In a recent letter to the Criminal Investigation Department (CID), the Bangladesh Bank stated that having cryptocurrencies or conducting virtual transactions and trades using them is not a criminal offense.
Even if cryptocurrency possession, storage, or transaction is not recognized, it does not appear to constitute a crime.
However, under the second phase of the Foreign Exchange Control Act 1947, the Anti-Terrorism Act 2009, and the Prevention of Money Laundering Act 2012, transactions with virtual currencies may be classified as crimes.
Bitcoin and other cryptocurrencies are tomorrow's money. We cannot pretend to be blind to the transition to a cashless society.
The introduction of such technology, which has the potential to disrupt various industries, demands that we begin to prepare.
Virtual currencies are not unlawful under existing regulations, and the Foreign Exchange Regulations Act, 1947 does not prohibit the introduction of new currencies with the approval of the regulatory authority.
So, there is hope for the introduction of cryptocurrencies in our country if nothing wrong happens.
So, in the near future, cryptocurrency can be an alternative to the currencies in Bangladesh if the regulatory authorities permit it to be used.
Although in the developed countries, the era of virtual currencies has begun. However, there are some risk factors in investing in Virtual Currencies.
Risk factors
Unlike fiat money, cryptocurrencies, like Bitcoin, are stored in digital wallets and controlled by the owner of both the public and private keys associated with the digital wallet in which the bitcoins are held.
An investor will not be able to access the bitcoins kept in a digital wallet if the private key is lost, destroyed, or otherwise compromised.
This third party may be able to obtain access to the bitcoins if they acquire the private key.
In August 2016, the price dropped roughly 23% in response to the theft of nearly 120,000 bitcoins, valued at $72 million, from the Bitfinex exchange in Hong Kong.
BitPay lost $1.8 million worth of bitcoins in September 2015 because of a phishing operation.
So if we consider these incidents, it can be easily assumed that third-party service providers, such as trading platforms, are potentially subject to hacking or other harmful acts.
Following examples of fraud, business failure, or security breaches, when investors could not be paid for losses suffered, there have been increasing calls for digital currency trading platforms to be regulated.
However, despite the absence of exchanges and trading platforms, many traders use trading platforms to swap fiat currency for cryptocurrency or change one cryptocurrency into another.
Moreover, at the moment, digital currencies are a new and rapidly evolving market within the digital assets sector.
There is an extremely high degree of ambiguity surrounding it. While retail and business markets use digital currencies far less, online platforms have helped increase the trading activity of speculators, who use the assets to profit in the short-term or long term.
As the market price of cryptocurrencies is largely based on how much investors are willing to pay for them, a decline in investors' confidence could lead to a general decline in the value of cryptocurrencies.
There is much uncertainty around whether an investment in digital currencies is taxable.
Cryptocurrencies, such as bitcoin, may be regarded as financial assets in some countries and currency in others.
In the case of digital currency sales and purchases, value-added taxes (VAT) may be imposed. Considering his or her home country, an investor may want counsel on digital currency tax treatment on a frequent basis.
For a contrasting view, it has been noted that cryptocurrencies are founded on rules that control numerous individuals' peer-to-peer interactions.
If disagreements over protocol arise, there will be a "fork," and two independent networks will be created.
An excellent example of a permanent fork in Ethereum's blockchain is the split that occurred in 2016, resulting in two separate digital currencies: Ethereum (ETH) and Ethereum Classic (ETC).
Only a few months ago, the first Bitcoin fork happened, resulting in the birth of Bitcoin Cash (BCC).
In the previous five years, Bitcoin holders have become millionaires. Young risk-takers who can afford to experiment are heavily represented in this wealthy crypto-generational group.
While cryptocurrency price volatility is relatively high, public sentiment about widespread cryptocurrency use has grown in recent years.
The range of possibilities in the crypto-economy is being expanded as a result of their risk appetite. So, Crypto is an evident investment, and as a result, there is an increase in investor interest, which, in turn, results in an increased amount of money to be made.
In investing in cryptocurrencies, there is always the chance of losing everything, so make sure you fully understand the risks and outcomes so you can get the achievements you desire.
The author is a DLA scholar and trained on Understanding NFTs & DeFi (the next installment of crypto and blockchain topics) by DLA Piper UK
