Despite the more than 1,100 cryptocurrencies in existence as of writing (November 2017), Bitcoin remains in the public mind the most widely known and the most widely adopted.
However, despite its widespread familiarity and an unrelenting growth in adoption, it has struggled to gain formal approval from officialdom. There are signs, however, that the trend might be turning. Japan – noted for its forwardness in relation to the crypto revolution – officially recognised Bitcoin as legal tender back in April 2017.
In September, Japan’s Financial Services Agency (FSA) officially approved eleven cryptocurrency exchanges in a further move that is now fast making the country an epicentre of the digital revolution, and Japanese forward-thinking now appears to be encouraging other countries to at least consider the question.
Australia, Switzerland, Canada and Belarus Line Up
Despite falling into the orbit of its Russian neighbours whose general line it has been adopting on a range of policies, Belarus appears to be taking an independent position in relation to the crypto-currency revolution as it now stands on the verge of approving its own state-backed crypto-currency exchanges.
The Eastern European country is currently reviewing new legislative proposals that will allow Bitcoin and other digital currencies to interface with traditional fiat although it is still unclear at this stage what specific legal status Bitcoin will have.
Various Legal Statuses
The Swiss have formally designated Bitcoin as a foreign currency and the country’s canton-level organisational structure which guarantees a high degree of local autonomy has seen at least one municipality adopting Bitcoin as legal tender for tax payments.
The Canada Revenue Agency (CRA) formally classifies Bitcoin as a commodity, meaning that Bitcoin transactions are considered barter transactions. This formal recognition has served as the driver behind Canadian outfit Evolve Funds proposing what looks set to become the world’s first Bitcoin ETF offering.
In the Netherlands, national government has adopted the same approach as its Canadian counterpart, classifying Bitcoin as a bartering commodity, although it is likely that no EU country for the foreseeable future will grant outright legal tender status to Bitcoin as the European Banking Authority continues to treat it suspiciously as a powerful money laundering tool.
‘Hands Off’ Approach Still the General Trend
The overall trend has been for governments to adopt a hands-off approach – the Irish government has stated that it sees no legal requirement for regulating the currency, granting it de-facto legal status albeit without any formal recognition.
As things stand, the Japanese approach remains the exception but with the growth of Bitcoin-derived financial instruments set to take off in 2018 – CME Group, for instance, is planning to launch the world’s first Bitcoin Futures offering in December on the Chicago Stock Exchange – governments increasingly will find their hand forced into drawing up specific legislation to address a range of issues raised by the crypto-currency phenomenon.