By Matthew P. Ponsford
Edited by Ann Kristin Glenster and Cristina Carapezza
Bitcoin, also known as a decentralized virtual currency (DVC), is regulated differently in the People’s Republic of China (PRC), Canada, and the United States, and represents a vastly underdeveloped area of the law. No country has currently backed Bitcoin. Launched in 2009, and founded by Satoshi Nakamoto, Bitcoin is a “decentralized peer-to-peer currency.” Other virtual currencies include Litecoin, Namecoin, Auroracoin, Peercoin, and Dogecoin – about 500 varieties in total – but research here will primarily focus on Bitcoin. A comparative analysis will help discern how these respective countries classify Bitcoin (e.g., a virtual object, currency, or potential security), and how these jurisdictions regulate, or intend to regulate, DVCs. Bitcoin is identified as a “currency,” throughout the paper, but the classification is heavily contested. Questions for analyses include: are there appropriate existing legal frameworks to regulate Bitcoin? What securities regulation challenges does Bitcoin pose? What are the consumer and investor protection concerns associated with Bitcoin compared to traditional financial exchanges? What are the cross-jurisdictional challenges of virtual currency transactions that operate over the Internet (e.g., money laundering, or fraudulent activities)? Research herein incorporates securities commission reports, social and political commentary from secondary sources, and relevant jurisprudence and legislation. The paper helps situate the current climate of Bitcoin globally, and assesses how its regulation differs relative to technological, economic, social, financial, and political forces.