In a new report, the Commonwealth of Nations has called for the acknowledgement and legislation of virtual currencies by its member nations.
A new Commonwealth report – the result of research conducted by the Commonwealth Virtual Currencies Working Group – has broadly spoken toward the impact of virtual currencies like Bitcoin and called for member nations to acknowledge and legislate virtual currencies.
The complete report can be downloaded here. [PDF]
The report also reveals that Bangladesh is the only country out of the 53 Commonwealth collective where its central bank declared virtual currencies illegal. Still, there were at least 60 instances of the Bitcoin Core client downloaded in the country, after the ban.
The Working Group called for member countries to address the legality of virtual currencies by stating:
Member countries should be encouraged to make a positive determination on the legality of virtual currencies in their respective jurisdictions.
Furthermore, the report encouraged the 53 member nations to “foster an awareness of virtual currencies,” with the conclusion that such innovation has the potential to benefit nations and drive development. On the flip side, the report also underlined the risks involved with virtual currencies, specifically with money laundering, terrorism financing and cybercrime.
However, a majority of Commonwealth nations have recognized the advantages of virtual currencies like Bitcoin and have even treated its use as lawful, the report highlights.
In making a marked point about prohibitive measures, the Study Group stated: “prohibition of virtual currencies is unlikely to be effective. In some member countries in which regulation has been adopted, it has been limited, uncoordinated and fragmentary.”
The report also seeks to highlight and explain the technology behind Bitcoin and other virtual currencies – a blockchain. As a decentralized distributed ledger, the report opines that they help unbanked citizens as an alternative to the banking system. In stating the benefits of blockchains, the report adds notes remittance without high transfer fees, payments and a cheaper and faster way to trade goods and send or receive money.
As a contributor to the report, Sandra Sargent, senior operations officer at the World Bank said in a statement:
I have seen a decisive shift in attention towards blockchain technologies among private banking institutions. The technological innovation behind it may shift the way we conduct financial transactions in the future.
She claimed the report was a “cohesive and coordinated approach” toward virtual currencies by Commonwealth countries. “I already myself recommended it to a number of World Bank clients as a solid policy-guiding document,” she added, speaking about the credibility of the report.
Regulatory and Legal Framework for Bitcoin
The report also makes suggestions toward central banks and financial regulators to make public statements on the legality of virtual currencies. Furthermore, it calls for such regulatory authorities to seek its applicability in existing legislative frameworks.
In calling for legal frameworks, the report touches upon taxation solutions, encouraging authorities to implement existing taxation protocols to adapt and extend to virtual currencies. A recommendation also points towards consumer protection, seeking the inclusion of tender and exchange by virtual currencies for purchases to be included in consumer protection legislation.
The Working Group also asks member countries to consider improving current law enforcement infrastructure in the areas of digital forensics and analytics. “This should include the training of prosecutors, judges and regulatory authorities,” the report insists.
The Commonwealth of Nations comprises of 59 countries spread across several continents such as Africa, Asia, Europe and North America (the Caribbean).
Image from Shutterstock.