Bitcoin has stormed onto the international scene as a highly-popular – and for some highly-profitable – investment vehicle and potential currency. Governments in Asia have cooled on Bitcoin in recent weeks, however, with the Indian government releasing a warning, and the Chinese government tightening oversight over the currency. Now, the Malaysian Central Bank has advised its citizens to use caution in regards to Bitcoin.
Bitcoin is not a legally recognized currency in Malaysia. The Central Bank made this clear in a public statement. The government also said that it does not regulate Bitcoin, and can offer no protection in regards to Bitcoin trading. The bank stopped short, however, of saying that Bitcoins were illegal or outlawed. Instead, the bank cautioned citizens who were engaging in trading.
This stance mimics the stance taken by numerous other governments across the world. Malaysia’s neigbhor, Thailand, has come close to outright outlawing the currency. Thailand’s Central Bank previously announced that Bitcoin was illegal, and thus any transactions in Bitcoin were also illegal. The bank itself lacks the legal authority to make such a ruling, however, and neither the parliament nor the Ministry of Finance have ruled against Bitcoin.. The status of Bitcoin in Thailand thus remains contentious but for now the digital currency is not technically illegal.
India and China cracking down on Bitcoin
In India, numerous Bitcoin exchanges shut down after the government released a warning against the currency. Government officials also raided the offices of some exchanges, seizing information and detaining people. The government appears to be trying to protect its own national currency as some Indian traders have been investing in Bitcoin to hedge against the declining value of the Indian rupee.
Initially, the Chinese government embraced Bitcoin. After Chinese borne investments surged, however, sending the value of Bitcoin skyrocketing, the government got cold feet and began to crack down on the currency. In December, the Central Bank actually banned financial companies from processing Bitcoin transactions, severely crimping trading. This caused a decline in Bitcoin prices.
Worldwide Bitcoin legality remains contentious
Taiwan recently announced that it would not allow Bitcoin ATMs to be installed in the country. The country’s financial authority explained that Bitcoin is not a currency, and that businesses should not use it as a method of transaction. ATMs will likely go up in Hong Kong, however, which does not regulate Bitcoin.
Across the world, Bitcoin has generally not been recognized as a legal currency. For those governments that do offer some legal and regulatory oversight, Bitcoin is usually recognized as an investment vehicle. This is important because this opens up Bitcoin exchanges to taxation. This does offer Bitcoin some legal protection in countries, such as the United States, which recognize it as an investment vehicle.