The path of Bitcoins is full of hurdles especially legal ones. Countries like China, France, Thailand, Norway, etc have already raised red flags against use of virtual currencies like Bitcoins. As far as India is concerned it has been reported that Bitcoins legal issues are fast increasing among the Bitcoin community of India. In fact, Indian Laxmicoin has sought clarifications from regulatory authorities before its launch. Thus, Bitcoins legal issues vexing Bitcoin community of India.
Various operators are expecting clear regulatory clarifications that virtual currencies are not illegal per se but according to Perry4Law, the leading techno legal ICT law firm of Asia, Bitcoins website owners and entrepreneurs must comply with Indian laws to stay legal. The virtual currencies are saddled with number of significant financial, cyber security and legal risks at the moment. The research paper titled Cyber Law Due Diligence in India and E-Commerce Businesses (PDF) issued by Perry4Law has aptly described the cyber law due diligence requirements that Bitcoin websites in India are required to follow.
In a parallel and significant development in the Asia region, the Alibaba Group Holding Limited’s Taobao has decided to ban sales of Bitcoins on its platform. The ban would be effective from January 14, 2014.
According to TOI, Taobao will ban the sale of Bitcoins on the heels of a government crackdown against the virtual currency to plug a potential gap in its tight controls on capital flows. The move comes as Alibaba, China’s biggest e-commerce company, seeks the smoothest of rides toward a giant initial public offering of stock expected later this year.
“The central bank clearly has required third-party payment services to close Bitcoin…trading channels,” Taobao said in its statement, without disclosing any details on Bitcoin sales through its platform up to now. Backed by neither a government nor a bank, Bitcoin has attracted currency speculators in recent months.
Alibaba spokeswoman Florence Shih said, “In the interest of consumer protection, Taobao has banned the sale of Bitcoins on the platform.” The Taobao ban, which covers other virtual currencies, also includes the sale of any guides, computer hardware or software related to Bitcoin “mining”.
In December, the People’s Bank of China (PBOC) banned financial institutions from trading in Bitcoins, saying the government would act to prevent money laundering risks from Bitcoin, which is not backed by a government or central bank. It did not ban individual trading.
Later the same month, the Chinese Business News reported that the government had asked third-party payment services to stop handling Bitcoin transactions, forcing Shanghai-based BTC China, the world’s largest Bitcoin exchange platform by volume, to stop taking Chinese yuan deposits.