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Technology / Cybersecurity

Commonwealth nations urged to look into legal status of Bitcoin

The Commonwealth is urging member nations to confirm the legal status of Bitcoin and other digital currencies.

A report published by The Commonwealth Working Group on Virtual Currencies on February 3rd 2016 said: "Member countries should be encouraged to make a positive determination on the legality of virtual currencies in their respective jurisdictions."

The report found that while "virtual currencies are prevalent in almost every member country and within every region of the Commonwealth" there was a wide range of legal frameworks across the group of 53 nations.

Bangladesh is the only Commonwealth country in which virtual currencies are fully legal, whereas they remain unregulated or under regulated in other nations in the group.

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The report said: "Member countries should be encouraged to foster an awareness of virtual currencies within their jurisdictions and the potential risks involved in their use," and "to consider the application of their existing legal frameworks to virtual currencies and, where appropriate, should adapt them or enact new legislation to regulate virtual currencies."

It notes the continued association of virtual currencies with criminal activities, and the risks that could potentially be posed to consumers using the technology.

It said that financial regulators and central banks should act to check how applicable existing legislation is in dealing with the new currencies, and urges an increase in both funding and training for law enforcement.

Katalaina Sapolu, Director of Rule of Law at the Commonwealth Secretariat, said: "Recognising the rapid expansion of virtual currencies and the need to combat cybercrime, the Commonwealth formed a specialist working group to help its members upgrade laws to harness the benefits and counter risks. This report constitutes the group’s initial findings and aims to provide an informative and useful resource to help lawmakers, police, financial regulators and tax authorities."

Looking into the current usage of virtual currencies across the nations, the report revealed that Canada has the most downloads per 100,000 internet users of the Bitcoin Core client, at 691. The United Kingdom is in fifth place, with 494, behind Malta (499), New Zealand (578), Australia (660).

In terms of mining, the process which generates new bitcoin, the United Kingdom has 0.66 nodes per 100,000 internet users, compared to 1 for Singapore, and 0.001 in India.

Commenting on the report, one of its contributors, Sandra Sargent, Senior Operations Officer at the World Bank and said: "I have seen a decisive shift in attention towards block chain technologies among private banking institutions. The technological innovation behind it may shift the way we conduct financial transactions in the future."

Lorien Gamaroff’s firm Bankymoon is highlighted in the report. It brings together smart metre technology and Bitcoin, allowing anyone to pay electricity costs for schools in South Africa. He said: "There is a large segment of the global population that do not have access to banking services – 80% of Africans exist solely in a cash economy.

"This means that payments are often inconvenient and insecure, expensive and in some cases, impossible. By making digital payments available new products and services will become accessible to this large market."
This article is from the CBROnline archive: some formatting and images may not be present.