For a long time, our relationship with money has been molded by 3 actions – buying, selling and keeping. The concept of ‘currency’ has changed over time, from precious stones to coins, to notes, to credit cards. Now, it is being transformed once more with the creation of Bitcoin by Satoshi Nakamoto and the increasing adoption around the world boosted by its popularity.
However, Bitcoin differs from traditional fiat currency because a central bank does not issue it, and you can ‘create’ one yourself through the sheer power of computing. That thought has made governments scramble to understand what this means. In this case, you won’t go to prison for creating a coin in your house. The most you’ll have to do is pay a higher electricity bill, a known consequence of mining cryptocurrencies.
In an ever-evolving world, it is hard to keep up on regulations. So as Bitcoin gains immense popularity, and amid all this hype, there lies an important question – is Bitcoin legal?
Bitcoin is the first borderless apolitical form of money. No matter what people say and believe, the decentralized nature of the currency ensures that no one can stop you from using it.
Broadly, it will not be wrong to say that you can use Bitcoin almost anywhere where you have access to the internet.
First Things First – Is Bitcoin a Legal Tender?
A legal tender is an acceptable form of money that must be accepted by the receiver as the payment for a debt in the concerned jurisdiction.
As regulators step up the debate of use and trade of digital assets, cryptocurrencies and especially Bitcoin are concerned. Given its market leadership, it’s usually in the center of the highest concerns.
Some countries have declared Bitcoin illegal; however, it doesn’t stop it from being a ‘legal tender’ – only Japan has given Bitcoin that designation. Though, it doesn’t need to be classified as such to be used to conduct payments.
Bitcoins can be used in cases wherein both parties agree to use it as a form of payment. It also means that there are no protections for the merchant or the consumer – its use is entirely discretionary.
That being said, Bitcoin can be used in the U.S to buy products. In 2013, the US Treasury Department’s Financial Crime Enforcement Network (FinCEN) classified it as a “convertible decentralized virtual currency”. Thus, those using virtual currencies to purchase goods are operating within the law and cannot be considered as ‘money transmitters’.
Not limited to the U.S, some online retailers accept Bitcoin as payments around the world, and consumers can purchase goods and services efficiently. In some countries such as Finland, Belgium and France, there are specific tax laws that apply to the digital currency.
However, there are various countries which have outrightly discouraged its use, while there are others which have taken a wait-and-see approach and are still exploring the available options.
Why Are Certain Countries Worried About Cryptocurrencies?
Things are not as easy as they seem to be. As the use of Bitcoin rises, legal regulators, tax authorities and financial institutions are working to understand where the cryptocurrency fits in the existing legal framework.
There are various issues that countries are concerned about, let’s cover some of them.
Scams and Frauds
It is natural for a regulatory body to be worried about a financial community which doesn’t fit into the standard regulatory framework. Coupled with its decentralized nature, understanding the concept of Bitcoin has proven to be a bit of a challenge.
Moreover, cryptocurrencies so far have witnessed their own set of ups and downs. As a central bank does not issue Bitcoins and of other cryptocurrencies, its price is not adequately regulated, which makes the market highly volatile – prices may go up and down in the blink of an eye. This instability is known as bear and bull market.
We’re not talking about the market plunge at the end of last year that left many crypto-millionaires in despair. Instead, there have been numerous instances when crypto exchanges have shut down overnight and ran away with people’s money.
Mt.Gox exchange was one of the prominent trades of its time, but the platform soon filed for bankruptcy due to the technical problems in 2014. The transaction reported a loss of 744,000 Bitcoins of its users. This number accounted for 6% of 12.4 million Bitcoins which were in circulation at that time.
Furthermore, setting up a crypto exchange platform can be subject to the legal framework of the country in question, particularly now that all eyes are on cryptocurrencies. Procedures for setting up shop might include Anti-Money Laundering compliance and Know Your Customer (KYC) policies. Some countries such as the U.S require that any investment and trading in cryptocurrency can only be conducted with the connection and support of a traditional legacy bank account.
