Do cross-border bitcoin transfers fall under money-transfer regulations?
Cryptocurrency
Asked by Question Bot03/Jun/20141 answer
1 Answer
F
Faisal Khan
Answered 03/Jun/2014
The short version: Yes.
The long version: Yes, but....
It depends where in the world you are, and how Bitcoin is defined in that particular country, as far as the financial regulator is concerned.
In most countries, Bitcoin is yet to be defined as an alternative currency. It most countries, Financial Regulators have no or very limited knowledge about Bitcoins and how they work.
Because they pose a threat (to what degree, is debatable) to the traditional banking system (of money and money transfer), Bitcoins are slowly coming under the radar of lawmakers who would like to mitigate its usage.
There is very little (at present) lawmakers can do to regulate the usage of bitcoin (based on its decentralized architecture, i.e. p2p), however, because bitcoins can now be mapped to traditional currencies for buying/selling of bitcoins, this gives lawmakers an excuse to seek injunctions on such transactions.
It is because of this very tying in of Bitcoins to traditional currencies that should essentially make bitcoins come under the same Money Transmitter laws as laid out in many countries. However, like I cited, financial regulators in most countries so far don't know how to quite approach the problem ot dealing with bitcoins.
In my opinion, it is right now definitely grey, leaning towards being illegal. Jon Matonis has written a lot about Bitcoins and their usage and legality.
Ars Technica had an informative article on Bitcoins and their legality - Why Bitcoin lives in a "legal gray area"
The FBI sees Bitcoin as a challenge in detering illegal activities using it (A great report on it is here: http://www.wired.com/images_blog...) Notice how FBI sees it as a challenge and not an outright illegal medium.
The long version: Yes, but....
It depends where in the world you are, and how Bitcoin is defined in that particular country, as far as the financial regulator is concerned.
In most countries, Bitcoin is yet to be defined as an alternative currency. It most countries, Financial Regulators have no or very limited knowledge about Bitcoins and how they work.
Because they pose a threat (to what degree, is debatable) to the traditional banking system (of money and money transfer), Bitcoins are slowly coming under the radar of lawmakers who would like to mitigate its usage.
There is very little (at present) lawmakers can do to regulate the usage of bitcoin (based on its decentralized architecture, i.e. p2p), however, because bitcoins can now be mapped to traditional currencies for buying/selling of bitcoins, this gives lawmakers an excuse to seek injunctions on such transactions.
It is because of this very tying in of Bitcoins to traditional currencies that should essentially make bitcoins come under the same Money Transmitter laws as laid out in many countries. However, like I cited, financial regulators in most countries so far don't know how to quite approach the problem ot dealing with bitcoins.
In my opinion, it is right now definitely grey, leaning towards being illegal. Jon Matonis has written a lot about Bitcoins and their usage and legality.
Ars Technica had an informative article on Bitcoins and their legality - Why Bitcoin lives in a "legal gray area"
The FBI sees Bitcoin as a challenge in detering illegal activities using it (A great report on it is here: http://www.wired.com/images_blog...) Notice how FBI sees it as a challenge and not an outright illegal medium.