Legal challenges around cryptocurrency, particularly bitcoin, is nothing new. Cryptocurrency lies outside legal boundary; as nothing could completely regulate internet, so does no one could entirely control bitcoin. Even so, for a currency to be able to play its part in the community, some sort of trust on its value and ability to be used comfortably must be established.

Legal challenges around cryptocurrency, particularly bitcoin, is nothing new. Cryptocurrency lies outside legal boundary; as nothing could completely regulate internet, so does no one could entirely control bitcoin. Nevertheless, for a currency to be able to play its part in the community, some sort of trust on its value and ability to be used comfortably must be established.

Bitcoin Legal Standing

 

Zero Legal Backing

Although most countries have not mentioned anything in regard of bitcoin, but leading countries have seen the need to address it either for economy or legal purposes.

Transactions using the cryptocurrency is restricted in China as financial institutions are forbidden from handling it. Vietnam and Iceland have banned their citizens from using or holding it. While in the US and several other countries, bitcoin is a subject of tax in one way or another. However, the fact that bitcoin is not outrightly illegal does not mean that those governments condone the use of bitcoin.

US Securities And Exchange Commission (SEC) this week issued a warning on the danger of bitcoin-related investments. Fraudsters and scammers could easily lure people in by promoting the success of Bitcoin so far and blending with bitcoin crowds, they said. Quoted by Marketwatch, SEC further stated that if dragged by fraud, then investors may have limited recovery options.

Well, that one's already old news. Those who got involved with bitcoin despite of their country's warning may have to face with legal recriminations. And those who live in places where it is kosher, by now should have understand that if an Mt.Gox-esque incident occur, then they will have near zero legal backing. Even worse, they could even be dragged in the event of criminal activity committed.

 

Bitcoin Escape Route?

Nevertheless, there is no problem without solution.

Wall Street Journal (11/5) reported that Bitcoin Foundation is trying to lobby governments in order to identify political impediments to bitcoin adoption, and build confidence in bitcoin among governments around the world. However, bitcoin opponents are many and most of them sit in govenment seats. Whether they are going to succeed in this endeavor or not remains to be seen.

In case things do not go well, there is always the option of relocating to somewhere more tolerant environment, like what Chinese bitcoin companies are thinking to do.

Early this morning (13/5), South China Morning Post reported that China-based bitcoin companies are planning to move abroad following Chinese regulators clampdown on bitcoin transactions. The clampdown means that Chinese banks has to sever ties with bitcoin exchange in the country. Although Chinese bitcoin exchange are finding ways to walk around the rules, but now people are less interested to deal with the cryptocurrency. Consequently, China's biggest bitcoin exchange, Huobi, and Bitcoin cash machines maker Bitocean, are considering to relocate.

To run everytime something bad happen is not a good way of life. But there might be another benefit for the bitcoin exchange and companies to relocate, especially if they move to someplace in Southeast Asia where the government is less concerned about cryptocurrency. Just think, the move will not only distance them from China legal grasp, but also bring them closer to new customers.