Legal Issues Of Bitcoin And Its Regulation

Bitcoin is a new matter, being active in currency fields since 2012. Bitcoin emerges as the times require. Its inner value and utility is accepted by a big group of people, which broadens the practice areas of Bitcoins. In particular, decentralization, one of Bitcoin’s merits, brings a series of advantages, such as anonymity, borderless. Those advantages are enthusiastically praised by Bitcoin’s fans. However, those advantages are also accompanied by issues, such as wild fluctuation in the price, money laundering, or passive impact on the legal tender or monetary policy of a country. China chose the way of forbidding banks to participate in Bitcoin business as her response so as to cut off the transmission of Bitcoin’s risk. Other countries in the world have different attitudes towards Bitcoin. They have set different regulations in tax, consumer protection, intermediary, self-regulation and case law.This thesis will judge the legal property of Bitcoin by elaborate analysis of Bitcoin’s function as a currency, with demonstrating the impact of Bitcoin on the national currency system, the way of consumption of individuals and judicial domain and emphasizing the necessity of proper regulation. On the other side, this thesis will refer to the strategies and methods taken by European and North American countries and parse the regulation issued in 2013 by China regarding Bitcoin in detail, through which finding the shortage of regulatory system of Bitcoin. The thesis will set up a frame and principle for China to regulate Bitcoin by combining those analysis and realities.2 The Introduction will raise the new issue, Bitcoin, due to the progress of science and technology by introducing the laws of currency development and the supervision of currency conducted by countries.Chapter One will state the background and reason of the upsurge of Bitcoin is due to the improvement of science and technology and perfection of theories, which also accords with the trend of currency. Besides, this chapter will also set forth the idea that it is because of the emergence of the former virtual currencies that paves the way for people to admit the theory of Bitcoin. And based on the previous statement, this chapter will also show features, advantages of Bitcoin in detail.In Chapter Two, legal properties of Bitcoin will be the major topic. By discussing the connotation and denotation of Bitcoin, this chapter will further analyze whether Bitcoin is a currency or a commodity. The denotation part will clarify the limit or distinction of Bitcoin by comparing several similar terms. The connotation part will draw a conclusion that Bitcoin now is a combination of currency and commodity by discussing feature of virtuality and monetary attribute of Bitcoin.Chapter Three is about the impact on the current legal tender and influence on the traditional currency. In this chapter, you will see the influence of Bitcoin on the consumer’s ideology, as well as the impact of Bitcoin on monetary policy, country’s credit, tax, striking crimes and judicial parts(such as perpetuation of evidence).Chapter Four will sum up the legal practice regarding Bitcoin abroad as well as introduce the regulation of Bitcoin in China. We have to take the legal system of other countries which have already had thorough systems of financial supervision and virtual property as a reference and explore the methods of supervising Bitcoin taken by those countries. At the same time, by comparison with foreign regulation on Bitcoin, we will find the insufficient of Chinese regulations.Chapter Five will discuss the challenges that will face to China and the principles and mechanisms that should be used during establishment of supervision system on Bitcoin, as well as the key points when supervising Bitcoin by integrating the experience of foreign legal practice and local situations.Chapter Six is the conclusion of this thesis. It will stress once again that the inevitability of Bitcoin in the trend of civilization progress and the requirements of regulating Bitcoin, so as to establish a proper supervision system for Bitcoin within an appropriate range.