Is Bitcoin Legal?

Is Bitcoin Legal?

Bitcoin remains a technology and a currency that primarily exists outside of the influence and control of governments and regulated markets. In most places, it is accepted for what it is. In some countries, it is explicitly banned.

Bitcoin is technically illegal in a few parts of the world, but for the most part, it remains in the extra-legal realm, existing outside of the traditional legal system and the regulated markets. Bitcoin was created in large part to be difficult to understand and to pin down, to be part of the fringe and underground that could not be controlled by a central authority. It is open-source, so no one owns the rights to the code, and the community of programmers interested in shaping the future of cryptocurrency frequently attempts to make small upgrades and tweaks to blockchain technology in the interest of creating more efficient, more scalable blockchain cryptocurrency.

As idealistic as it may be, it is drawing a lot of negative attention by outspoken critics despite the continuously rising demand for it. Several large figures in the finance world are openly decrying bitcoin as primarily a tool for money laundering and tax evasion. International banking and finance agreements such as Basil II have made strides toward international cooperation in the realm of anti-money laundering (AML), and stateless currencies such as bitcoin, who answer to no regulating authority or governing body, threaten the success of such measures.

China was the home to some of the largest and most successful bitcoin mining and exchange operations up until 2017 when the government decided it was too easy for bitcoin and other cryptocurrencies to be used for otherwise illegal transactions. China has since ordered the exchanges to shut down. Russia is currently drafting similar legislation at the time of this writing. These governments acknowledge the usefulness and value of blockchain technology, but appear to be seeking state-regulated methods of implementing it.

While the US has been much more tolerant of bitcoin and other cryptocurrencies, the SEC is looking for ways to crack down on what it sees as illegal securities solicitations in the form of Initial Coin Offerings (ICOs). Interestingly, it can be more difficult in many cases to conceal illegal activity because the distributed ledger is ubiquitous and permanent. If a user can be traced to a particular key from which illegal transactions have taken place, there is little that can be done to dispute the evidence; and indeed, this has already happened in several significant cases.