Is Bitcoin Legal?
As the market capitalization of the cryptocurrency
market shoots up, through price movements and a surge in new tokens, regulators
around the world are stepping up the debate on oversight into the use and
trading of digital assets.
This affects all cryptocurrencies, but especially
bitcoin, given its market leadership and integration into the global startup
ecosystem.
Very few countries have gone as far as to declare
bitcoin illegal. That does not, however, mean that bitcoin is "legal
tender" – so far, only Japan has gone as far as to give bitcoin that
designation. However, just because something isn't legal tender, does not mean
that it cannot be used for payment – it just means that there are no
protections for either the consumer or the merchant, and that its use as
payment is completely discretionary.
Other jurisdictions are still mulling what steps to
take. The approaches vary: some smaller nations such as Zimbabwe have few qualms about making brash
pronouncements casting doubts on bitcoin's legality. Larger institutions, such
as the European Commission, recognize the need for dialogue and deliberation,
while the European Central Bank (ECB) believes that cryptocurrencies are not yet mature enough for regulation (although with
bitcoin almost 10 years old, one is left wondering when we will know it has
reached sufficient maturity). In the United States, the issue is complicated
further by the fractured regulatory map – who would do the legislating, the
federal government or individual states?
A related question in other countries, to which there
is not yet a clear answer, is: should central banks keep an eye
cryptocurrencies, or financial regulators? In some countries they are one and
the same thing, but in most developed nations, they are separate institutions
with distinct remits.
Another divisive issue is: should bitcoin be regulated
on a national or international basis? France is pushing for the G20 (an
international forum for governments and central banks) to discuss establishing parameters at the upcoming summit in
April 2018.
A further distinction needs to be made between
regulation of the cryptocurrency itself (is it a commodity or a currency, is it
legal tender?) and cryptocurrency businesses (are they money transmitters, do
they need licenses?). In a few countries the considerations are tied together –
in most others, they have been dealt with separately.
Below is a brief summary of pronouncements made by certain
countries. This list is updated monthly.
Last updated: 5 July 2018
Australia
In October 2017, the Australian Senate began debating a bill that would apply anti-money
laundering statutes to the country's cryptocurrency exchanges, as well as
mandate criminal charges for exchanges that operate without a license.
That same month, the tax authorities removed the "double taxation" of bitcoin, which was a
result of a decision in 2014 to treat the cryptocurrency as a "bartered
good" rather than a currency or asset.
As of the end of 2017, cryptocurrency exchanges have to register with the country's financial
intelligence agency Austrac, and comply with customer verification and record
preservation requirements.
Further moves are unlikely for now, however, as
officials from the central bank recently said that regulation is not needed for the use of
cryptocurrencies as payment.
Argentina
In spite of a strong bitcoin ecosystem, Argentina has not yet
drawn up regulations for the cryptocurrency, although the central bank has
issued official warnings of the risks involved.
Bangladesh
In 2015, Bangladesh expressly declared that using cryptocurrencies was
a "punishable offence."
Bolivia
In 2014, the central bank of Bolivia officially banned the use of any currency or tokens
not issued by the government.
Canada
Canada was one of the first countries to draw up what
could be considered "bitcoin legislation," with the passage
of Bill C-31 in 2014, which designated "virtual currency businesses"
as "money service businesses," compelling them to comply with
anti-money laundering and know-your-client requirements.
The government has specified that bitcoin is not legal tender, and the country's
tax authority has deemed bitcoin transactions
taxable, depending on the type of activity.
China
While China has not banned bitcoin (and insists it has no plans to
do so), it has cracked down on bitcoin exchanges - all major bitcoin exchanges
in the country, including OKCoin, Huobi, BTC China, and ViaBTC, suspended order
book trading of digital assets against the yuan in 2017.
It also appears to be withdrawing preferential treatment (tax deductions
and cheap electricity) for bitcoin miners.
Ecuador
In 2014, the National Assembly of Ecuador banned bitcoin and decentralized digital currencies
while establishing guidelines for the creation of a new, state-run currency.
Egypt
In January 2018, the Grand Mufti of Egypt
declared that cryptocurrency trading was forbidden
under Islamic religious law due to the risk associated with the activity. While
this is not legally binding, it does count as a high-level legal opinion.
Europe
The European Union is taking a cautious approach to
cryptocurrency regulation, with several initiatives underway to involve sector
participants in the drafting of supportive rules. The focus appears to be on
learning before regulating, while boosting innovation and taking into account
the needs of the ecosystem.
