Regulation of Bitcoin

Bitcoin was founded on the principles of decentralization, meaning that the cryptocurrency was not regulated by the central authority in the way that a traditional (or fiat) currency would be. As Bitcoin, and the blockchain technology behind it, remains quite new and in the early stages of its evolution, authorities are still trying to get to grips with what exactly the technology is before attempting to come up with a plan about how to deal with it, especially in relation to taxation and money laundering issues.

Currently, there is no uniform international approach to Bitcoin and its legality will depend on where in the world you reside. However, as authorities gain more experience and knowledge about Bitcoin, and the cryptocurrency industry in general, it is likely that at least a certain minimum levels of regulation will come into place in the vast majority of countries. In addition, the huge gains being made by the cryptocurrency this year (2018) has meant that authorities are feeling that urgency about regulating the sector, with over 30 global regulators having announced various approaches to cryptocurrency regulation in recent months (as from July 2018).

Other issues arising include the fact that as Bitcoin has risen in value, its usefulness when it comes to making transactions has fallen and it is being used more and more to store value, leading to the possibility of a bubble. It is suggested that the vast majority of Bitcoin transactions over the last 12-24 months have been for speculation purposes, with the volatility of the asset and the demands (and resulting expense) that the sudden surge of interest has placed on the currency making it increasingly unsuitable for everyday transactions.

Although a small number of countries have restricted or banned Bitcoin, most countries allow Bitcoin to be used, while a patchwork of regulations having been put in place in different. The decentralized nature of Bitcoin makes it very difficult to enforce restrictions on Bitcoin, even in those countries that have banned it.

(excerpt from text on https://blockonomi.com/bitcoin-regulation/)