As the world evolves, traditional systems are being refashioned to adapt to new trends. In recent years, nothing depicts this truth more than the meteoric rise and general acceptance of cryptocurrency, specifically Bitcoin. According to a report by Statista, the number of daily Bitcoin transactions as of February 2020 was around 328,000. This surge in Bitcoin’s popularity has not only raised eyebrows but also issues surrounding its legality, sparking debates around the globe.
Bitcoin: A Brief Overview
Bitcoin, invented and implemented by the pseudonymous Satoshi Nakamoto, came into existence in 2009. The digital currency operates independently of a central authority and uses a peer-to-peer network for its operations. Its decentralised nature, coupled with the anonymity it offers to users, has made it an attractive tool, notably for transactions over the internet. However, the digital asset’s unique characteristics have also made it a complicated matter from a legal perspective.
The Legal Conundrum: Bitcoin’s Regulatory Status
While Bitcoin has been ruled a form of property by many legal authorities, its regulatory environment vastly differs between countries and even within states. In jurisdictions that accept Bitcoin, the usage may be restricted to certain businesses or activities and subject to licensing, such as bitcoingambling.org that complies with all applicable laws and regulations. Noteworthy is that it involves legitimate uses where Bitcoin is instrumental as an efficient, rapid, and low-cost means of payment, especially in cross-border transactions.
Bitcoin Regulation in the United States
In the United States, Bitcoin is primarily regulated as a commodity by the Commodity Futures Trading Commission (CFTC). However, in the context of certain activities, it could be treated under federal securities laws.
Bitcoin Regulation in the Exchange and Over-The-Counter (OTC) Markets
Bitcoin and other cryptocurrencies are also used as securities as per the US Securities and Exchange Commission (SEC). They can be traded as such in the exchange and OTC markets, where all participants must adhere to the regulations of the SEC.
Bitcoin Regulation in the European Union
In contrast, the European Union (EU) currently does not have comprehensive cryptocurrency regulations that apply to all member states. The legal status of Bitcoin and other virtual currencies varies considerably, and any regulatory measures are left to each member state’s discretion.
Bitcoin Regulation in Asia
Asian countries have significantly varying stances on cryptocurrency. For instance, Japan legalised Bitcoin and officially recognised it as a payment method, while China has banned all cryptocurrency exchanges and ICOs. In countries where Bitcoin is legal, authorities have enacted regulations to control its use in illegal activities while promoting technological development.
Key Legal Issues Surrounding Bitcoin
While consulting an expert from BitcoinGambling.org, it was ascertained that adhering to regulations plays a crucial role in establishing a business’s credibility. Furthermore, a pivotal point often raised in any discussion about Bitcoin’s legality is its potential use in illegal activities. However, just like conventional currency or other technological tools, Bitcoin’s use in illegal activities doesn’t undermine its intrinsic value or legality.
Regulation: The Way Forward
As the adoption of Bitcoin and cryptocurrencies continues to grow, legislative bodies need to provide clarity in their regulatory frameworks. By doing so, they can help support innovation and growth while ensuring consumers and investors are protected under the law.
The lack of universal regulations to guide Bitcoin’s usage and acceptance needs a comprehensive and balanced legal system that preserves the benefits of cryptocurrencies, whilst mitigating their potential risks. This progress in legislation will undoubtedly mark a significant step forward in our digital economy’s evolution.
