Bangladesh should formulate a specific set of laws to categorise and clearly define the legal standing of crypto currencies like Bitcoin in the country, said a study.
At the same time, the government needs to closely examine the security issues related to Bitcoin to see its viability in the context of Bangladesh, said the study conducted by Bangladesh Institute of Bank Management(BIM), the leading entity for banking related research in the country.
A group of experts including Deputy Managing Director of Prime Bank Md. Touhidul Alam Khan, as well as Assistant Directors of Bangladesh Bank Md. Habibur Rahman and Md. Julker Naim have conducted the research.
The outcome of the study will be revealed today (Thursday) at the Annual Banking Conference now being held in the city.
Bitcoin transaction is still illegal in Bangladesh. Current anti-money laundering law states that if anyone performs transactions with any kind of decentralised crypto currency, he or she runs the risk of being jailed for 12 years.
In September, 2014 and December, 2017, Bangladesh Bank issued two notices declaring crypto currency transactions unauthorised and illegal.
The notices read that Bitcoin is not an authorised and legal currency in any other country in the world. "Transaction with this currency may cause a violation of the existing money laundering and terror financing regulations," the notices further read.
Referring to these steps, the researchers said that the government or Bangladesh Bank should define Bitcoin use more carefully.
Noting that until now, only two notices have been circulated from the BB in September 2014 and 2017, it said, "But this seems to be inadequate considering mass public unawareness about Bitcoin in Bangladesh", adding "More steps are required to make public aware of Bitcoin transaction".
"We recommend that a specific set of laws be introduced to categorise and clearly define the legal standing of Bitcoin and its users, businesses, and exchanges", the research said stating that analogous laws already exist regulating credit and debit card use",
The research also asked the government to use media strengths to raise public awareness about Bitcoin transaction.
"People often rush towards a new product that offers lucrative profits within a very short time. Multi Level Marketing companies defrauded people in the same manner", the study said.
"That's why, public awareness can prevent misuse of Bitcoin values or to prevent transactions related fraudulence", it added.
The researchers also noted that extensive research is needed to decide whether Bitcoin would complement our growing economy or whether it would prove costly to the economy.
It stated that third world economies like Bangladesh often lag behind to take competitive advantage of a new product in the market.
For this reason, the government should check the security threat issues of Bitcoin and then, if it appears to be viable, should introduce the currency to reap the benefits, it said.
"If Bitcoin transactions appear viable, Bangladesh Bank/Government may require Bitcoin traders to reveal their identity instead of remaining anonymous. It can help thwart security concerns regarding the currency transactions", the research said.
The study also noted that over valuation of Bitcoin through propagation can potentially trigger more money laundering incidents in Bangladesh.
"For this reason too, judicious decision is a prerequisite to ensure the safety of our economy from the threats posed by Bitcoin", it said.
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