Most recently, we covered how Binance has increased their presence around the world, such as Jersey Island and Uganda, where on the first week of operations, 40,000 traders signed up to the fiat-to-crypto exchange.
Besides, the number of hacks that keep people on their toes has tainted the crypto-sphere. The Cryptopia saga in New Zealand can be named a primary example of such malware. It is safe to say that these negative downsides contribute to the governmental scepticism created around the currency. However, the tide might be shifting. Governments rush to comprehend more about this decentralized currency and as a result, policies get more secure.
Anonymity
Perhaps, what adds to the concerns regarding the use of Bitcoin is the fact that users can process the transactions by staying semi-anonymous. Although the transaction is recorded in the blockchain, users can still play around a bit as these digital records only contain the number of funds transferred and the public keys.
This practice goes directly against traditional banks payments and transfer systems, where everything is recorded on the network and anonymity isn’t an option for legal and fiscal reasons.
Crime
As you can already imagine, this anonymity feature, while celebrated as part of the decentralized nature, is also seen as strongly linked to criminal activity. The use of Bitcoin (and other cryptocurrencies) to fund crime has been one of the main concerns shared by governments around the world. This issue became apparent after a dark web market called ‘Silk Road’ surfaced. Only Bitcoins were accepted there. Even though the market was since shut down by the FBI, authorities are still concerned that Bitcoin will appeal to traders of illegal goods and services.
Moreover, it is feared that Bitcoin’s semi-anonymity and decentralized nature can be exploited in money laundering and tax evasion schemes.
G20 countries have actively investigated the matter as they delved into the legalities of Bitcoin and its fellow cryptocurrencies. In October 2018, the Financial Action Task Force organization put forward new proposals to strengthen anti-money laundering measures and combat terrorist financing more efficiently. Ways to monitor cryptocurrencies have become a priority, particularly in that time gap between researching Bitcoin and providing a legal framework to support it (or not).
‘Global financial stability’ is often brought up as a key point in the face of threats of illegal activities surrounding the currency.
“Crypto-assets do, however, raise issues with respect to consumer and investor protection, market integrity, tax evasion, money laundering, and terrorist financing. Crypto-assets lack key attributes of sovereign currencies” explained a communique by the G20 members.
According to Lilita Infante, special agent for the U.S. Drug Enforcement Administration (DEA), the use of Bitcoin has drastically dropped in criminal funding activities. However, what’s interesting is that the number of Bitcoin transactions has multiplied in the last few years.
She said, “Criminal activity accounts for approximately 10 per cent of on-chain Bitcoin transactions, down from a high of 90 per cent in 2013 prior to the U.S. government’s takedown of dark web marketplace Silk Road.”
Overview of Regulations Around the World
Many countries have tried to restrict the use of Bitcoin with their geographical borders, while there are various like Bolivia, Ecuador, and India which have been attempting declaring Bitcoin as illegal. Besides, multiple countries have launched their cryptocurrencies.
On the contrary, China has imposed restrictions on the use of digital currencies and has prohibited all financial institutions from processing any digital currency transactions at all.
It is important to mention here that although countries are resorting to various methods to curb the use of Bitcoins, and are trying to scare the people with different kind of consequences, they cannot prevent people from using it in the real sense, all thanks to the decentralized nature of Bitcoin.
Countries Which Have Banned the Use of Bitcoins
Ecuador
Ecuador has banned all forms of cryptocurrencies including Bitcoin. Instead, they have established a state-run electronic money system which is controlled by the government and tied to the local currency.
Bolivia
In 2014, Bolivia banned all cryptos non-issued and non-regulated by the government. Although the ban is valid on all cryptocurrencies, the bank specifically talked about Bitcoins. According to Bolivian authorities, cryptocurrencies are more of a pyramid scheme, and users must avoid using them.
Vietnam
Vietnam is another country which has prohibited the use of Bitcoins within its borders. Moreover, if anyone is found guilty of using Bitcoins, they will have to face a fine.
