The European Union still does not have comprehensive and consistent legislation regarding the use of bitcoin, and it may be years before it does. A recent report by an independent financial research organisation, the SWIFT Institute, has concluded that the EU’s response to the rise of bitcoin has been inadequate despite recently adopting new laws on bitcoin taxation.
In October this year, the EU passed a new set of consumer payment protection rules, which will aim to promote the use of innovative online and digital payments. The case was brought before the European courts in an attempt to provide clarity on the use of cryptocurrencies, which are increasingly becoming used as a means to pay for everyday goods and services. The European high court has ruled that digital currencies can be exchanged tax-free in the European Union. Despite this development, there still is not a comprehensive set of rules for the use and exchange of bitcoin in the EU.
The European Banking Authority (EBA) has recently called for governments to develop thorough regulation solutions for the use of cryptocurrencies. The EBA believes that bitcoin should be regulated through the development of a comprehensive framework.
Governments around the world have been struggling in recent years with how to best regulate bitcoin, as the cryptocurrency has been expanding in popularity and becoming more and more widely used.
Bitcoin is frequently used within the gambling community as the digital currency is noted for its speedy transactions and its complete anonymity. It began as an experiment but has become a legitimate form of payment, used by million of people. It has encouraged the growth of many other decentralised, peer-to-peer currencies, which do not incur any fees or charges, and do not involve banks. This becomes problematic for governments, who are unable to control the currency.
In March this year, the UK announced a series of initiatives to deal with bitcoin in a report published in conjunction with the Chancellor of the Exchequer’s annual budget speech. The announcement was the UK government’s first attempt to manage the regulatory and consumer safety issues surrounding digital currencies. The Treasury intended to consult the views of digital currency companies and the general public on the issue of bitcoin use, but there has not been much progress made by Parliament on the matter since then however.
In the USA, there have been some measures to bring bitcoin use under the the existing legal frameworks regarding money services. Changes in legislation to accommodate bitcoin are making their way to state level to be approved.
Many financial commentators have stressed the importance of regulation for bitcoin use. Consumers need to be made aware of the risks associated with digital currencies, particularly when it comes to refunds or losing money. There is a lack of specific regulations to cover bitcoin users for losses.