As far as we know, the Bitcoin isn’t illegal from the point of view of the current legislation in the majority of jurisdictions. Nevertheless, in some jurisdictions (for example in Argentina and Russia) strict restrictions or a ban on use of foreign currencies are imposed. Other jurisdictions (for example Thailand) can demand licensing of certain subjects, such as bitcoin exchangers.
Regulators of different jurisdictions take steps on creation of rules concerning the natural and legal entities directed to integrating this new technology into the existing financial system. For example, the American Network on Fight against Financial Crimes (FinCEN), the division of the U.S. Department of the Treasury, has released the unreliable management, how it characterizes some kinds of activity including virtual currencies.
Whether the Bitcoin in the illegal purposes is used?
The bitcoin is money, and money was always used both for lawful and for the illegal purposes. Cash, credit cards, and a modern banking system strongly exceed Bitcoin concerning their use for financing of crimes. The bitcoin can bring considerable innovations in payment service providers and the advantage of these innovations usually is considered much blocking their potential shortcomings.
The bitcoin is arranged so that it is a serious step forward in respect of safety of means. He can be also used as essential protection against many forms of financial crimes. For example, bitcoins can’t absolutely be forged. Users completely control the payments and can’t accept unconfirmed accounts, such, as at fraud with credit cards. Bitcoin transaction are irreversible and aren’t subject to risk of roguish return of means. The bitcoin allows to protect money from thefts and losses by means of powerful and useful mechanisms, such as preservation of a backup copy, enciphering, and multiple signatures.
Some fears express that the Bitcoin can be more attractive to crime because the confidential and irreversible translations are characteristic of him. However, cash already has similar characteristics and telegraphic transfers which are used more widely and everywhere. Use of Bitcoin undoubtedly will undergo the same regulation which already exists in present financial systems, and the Bitcoin will hardly prevent conducting criminal investigations. Generally, this commonplace for the revolutionary ideas to any area to be perceived as something disputable before her advantages become well clear not to all. A good example, among a great number of others who illustrate it — formation of the Internet.
Whether it is possible to regulate Bitcoin?
The bitcoin protocol can’t be changed, without the consent practically of all its users who independently decide to use what software. Attempts to appropriate special privileges to any local authorities, at a global essence of Bitcoin, in practice are unreal. Of course, any rich organization can invest in the mining-equipment for receiving control over a half of computer power of network that it will allow her to block or roll away recent transactions. However, there is no guarantee that they will be able to reach or keep such position because it will demand to invest constantly as much how many all other mayner of the world combined invested.
However it is quite possible to regulate use of bitcoins, like other financial instruments. As well as the dollar, Bitcoin can be used for a wide range of the purposes which can be recognized legitimate or not, depending on laws of each concrete country. In this regard, the Bitcoin differs in nothing from other tools or resources and can be regulated differently in the different countries. It is possible to make so that use of Bitcoin will become difficult, from the help of rules and restrictions, and in this case it is difficult to foretell what percent of users will continue to use this technology. The government which has decided to forbid Bitcoin will prevent the domestic market and businessmen to develop that will lead to an overflow of innovations to other countries. A call for regulators, as always, in developing effective decisions, at the same time without weakening growth of again arising companies and the markets.
How about Bitcoin and taxes?
Bitcoins are not money, they aren’t obligatory to reception in any jurisdiction. However, taxes are often accrued regardless of the used means of payment. There is a wide range of laws, in a large number of various jurisdictions which can become the basis for emergence of tax obligations concerning income, sales, salary, a capital gain, and some other forms of taxes, when using Bitcoin.
How about Bitcoin and consumer protection?
The bitcoin gives to people freedom to make transactions on the conditions. Each user can send or receive payments as well as for cash money, but can also participate and in more difficult contracts. Multiple signatures allow transaction to be the accepted network only if concrete number of certain people agree to sign it. It allows to develop in the future innovative service of settlement of disputes. This service will be able to allow the third-party organization to accept or decline transaction, in case of disagreement between the parties, without receiving control over their money. Contrary to cash and other payment methods, the Bitcoin always leaves the public proof that transaction took place that can be potentially used as the decision against the companies with roguish activity.
It is also worth noting that while the companies usually depend on the reputation to remain in business and to pay the employees, they have no access to the same level of knowledge when they deal with new consumers. That as works Bitcoin, allows both parties, both the buyer and the seller, to be insured from roguish returns of payments, at the same time giving the choice to buyers to choose big protection when they don’t trust the specific seller.