The question of how to legally account for Bitcoin is becoming more urgent as adoption of the virtual currency spreads and Bitcoin-related companies come under legal scrutiny. But for users and entrepreneurs, the global legal landscape is murky at best.
More and more governments are coming out with semi-official opinions on how the virtual currency Bitcoin should be treated under the law. Many countries such as Germany have explicitly stated that Bitcoin is not legal tender and cannot be used to pay taxes, while others such as Canada have said that taxes must be paid on income earned in Bitcoin. But most countries are in wait-and-see mode: "At the moment, we’re studying Bitcoin and we have no plan to issue a regulation on it," a spokesperson for the Bank of Indonesia told the Jakarta Globe in December.
At the urging of Sen. Tom Carper (D-DE), the chairman of the Homeland Security and Governmental Affairs Committee, the Law Library of Congress has surveyed 40 jurisdictions and the European Union to see which ones have set down rules for Bitcoin.
Only China and Brazil have made new laws for Bitcoin
The conclusion: not many countries have locked down their legal interpretation of the virtual currency. China and Brazil have the most specific laws to date. The Chinese government has declared it illegal to use as a currency, while the Brazilians set out a framework for its formalized adoption under Law No. 12,865. "Overall, the findings of this report reveal that the debate over how to deal with this new virtual currency is still in its infancy," the report concludes.
The US, where most Bitcoin users live, is at the fore of this legal frontier. The New York State Department of Financial Services, which often sets precedent for other states, is now considering Bitcoin-specific regulation.
"This report has some good news — namely that the United States may not be as far behind the curve on virtual currencies as some have argued," Sen. Carper said in a statement. "In fact, the United States might be leading the way for a number of nations when it comes to addressing this growing technology."