Greenaway Scott Examines the Legality of Bitcoin
Monday 16th October 2017
The successful deal will enable the trading platform to expand to incorporate more currencies, both monetary and cryptocurrency, which will allow it to operate across a wider global marketplace.
But as we begin to offer business advice in this relatively new and fast-growing sector, the topic has also brought up some vital questions.
The most significant of which is, is bitcoin legal? The answer, while complex, is yes.
Bitcoin is a form of digital currency created and held electronically, which enables people to make electronic purchase. As such, this is decentralised and operates outside of the banking system.
It is this lack of regulation that creates unease among many people.
Its legal status varies from country to country, with most not taking any steps to make the use of bitcoin illegal (with the exception of Bangladesh, Bolivia & Ecuador).
But its status as money (or a commodity) varies with differing regulatory implications in each jurisdiction. In the UK for example, bitcoin is legal but remains unregulated. In various countries, including the UK, bitcoin is likened to a 'foreign currency' for VAT purposes.
The Financial Conduct Authority has commented that it does not regulate digital currencies and has no intention of doing so in the future.
A potentially problematic area surrounding the legality of bitcoin is its use in the purchase of illegal goods. Due to its anonymous and non-regulated nature, allowing users to hold multiple bitcoin addresses, which aren't linked to names, addresses, or other personally identifying information - bitcoin could potentially be utilised for money laundering or purchasing illicit goods.
However, using the cryptocurrency to undertake illegal activities doesn't make the currency itself illegal.
So is bitcoin the future of currency? Who knows. Its use has certainly gained in popularity over recent years. At the moment bitcoin is fuelled by other already well-established forms of currency such as sterling or dollars or even gold, so it is hard to ascertain whether there will be a time in the future where we are buying groceries and being paid in cryptocurrency. Big household names such as Reddit, Microsoft, Dell and Virgin have started to accept cryptocurrencies as a form of payment for goods and services.
Today at the time of writing bitcoin is worth £3283.13 so the future of bitcoin is looking relatively promising. But with China's recent ban on cryptocurrencies it is hard to tell which way the tide will turn.
This article was first published on BusinessWales on the 16th Oct and can be found here.