With bitcoin’s popularity headed in only one direction — upwards, a question the still invites unclear answers is that whether it is a legal form of currency or not. You’re unlikely to receive an answer to this that applies on a global level, since the legality of bitcoin varies from country to country.
Understanding Bitcoin Legality
The primary reason behind the ambiguity on bitcoin’s legal status is actually its biggest USP — its decentralised nature. Bitcoin has no regulatory authority, unlike all other currencies that are controlled by national banks and governments. So what users actually do with the currency is up to them. Of course, if you engage in illegal activity with bitcoin, then you are on the wrong side of the law. But that would apply to any other currency as well. It is important to understand the three different stakeholders bitcoin involves:
Bitcoin exchanges allow you to buy, sell and store bitcoins on an online bitcoin wallet. Think of them like stock exchanges except they’re dealing with bitcoins and not securities. This practice is not illegal, and in fact, fuels much of the bitcoin economy since it is on these exchanges that the users transact on bitcoins. With bitcoin’s rising popularity in India, exchanges like Zebpay are servicing millions of users. What’s more — Zebpay even self regulates itself, with KYC norms requiring bank account and PAN card details for its users.
Of course, like with any other investment — dealing in Bitcoins is subject to market and regulatory risks.
Bitcoin miners use expensive, state of the art computers designed specifically to ‘mine’, or create bitcoins. Bitcoin mining is an elaborate subject that deserves a dedicated post of its own, but note that this practice, while increasingly becoming difficult (it is far easier to buy bitcoins from exchanges like Zebpay than to mine them) is not illegal.
The end users consist of entities like you who buy, store and sell bitcoins and use them for transactions. It is entirely legal to do all of these things with bitcoins, and it would be illegal to do any unlawful actions — such as money laundering or terrorism financing with them. The end users is where the legality debate is all about — and you’re on the right side of this debate as long as you’re using them for all legal purposes.
The Global Scenario
Some countries have welcomed bitcoin with open arms. The first country to completely legalize the status of bitcoin was Japan. Bitcoin trading and its use has been a legal affair in Japan from April 2017. While bitcoin is considered a legitimate currency in Japan, this is not the case with every economy. In the USA, the Treasury Department regards bitcoin as a money service business (MSB) and not actual currency.
Moving to Europe — all countries there have a strong regulatory control on bitcoin to prevent crimes like money laundering, but by and large, the use of bitcoin as actual currency is not accepted.
In Russia, cryptocurrency is considered as an asset, but is not of widespread use. Brazil has had laws since 2013 regulating electronic currencies.
A few countries have completely banned bitcoins. These include Ecuador, Bolivia, Iceland, Bangladesh, Kyrgyzstan and Vietnam. One thing interesting about Iceland is that even though the country has one of the largest bitcoin mines in the world, bitcoin trading is not allowed by its domestic laws.
The Indian scenario
Coming to India — as per the Reserve Bank of India, bitcoin or any other form of currency is not considered to be legalized under law. According to the Minister of State in Finance and Corporate Affairs, Arjun Ram Meghwal, “The absence of counter parties in usage of virtual currencies, including Bitcoins, for illicit and illegal activities and anonymous/pseudonymous systems could subject the users to unintentional breaches of anti-money laundering and combating the financing of terrorism laws.”
This has been the government’s official stand so far, but with the increasing acceptability of bitcoin on a global scale, Indian government might be rethinking its decision.
Kirit Somaiya, a member of BJP has said that “there is an urgent need to have a study on development of Bitcoin in India.” A lack of a regulator could cause harm to people using bitcoin, he added.
India’s self regulatory watchman authority Digital Asset and Blockchain Foundation of India (DABFI) has on many occasions approached the Indian Government to discuss bitcoin usage. A major development came out in June 2017 when CNBC Awaaz announced the Indian Government has taken decisions to regulate bitcoin in India and is currently creating a task management team for this purpose. The current status is, the Government of India has set up a body to study and give suggestions on regulating Bitcoins.
Self-Regulation by Zebpay
Zebpay follows stringent compliance and account verification processes. This helps ensure maximum security for the end users. It’s a multi-faceted process that ensures a safe environment for bitcoin transactions:
- All users on Zebpay have to submit their PAN card to complete their registration on the portal.
- Zebpay only allows bank to bank transfers, ensuring every transaction is recorded and on the books.
- A user can add only one bank account per Zebpay account (and therefore per PAN card).
What Does This Mean For You?
Regardless of which side of the debate this ambiguity is settled on, bitcoin is attracting users from around the world.
At the same time, bitcoin is risky, volatile, and susceptible to hacks and theft if good practices are not followed. It’d be prudent to read up and understand the technology better before you get started.
For more and updated information on bitcoins legality, visit zebpay.com/legal.
Source : Zebpay