The Commonwealth of Nations has released a new report that calls on its 53 member countries to speak out about the legality of bitcoin and other digital currencies.
Published on 3rd February, the report is the result of nearly a year of research conducted by the Commonwealth through its Working Group on Virtual Currencies. The group was commissioned following a roundtable event convened last February by the Commonwealth Secretariat, its main governmental body.
The report found that of the countries under its mandate, only Bangladesh had deemed that bitcoin and alternative digital currencies were unlawful, and that even after this declaration, such activity continues unabated.
With this in mind, it concluded that member countries make a “positive determination on the legality of virtual currencies” given its conclusion that the “prohibition of virtual currencies is unlikely to be effective.”
The report reads:
“Financial regulators and central banks should consider making public statements on the legality of virtual currencies and the applicability of any existing legislative frameworks. Education and funding should be provided for training for law enforcement.”
Overall, the report provides a comprehensive overview of developments in the bitcoin and blockchain ecosystem, with sections ranging in coverage from its more positive use cases in payments and remittances to the use of the technology in cybercrime.
Concurrent with member country concerns about crime, researchers even attempted to access a “dark web crawler” for purposes of the report. However, due to delays in the acquisition of this resource, any findings were too early to be included.
The Commonwealth of Nations includes 53 states in Africa, Asia the Caribbean, Europe and the Pacific, including such notable markets as Australia, Canada, India and South Africa.
Regulatory recommendations
On the subject of criminal offenses, the report recommended that member states move to ensure their laws apply to the technology while collaborating more broadly with other regulators around the globe.
The report advised that regulations be applied as necessary to prevent money laundering and terrorist financing, pointing out that, to date, this has meant overseeing ATM and exchange-related services.
However, the paper acknowledged lawmakers would need to take an “innovative” approach to any rulemaking, given that crimes can still be committed by digital currency users who are not converting funds into government-backed currencies.
The paper went on to encourage member states to make public statements on how the use of digital currencies falls under tax laws when they are used as a medium of exchange; update legislation related to the proceeds of crime; and extend consumer protection frameworks to cover the industry.
Regulation was notably not recommended for distributed ledger use cases of the technology, as the report read:
“Any regulatory and legislative frameworks should focus on interactions with fiat currencies and avoid attempting to regulate the underlying decentralised ledger technology.”
Evidence of use
More unique to the report was its attempt to quantify how widely used the technology is in Commonwealth member countries.
Using public sources, researchers ultimately found evidence that the basic Bitcoin Core wallet had been downloaded in 46 member states, though use varied sharply.
While the report acknowledged it suffered from a lack of available data, it did suggest that bitcoin use is correlated with Internet access, with the “countries with the highest levels of Internet penetration” having the highest wallet downloads.
For more details, read the full report.
Commonwealth flag image via Shutterstock