Bitcoin has been causing law enforcers and regulators to be worried because they claim that this could allow money launderers to have a medium to make transactions without any traces as it allows the trader to remain anonymous. However, since digital transaction services are still developing we do not know much about it which also means there are no laws yet surrounding the use and transaction of bitcoins. Although, if you are confused about its legality, you will be assured to know it is completely legal.
- Concerns regarding bitcoin.
As stated previously, government and law enforcers are worried about the use of bitcoin due to the fact that it can allow the user to make transactions anonymously, which can encourage money laundering. In fact, government agencies are more worried about the nature of the currency to be decentralised. Bitcoin is reported to have been the only acceptable currency on Silk Road, an anonymous network which was closed in 2013 because of the fact that it used to sell products which are illegal in certain countries, including drugs. Charles Schumer called the website to be shut down while linking it with bitcoin and referring to it as a substitute currency.
- Who is in charge of regulation?
People who regulates the exchange of bitcoin varies from countries to countries. It is expected that national financial regulators are supposed to be interested in bitcoin and similar virtual currencies available along with regional regulators who are in a sub-country level.
The SEC case had forced the government to consider whether bitcoins were legal or not. Shavers argued that they could not be charged for security fraud as bitcoin is technically not money. However, the judge issued a memorandum which stated that bitcoin could be used a form of money.
In August 2013, leeters were sent to law enforcements to inquire about the risks and threats associated with bitcoin being a virtual currency and they also asked about suggestions for rules and regulations for bitcoin. A letter which came in a reply suggested that bitcoin did not have adequate trails which could be referred by law enforcers and government agencies if required.
Private Sector Companies (Banks)
Multiple banks have been reported to have closed accounts owned by people who operate exchange of bitcoins. In a particular case, the bank was disappointed that the company involved did not have a Money Transaction Business (MTB) account.
The legal status of bitcoins is usually based on the fact of who you are and how you plan on using it.
These are people who simply sell, collect or buy bitcoins for transactions purposes which is legal under the guidance of FinCEN.
These are a group of people who use bitcoins to exchange it for real currency which can be considered troublesome for government agencies but this issue has not been on trial in a court, so we do not have a clarified explanation.
It has been plainly defined as MTBs. Such people exchange and transmit money from one person to another person in exchange for virtual currency, funds or whatever holds value to be used as a substitute for the currency.