What Regulations and Requirements Govern Bitcoin?
Bitcoin is a decentralized digital currency used to purchase goods and services at thousands of online retailers. Bitcoin has been around since 2009, but the concept of cryptocurrencies dates back to the early 1990s when it was first introduced by an unidentified programmer under the pseudonym Satoshi Nakamoto. Since then, Bitcoin has evolved into a globally traded asset with a market cap valued at over USD 100 billion as of November 2018. For more information about Bitcoin, you can visit Fintech Insight.
What Regulations and Requirements Govern Bitcoin (BTC)?
Any government does not regulate Bitcoin. It’s also not regulated by any central authority, bank, or financial institution. There are no regulations or requirements governing bitcoin. That means that you can use bitcoin to purchase items online anonymously, which is why you may use it for illegal activities like buying drugs and weapons on the dark web marketplaces that accept cryptocurrencies as a payment mechanism.
Bitcoin Doesn’t Require Compliance with Anti-Money Laundering (AML) and Know Your Customer (KYC) Laws. When dealing with Bitcoin, you don’t need to worry about complying with AML or KYC laws. The reason for this is simple. Bitcoin isn’t categorized as anything. It’s not a currency, commodity, security, or financial instrument. It’s not a financial service provider and doesn’t fall under any other classification.
Users Are Not Required to Disclose Their Identities to Trade Bitcoin (BTC)
Bitcoin is not anonymous. Bitcoin is pseudonymous, meaning that while users of the currency are not required to disclose their identities to trade, they can choose to do so if they wish. The transactions themselves are traceable and transparent, but the real-world identities of those making them are not.
Who Regulates Bitcoin (BTC)?
While the government does not regulate Bitcoin, it is closely monitoring it. Because Bitcoin has no central authority and is not backed by any commodity, the government does not consider it a currency. Instead, it is viewed as an investment or service for which it may charge a transaction fee.
Although there are many legitimate uses for Bitcoin (such as purchasing goods or paying for services), the anonymity of the transactions makes them ideal for illegal activities such as money laundering or drug trafficking. This lack of regulation has led some countries to ban its use altogether. These include Ecuador and Vietnam; China has also stopped accepting BTC payments into their country’s banks since mid-2017.
Because they believe that any country’s laws cannot control cryptocurrencies, Japan was probably most accepting at first, with its value rising from $0 in 2010 to 18 months ago when it reached nearly $20K per coin before falling back down again. Which was when most countries started taking notice and looking at ways to control bitcoins without disrupting them completely
Is the Government’s Inability to Regulate Bitcoin (BTC) a Good Thing?
The government doesn’t control Bitcoin. There’s no central authority that does. If a government tried to regulate Bitcoin, it would be like trying to hold the Internet or social media. The technology is too versatile for such efforts.
Any government does not regulate Bitcoin because users have complete control over their funds and transactions. However, that doesn’t mean that governments don’t pay attention to Bitcoin or other cryptocurrencies; some are exploring ways in which they can use them instead of fiat currency.
While bitcoin is not regulated, the government watches bitcoin transactions to see if they are used for illegal activity. The government also wants to ensure that there are no terrorist organizations or other criminal groups using bitcoin to fund their operations.
Final Words
The government has not taken a position on Bitcoin. They are not regulating it, but they are watching it closely. Bitcoin has been around for several years, but it wasn’t until recently that more people became aware of it. As more people become aware of how this form of currency works and its potential benefits, it has become popular among many who want to use it as an investment vehicle or a way to pay for goods and services online.
