, most EU countries, the USA, Japan and other states. Special tax rates are set for income in crypto accordingly. If you design a crypto payment gateway under the legislation of EU countries, cryptocurrency is taxed in all of them: often there is a capital gains tax, and the rate depends on the legislation of each sovereign state.

Consequently, taxes on the acquisition, exchange, sale and storage of cryptocurrency are determined separately in each country where crypto is legally defined. To choose the best jurisdiction for legalizing a crypto gateway for your business, we recommend contacting our blockchain lawyers.

Cryptocurrency business opportunities

Cryptocurrency offers a number of potential business opportunities in marketing. Here are a few of them:

1. International payments: Cryptocurrency allows fast, low-cost international transactions without intermediaries. This can help you expand your business geography and attract customers from all over the world. It is a very reliable tool if you have your own crypto payment gateway.

2. Cryptocurrency rewards: You can use cryptocurrency reward programs or tokens to reward customer loyalty or attract new customers. This can encourage customer activity and participation in your business. It is very popular to release unique NFT cards for a specific project or promotion.

3. ICO (Initial Coin Offering): If you have an innovative business idea, you can run your own ICO to attract investment by issuing your own tokens. This can be a way to fund your project and draw attention to your company. It can be connected to your own crypto gateway.

4. Secure transactions, especially with your own crypto gateway: Blockchain technology, on which cryptocurrency is based, ensures transparent and secure transactions. This can be an advantage for customers who value privacy and the protection of their data.

However, remember that adopting cryptocurrencies in business requires appropriate security measures and a legal framework. We recommend doing enough research and consulting specialists before you introduce cryptocurrency into your business. For detailed advice, please email us: info@sion-ip.com.