Bitcoin was created to have the nature of decentralization which means that it would not share the characteristics of traditional fiat currencies which usually has a central authority regulating it. This technology is still new to the world, and because of that, world authorities are still trying to make sense of it before they can provide adequate regulations for it.
As it stands today, the legality of Bitcoin is dependent on where you find yourself in the world as there is yet to be an even approach to Bitcoin internationally. Global regulation of cryptocurrency as a whole is expected to spring up across the globe as the knowledge and experience of authorities about Bitcoin continues to get better. With the recent profits recorded by cryptocurrency, more than 30 regulators all over the world have come up with different ways to regulate cryptocurrency.
A Cause to Worry?
The decentralized character of Bitcoin has created a certain level of worry amongst authorities because they fear that money laundering will gain momentum by its use. Also, the increase in the value of Bitcoin (BTC) has been a cause for concern because people now use it more to secure value rather than making transactions with it. Bitcoin has been used for speculations in recent months with its volatile nature alongside the high interest in Bitcoin today, has made it more unfitting for day to day transactions.
Current Regulations in Existence
Bitcoin is not allowed in some countries as a result of the ban placed on it by those nations, but many more countries support it albeit with regulations within their territories. These regulations differ from country to country, and even in the countries that have discontinued the use of Bitcoin, the currency is still operational because you cannot entirely restrict the use of Bitcoin because it is decentralized. We shall consider the strategy put in place by different countries to regulate Bitcoin below.
United States of America
The USA is yet to come up with a general regulation for bitcoin both at the state and federal levels. Considering the state level, some states like New York have designed licenses targeted at cryptocurrency. A state like Texas still regulates the use of cryptocurrency with the financial laws and regulations already in existence. Many, however, consider the license provided by the state of New York as a way to restrain the fintech industry in the state. At the federal level, Bitcoin has no regulation from the Federal Reserve, though it promises to be looked into in the future. An agency working inside the US Treasury Department published a statement in 2013 stating that the use of cryptocurrency will be included in the already existing measures for businesses in the money services such as Know Your Client (KYC) and Anti-Money Laundering (AML).
The EU is more flexible compared to the US with their approach towards Bitcoin, being an open one and less vague. Before the coming of Bitcoin, there existed a structure for electronic money, so when Bitcoin was introduced, such arrangement was easily made suitable for it.
The European Parliament came up with the idea to organize a task force, in 2016, which will supervise the operations of cryptocurrency to keep in check terrorism and money laundering.
Bitcoin trading has been restricted in China since 2017 by the authorities, but individuals are still able to make use of it. This led to a delay in withdrawal services by Bitcoin exchanges. The restriction is not unconnected with the media presentation of cryptocurrency as a dangerous tool used by criminals. This, in its way, is how China has chosen to regulate Bitcoin within their domain.
The idea of regulating the use of cryptocurrency is not entirely wrong, but it should be done with the original reason for its creation put into consideration, and that is, the anonymity of users. Hopefully, the authorities will find a way to check illegal activities related to the use of Bitcoin and at the same time, help people maintain their privacy as they transact with the currency.