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13 October 2016
Introduced in October 2008, Bitcoin opened a new era of online-only currencies and blockchain-based payment systems. Since then the value of the new peer-to-peer currency has considerably raised: now it costs around $650. However, while the popularity and demand of the emerging technology is growing, there is also a significant rise in regulatory concerns about its legal status and possible impact on the current monetary systems.
Reasons to ban Bitcoin
Upon closer analysis, all benefits of the new payment technology can be easily turned into its drawbacks that present significant challenges to central authorities. Since Bitcoin is a decentralized and non-regulated system, it may encourage financial anarchy. The anonymous nature of BTC transactions provides an excellent means to store and transfer money without disclosing your identity. The lack of a third party makes tax evasion and money laundering simpler.
Since Bitcoin exists in an online form only, it can be used to transfer money electronically from any location and at any time. This feature makes BTC an attractive solution for criminals wishing to sponsor illegal activities like terrorism or revolutions. Plus, users face the risk of losing their money from their devices due to cyber-attacks, viruses or data losses, and there is no intermediary who can cover these losses.
Is Bitcoin legal?
The digital currency market displays a lack of well-defined regulations or universal solutions concerning the status of digital currencies and notably BTC. The answer on the question whether Bitcoin is legal or not will depend on your location. While it is officially allowed to buy and sell BTC in such countries as the United Kingdom or United States, there are other locations which don’t approve the use of digital currencies. Here is a list of them:
Bangladesh is one of the few countries that criminalize the use of online-only currency. Two years ago, the Central bank of Bangladesh engaged in regulating the national monetary system warned its citizens against the use of e-currencies including Bitcoin due to their decentralized nature and potential financial risks. Under the strict local regulations, any person found guilty of using BTC could go to jail for up to twelve years.
In 2014, the Central bank of Bolivia published a statement officially prohibiting the use of electronic money non-regulated by the governments or other authorized authorities. The list of the banned digital coins includes bitcoin, namecoin, feathercoin, Quark, peercoin, and primecoin. According to the statement, these measures should protect the country’s national currency boliviano and inform citizens about the risks associated with the use of Bitcoin. All other counties in South America are more loyal to e-currencies.
The government of Ecuador has completely prohibited the use and circulation of Bitcoin and other similar P2P currencies to protect their newly-created national electronic currency from strong competitors. Contrary to Bitcoin, the new state-run digital money created to stimulate the economy and attract new investors will be backed by the assets of the Central Bank of Ecuador. Under the country’s laws, people violating the ban are subject to prosecution and confiscation of bitcoins.
In spring 2014, the Central Bank of Iceland published a statement clarifying the legal status of cryptocurrency within the country. In particular, according to the Icelandic Foreign Exchange Act, it’s prohibited to engage in Forex trading with Bitcoin to prevent capital movement out of the country. On the other hand, according to recent summer polls, this October Icelandic pro-Bitcoin Pirate Party can receive around 20%-25% of the national vote and then form a coalition with the establishment, so the situation can change dramatically.
Initially, in 2013 the Bank of Thailand announced that all BTC operations within the country are considered illegal. However, in 2014 they published a new statement that considerably improved the legal status of Bitcoin within the country. With reference to the new version, cryptocurrency is just electronic data and should not be considered as real money. In case of any problems connected with sending money to a wrong e-wallet or losing coins due to system failure or fraud, it will be difficult to file any legal actions to defend the user’s rights.
Nowadays, there are over 7 hundreds of digital currencies trying to repeat the financial success of Bitcoin, and the industry competition is becoming fiercer every day. It’s impossible to ignore the new multi-million electronic market, so it often gets subjected to intense scrutiny by different government agencies and financial regulators trying to address all possible risks.
However, at the present moment most countries still have no applicable laws regulating or restricting the use of Bitcoin and other electronic coins. It’s obvious that controlling Bitcoin would be similar to trying to control the whole Internet – even though governments can criminalize selling and buying bitcoins, they won’t be able to prohibit or alter Bitcoin itself. The intense growth of technology has left legislative bodies trailing far behind.
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