Bitcoin is a decentralized digital currency, without a central bank or single administrator, that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries. Transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain.
Bitcoin is unique in that there are a finite number of them: 21 million.
Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, products, and services.
As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment.
The legal status of bitcoin varies substantially from country to country and is still undefined or changing in many of them. Regulations and bans that apply to bitcoin probably extend to similar cryptocurrency systems.[1]
In October 2013 the US FBI shut down the Silk Road online black market and seized 144,000 bitcoins worth US$28.5 million at the time.
[2] The US is considered bitcoin-friendly compared to other governments.[3] In China, buying bitcoins with yuan is subject to restrictions, and bitcoin exchanges are not allowed to hold bank accounts.[4][5].
On December 3, 2013, the central bank of China and four other central government ministries and commissions announced that Bitcoin is not a currency and can therefore not be used in the country’s financial system.[6][7] However it is not illegal to own or trade bitcoins in China.[8][9][10]
As of January 2018[update], BTCChina (now BTCC based in Hong Kong), one of the largest bitcoin trading platforms, had stopped accepting new account registrations from mainland Chinese users.[11] Bitfinex also briefly halted new account registrations but allows existing customers to continue trading unimpeded.[12][13][needs update] BTC-E was fined $110 million by US authorities in 2017 for laundering money,[14] but returned to full service under new ownership after being acquired by London Trust Media Holdings Limited on 1 February 2018,[15][16][17] now rebranded as Kraken.Coinbase requires extensive verification including pictures of an official ID and selfie.
[18][19] Due to legal concerns about potential money laundering,[20] some countries have banned or heavily restricted its use such as Ecuador where Bitcoin use was banned outright,[21][22] Bolivia where its use was heavily restricted,[23][24] Iceland where Bitcoin was declared illegal,[25][26] Vietnam where transactions using cryptocurrency were banned,[27][28] Russia where cryptocurrency trading ban has been proposed multiple times but has not yet been enacted,[29][30] Thailand where double taxation on cryptocurrency trading has been proposed but no definite plans have been made yet,[31][32] Taiwan where cryptocurrency trading ban has been proposed but no definite plans have been made yet,[33][34][35] and China where trading regulations have been released that may restrict cryptocurrency exchanges in future if they do not comply with regulation guidelines released by Chinese Authorities on 8 September 2017.[36][37]. In September 2018 India’s central bank RBI announced its decision to ban all cryptocurrencies within its territory effective immediately due to concerns about money laundering[38]. This ban however does not extend to foreign investors dealing with cryptocurrencies outside India[39].
The United Arab Emirates has been cautious about Bitcoin and other cryptocurrencies. The Dubai Financial Services Authority (DFSA) warned against investing in cryptocurrencies in February 2018.[40] The DFSA clarified that this warning was only directed at individuals and not at businesses operating within the DIFC.[40] The DFSA reiterated its warning about cryptocurrencies several times throughout 2018.
[41][42], most recently on December 11th, 2018 when it issued another warning about cryptoassets stating “the risks associated with buying, selling or holding cryptoassets are extremely high”[43]. Despite these warnings from the DFSA, there does not appear to be any law prohibiting the purchase or sale of Bitcoin or any other cryptocurrency in the UAE. It is possible that future regulation may be introduced but for now Cryptocurrencies appear to be legal in UAE.