Legal Status of Bitcoins? How Does the Legal System Work Around Bitcoin?

Bitcoin is yet to gain recognition as a legitimate currency because of its decentralized nature. Is bitcoin legal? There are some countries where explicit use and trade of bitcoins is allowed. Whereas in other countries it is banned. As the rising trend of bitcoin use and trade, several drawbacks have arisen too. It is necessary to have a legal structure to remain protected from scams, fraud, etc. in the crypto world. You can get the idea of these scams from Blockchain technology.

Legal Status of Bitcoins? How Does the Legal System Work Around Bitcoin?

1.  Law Enforcement on Bitcoin

Bitcoin law? Crime involving bitcoin use has now become a major concern that calls for the need to enforce some legal regulations on bitcoin use. Regardless of bitcoin transactions being traceable, criminals are still using cryptocurrencies as extortions from innocent people. The criminal activities that involve Bitcoin must also be accounted for when you are talking about the legal status of Bitcoins. 

Even to date, many countries have not accepted Bitcoins as a form of currency. There are several reasons for this unacceptability. Let us check out the reasons. 

2.  No Regulation

Bitcoin regulation? Many countries have found that Bitcoins and any cryptocurrency, in general, cannot be regulated much by the central or regulatory bodies. The government and financial places cannot check out the exact values which are related to cryptocurrency and they cannot make changes in the system either. The justification which is given by most of the nations about the legality of cryptocurrency and bitcoins is that the financial systems will not be under the control of the government. Which country would like to relinquish the power it has over the currency-based system of the nation?

3.  Bitcoin Money Laundering

How does bitcoin money laundering work? It is a common notion that cryptocurrencies, especially bitcoins, are used very often in the crime world. This theory has evolved from the regular use of bitcoins in the criminal world. The normal banking system has to undergo a certain number of clauses and taxing processes which can ensure that money laundering is rare in the system.

However, when cryptocurrency is involved, none of the regulatory bodies can act even if they wanted to. The dark web has seen the regular use of cryptocurrency as it can be used to evade the law in many countries. Normal transactions are completely absent in the case of Bitcoins.

4.  Cultural Reasons

In many countries like Saudi Arabia, Bitcoins are banned due to religious reasons. This might seem weird who does not have an idea about the Islam faith but the government cited the reason that Bitcoin entails a huge amount of money. It is against the religious scripture of Islam for a huge amount of money to leave the nation. It cannot be controlled by the government based on religious reasons but other countries like Bolivia have also banned the use. Local transactions are also harmed by the presence of this kind of currency within them.

Conclusion

It has been acknowledged that cryptocurrency and bitcoins have not reached a legal status in most of the countries because of the reasons which have been mentioned above. However, let us take a moment and discuss here whether Bitcoins should be banned or not.  Even if bitcoins are banned from usage throughout the world, the criminal system will gain another source of currency to deal with their wrongdoings. Therefore, the legal status should not depend on the criminal use of the system.

Moreover, it should be remembered that the values of bitcoins cannot be controlled by the regulatory bodies. This is the main reason for the non-acceptance of cryptocurrency. If this particular issue is dealt with, there is no question over the legal status of Bitcoins!