Countries Which Have Legalized the Use of Bitcoins
Australia
In a bid to attract potential fintech investments into the country, Australia has recently legalized the use of Bitcoins.
Bulgaria
Bulgaria has officially recognized Bitcoin as a currency. It is, perhaps, the first EU member to treat Bitcoin as a currency and not as a gold-like commodity.
Canada
Canada currently classifies Bitcoin as an intangible asset, and it will soon be regulated under the Counter-Terrorist Funning and Anti Money Laundering laws.
Germany
Bitcoin is recognized as private money in Germany. This way, people of Germany can continue using the currency without facing any interference from the government. The authorities have now an opportunity to tax the companies on the profits they earn on using this cryptocurrency.
Japan
Japan is another country which has recognized bitcoin as a legal form of payment. It was in 2017 that the state eliminated the tax imposed on bitcoin trading.
In addition to these, there are various countries like Sweden, Slovenia, Jordan, Mexico, Iceland, Israel, Estonia, France, Finland and others where bitcoin enjoys relaxation.
Countries Which Have Not Regulated the Bitcoin
India
India neither supports nor regulates bitcoins even if they are currently banned in the country. It is expected that the bitcoin will not become utterly legal until and unless a suitable organization monitors them.
The Netherlands
The Netherland doesn’t regulate bitcoins as they fall outside the scope of the Act of Financial Supervision of the country.
The other countries in which bitcoins remain unregulated include the UK, Ukraine, Thailand, Singapore, Malaysia, Russia, New Zealand, Lebanon, Lithuania, and others.
The Wrap Up
Undoubtedly, if you look closely, it is evident that countries and related organizations have their reason to classify the digital currency the way they do. However, the fact that Bitcoin is recognized and codified uniquely by different countries leads us to conclude that Bitcoin does not hold a universal legal definition!
Because of the disruptive nature of the currency, its increasing adoption threatens the global financial stability that is so cherished by governments. Why? Because it disrupts legal sectors that were already in place and changes according to each country – from the central bank’s role to taxation, to the way payments are done, Bitcoin is only the first of the digital currencies set to change what we once saw as “traditional”.
What is your take on this? Let us know in the comments below.
I have witnessed that intelligent real estate agents just about everywhere are Promoting. They are noticing that it’s more than simply placing a poster in the front property. It’s really concerning building human relationships with these traders who someday will become consumers. So, while you give your time and effort to serving these traders go it alone : the “Law associated with Reciprocity” kicks in. Thanks for your blog post.
I thought it was going to be some boring old post, but I’m glad I visited. I will post a link to this site on my blog. I am sure my visitors will find that very useful.
A thoughtful insight and ideas I will use on my blog. You’ve obviously spent some time on this. Congratulations
I?m impressed, I need to say. Really rarely do I encounter a blog that?s each educative and entertaining, and let me let you know, you’ve hit the nail on the head. Your concept is excellent; the difficulty is one thing that not sufficient people are talking intelligently about. I am very joyful that I stumbled throughout this in my search for one thing referring to this.
Hello theblockchainland.com administrator, Thanks for the valuable information!
Hi, Neat post. There’s a problem with your web site in internet explorer, would check this? IE still is the market leader and a big portion of people will miss your excellent writing due to this problem.
You could definitely see your enthusiasm within the paintings you write. The sector hopes for more passionate writers like you who aren’t afraid to say how they believe. At all times go after your heart.
Thanks for your valuable post. Through the years, I have come to be able to understand that the actual symptoms of mesothelioma are caused by the actual build up of fluid involving the lining on the lung and the breasts cavity. The illness may start from the chest place and get distributed to other limbs. Other symptoms of pleural mesothelioma include weight loss, severe respiration trouble, fever, difficulty taking in food, and bloating of the face and neck areas. It must be noted that some people living with the disease never experience just about any serious signs or symptoms at all.
Hello, you used to write wonderful, but the last several posts have been kinda boring? I miss your super writings. Past few posts are just a little out of track! come on!
buy accutane 40mg for sale isotretinoin 10mg oral buy azithromycin generic