Global Legal Framework for Bitcoin

Bitcoin is a digital currency/cryptocurrency that is not supported by any country’s central bank or government. It’s different from other online transactions. We can say it’s peer to peer (P2P) transaction. We cannot see third-party involving here. Also, Bitcoin is sent between addresses via online, hence do not want to be tied to real world identity.

BLOCK CHAIN

It’s very famous word in Bitcoin transaction. This is simple accounting ledger. Here we can find every network transaction. They all are recorded here.

WHO OWN THE BITCOIN

A simple answer is no one. Because this is decentralized and distributed. There is no single company or a person to control. Bitcoin released in 2009 as an ‘open source project’. So anyone can update the software’s code. So many of software developers are involving to develop it.

HOW CAN PEOPLE GET BITCOIN

People can mine the Bitcoin or otherwise buy from a full-service exchange or broker. Otherwise, people can buy directly from another person. Bitcoin accepts to use in online transactions.

HOW CAN STORE

We can use Local wallets, Online wallets as well as ‘Multi-signature’ wallet (is the requirement for a transaction to have two or more signatures before it can be executed.) to store Bitcoin as it is a digital coin.

REGULATIONS

There are two ways of regulations
1. Existing legal framework
2. Creating new legal framework

1. Existing legal framework

– Currency and Foreign Transactions Reporting Act 1970
– Bank Secretary Act (BSA) 1970
– IRS Guidance, March 2014
– NY’s BitLicence, July 2014 (Draft)
In addition to those, there are some international bodies have issued guidance and warning regarding use Bitcoin. They are,

  • The Financial Action Task Force
  • The Organization for Economic Corporation and Development
  • IMF
  • World Bank

CASE LAWS

SEC vs. Trendon Shavers
Here, the question before the court was, Can Bitcoin trust as a currency? Court held that people can trust Bitcoin as a currency.

United State Vs. Faiella
The issue was unlicensed money transmission. Here Jed Rankoff, DC-Judge held that “…money in ordinary parlance means something generally accepted as a medium of exchange, a measure of value, or a means of payment Bitcoin clearly, qualifies as money”

 

 

 

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