The European Central Bank (ECB), however, is pushing
for tighter control over movements of digital
currencies as part of a broader crackdown on money laundering, while
recognizing the jurisdictional complexities in regulating an asset
with no boundaries. In late in 2017, an ECB official stated that the
institution did not see bitcoin as a threat, and president Mario Draghi
recently confirmed that, in the eyes of the ECB, bitcoin was
not "mature enough" for regulation.
In April 2018, the parliament's members voted by a large majority to
support a December 2017 agreement with the European Council for measures
aimed, in part, to prevent the use of cryptocurrencies in money laundering and
terrorism financing.
G20
The G20 - comprised of the world's 20 largest
economies - recently turned its attention to cryptocurrencies in general, and
committed to drafting recommendations on the first steps towards regulation by July 2018.
India
The Indian central bank has issued a couple of official warnings on bitcoin, and at the end of
2017 the country's finance minister clarified in an interview that bitcoin is not legal tender. The government does not yet have
any regulations that cover cryptocurrencies, although it is looking at
recommendations.
The central bank, however, has barred Indian financial
institutions from working with cryptocurrency exchanges and other related
services (a ban recently upheld by the country's
Supreme Court).
Iran
In April 2018, Iran's central bank and one of its
principal market regulators said that financial businesses should not deal in bitcoin or other
cryptocurrencies. Furthermore, CoinDesk recently reported on government censorship of
cryptocurrency exchange websites operating in the country.
Japan
Japan was the first country to expressly declare
bitcoin "legal tender," passing a law in early
2017 that also brought bitcoin exchanges under anti-money laundering and
know-your-customer rules (although license applications have temporarily been suspended as the
regulators deal with a hack on the Coincheck exchange in early 2018).
Recently the Financial Servivces Agency has been cracking down on exchanges,
suspending two, issuing improvement orders to
several and mandating better security measures in five others. It has also
established a cryptocurrency exchange industry study group which aims to
examine institutional issues regarding bitcoin and other assets.
Kazakhstan
According to reports, the National Bank of Kazakhstan recently hinted at plans to ban
cryptocurrency trading and mining, although as yet no strict regulations have
been passed.
Kyrgyzstan
The central bank of Kyrgyzstan declared in 2014 that
using cyrptocurrencies for transactions was against the law.
Malaysia
Malaysia's Securities Commission is working together
with the country's central bank on a cryptocurrency regulation framework.
Malta
The European island recently passed a series of
blockchain-friendly laws, including one that details the registration
requirements of cryptocurrency exchanges.
Mexico
In 2014, Mexico's central bank issued a statement blocking banks from dealing in virtual currencies.
The following year, the finance ministry clarified that, although bitcoin was
not "legal tender," it could be used as payment and therefore was
subject to the same anti-money laundering restrictions as cash and
precious metals.
At the end of 2017, Mexico's national legislature approved a bill that would bring local bitcoin
exchanges under the oversight of the central bank.
Morocco
Towards the end of 2017, Morocco's foreign exchange
authority declared that the use of cryptocurrencies within the country violated
foreign exchange regulations and would be met with penalties.
Namibia
Namibia is one of the few countries to have expressly declared that purchases with bitcoin are
"illegal."
Nigeria
While Nigerian banks are prohibited from handling virtual currencies, the
central bank is working on a white paper which will draft its official stance on use of cryptocurrencies as a
payment method.
Pakistan
In April 2018, Pakistan's central bank issued a statement barring
financial companies in the country from working with cryptocurrency firms.
Russia
Draft cryptocurrency legislation from the State Duma's
financial regulator is expected in mid-2018. The focus appears to be on
protecting citizens from scams, while allowing individuals and businesses to
work legally with cryptocurrencies.
The efforts of the State Duma have been bolstered by a
mandate from Putin himself, issued in October 2017,
urging development of a "single payment space" within the Eurasian
Economic Union (an alliance of countries including Armenia, Belarus and
others), increased scrutiny of token sales, as well as licensing of bitcoin mining
operations.
Singapore
The Monetary Authority of Singapore is reportedly
examining at whether new rules are needed to
protect cryptocurrency investors, and while it is not likely to ban
cryptocurrency trading, it is looking at imposing anti-money laundering and
terrorism financing rules on exchanges.
The central bank is also working on a regulatory framework for bitcoin payments, and has issued warnings on bitcoin investments.
South Africa
In 2017, the South Africa Reserve Bank implemented a "sandbox approach,"
testing draft bitcoin and cryptocurrency regulation with a selected handful of
startups.
Like
and share this article, please.
কোন মন্তব্য নেই