March 13th, 2018
Regulators from across the globe have started to address the issue of the virtual currency, Bitcoin, being able to bypass financial firms, banks, exchanges, and central clearing houses. It is true that this digital currency, the blockchain, and token sales have ignited a global phenomenon for Bitcoin. The digital currency has started disrupting products and services in almost every industry and lawmakers and regulators are scrambling to keep up. Bitcoin, the largest decentralized currency is largely operated outside the conventional financial system. Regulators are concerned about money laundering, fraud, and tax evasion. Because of its wide use, there is a greater importance to regulate it and initiatives are being taken in many countries.
Using Bitcoin has numerous advantages, millions of Bitcoin users from different places are switching to this digital currency for fast and hassle free money transactions. Some countries have started to consider the importance of regulating the currency as it continues to grow. If a company or business wants to operate using this cryptocurrency, some states are now asking them to submit an application before they can do so. This move is being taken after the collapse of a Bitcoin bank recently. After it was hacked it lost a good amount of digital currency. Till now, governments and authorities in most places were not able to act because Bitcoin software was not under their jurisdiction. Though some governments want to intervene, they don’t have the sufficient capacity to protect Bitcoin users.
Central Banks all over are looking to regulate Bitcoin software in order to remove any type of suspicious financial transactions. These authorities are specifically targeting different automated teller machines like Bitcoin ATMs that dispense bitcoins.
One of the reasons that consumers have been so attracted to bitcoins is that they are not beholden to any government or central bank. Thus, Bitcoin is able to evade tax and is easy to use. Another factor is that the recent rising price of Bitcoin has investors wanting to use this opportunity to earn a huge profit, quickly.
Even though the idea of having a decentralized currency system may sound like the perfect idea, Bitcoin users are vulnerable to sudden fluctuations of Bitcoin exchange rates. What’s worse is that like the in the case of Flexcoin Bank and Mt. Gox, Bitcoin users have no options other than to lose all of their bitcoins. They can never get their money back.
In Singapore, Bitcoin exchanges are being regulated by the government. THis particular authority move was taken to prevent potential use of digital currencies in illegal activities and money laundering. Using this new payment system, it is very easy to transfer money from one to the other. In Singapore, the identity of the user needs to be verified before a transaction can be completed. If any suspicious activity is suspected, police will be immediately notified.
Now more than ever, countries are calling for the regulation of Bitcoin exchange because it is quickly becoming a medium for all kinds of illegal activities. Countries like the US, China, and Russia are scrutinizing the Bitcoin system. There have even been discussions of limited or completely banning Bitcoin exchanges in a few places, but that seems next to impossible now.
In Tokyo, the government has recently issued a statement saying that the use of digital currency should be taxed by income. This announcement came right after Mt. Gox, the largest Bitcoin exchange in the world filed for bankruptcy. Theft is the cause of the download and the authorities announced that around 75,000 bitcoins or 2.8 billion yen was lost.
Users won’t be able to get their investment back since the government can’t intercede because Bitcoin was not regulated. Many governments worldwide are getting serious about regulating Bitcoin to prevent all types of unscrupulous activities from happening. Regulating Bitcoin may be the only way to keep it safe for everyone.