Since 2009, Bitcoin has become increasingly popular across the world. Today, hundreds of millions of people and businesses are using Bitcoin. Bitcoin’s immense growth and potential as a global digital currency have not gone unnoticed. Many governments and jurisdictions have already introduced or are contemplating introducing local regulations on Bitcoin use. You also don’t need to understand the technicalities of how Bitcoin operates because you can rely on free platforms like bitcoin profit.
Increased local regulations of Bitcoin are not a shocking trend. Cryptocurrency’s decentralized and autonomous nature is some of the main factors driving its popularity. Many governments are worried that Bitcoin poses some risk because there are no specific regulations and controls. For some, Bitcoin provides an opportunity for criminals to hide their tracks.
What Are Local Regulations?
Every country operates on a set of policies and rules. Many governments have central governments and other systems to control and regulate financial issues like currency exchanges and transfers within the financial sector. For example, if you get a considerable sum of money in your account, your bank will likely call you to clarify the source of the funds.
Such local regulations do not apply to Bitcoin. Bitcoin is a decentralized digital currency with no central authority or governance system. Additionally, Bitcoin is not a national or regional currency. No country or region owns or controls it. Moreover, Bitcoin provides peer-to-peer transactions with no third parties. So, if you decide to sell an item to someone and agree that he will pay in Bitcoin, that’s it.
Nevertheless, efforts to regulate Bitcoin and its use have emerged. In some countries like the U.S., for example, Bitcoin is not a legal tender, yet in others like Japan, it is a legal tender. China illegalized Bitcoin, and hence you cannot use it there. These are just examples of local regulations that intend to deal with the wild nature of Bitcoin.
Local Regulations and International Bitcoin Markets
You may be wondering how the local regulations affect the international Bitcoin markets. There seems to be no such thing as the effect of local laws on the global Bitcoin markets. That’s because Bitcoin is not a local currency and is not subject to any local government control. So, even the attempts to introduce regulations have not affected the international Bitcoin market per se.
However, when countries introduce regulations that Bitcoin users feel are bad, the local Bitcoin market may experience some changes. In extreme cases, such as when China banned Bitcoin, the local people will not use Bitcoin. Despite this, Bitcoin remains a valuable and popular digital currency in other countries.
In most cases, however, the local regulations have minimal and short-lived effects on the local Bitcoin dynamics. For example, suppose a government announces that it intends to introduce new taxes or fees for Bitcoin transactions. In that case, this may trigger increased activity as local Bitcoin users try to sell their Bitcoin before the law becomes effective. And this does not mean that other countries will experience the same effect. Bitcoin is an international digital currency and is resistant to such local regulations.
Local Bitcoin regulation is also a challenge. Some countries now have laws regulating Bitcoin exchanges, requiring Bitcoin exchange service providers to register with appropriate bodies. However, it becomes difficult to control what these service providers do because of their international network of operations.
For example, if you register with a crypto exchange in the U.K., the U.K. government will not be able to control or regulate your Bitcoin trading activities overseas. And this creates a significant dilemma for local regulations.
Conclusion
Despite growing efforts to introduce local regulations for Bitcoin in many countries, the effect on the international Bitcoin markets is negligible. It may be necessary to re-evaluate the need for such local laws.
