Why currency on the Internet is not legally money

Virtual currency has existed on the virtual market for several years. However, most people are still convinced that electronic money is legally invalid. What led to the formation of this opinion?
 

The position of the official authorities

The staff of the European Central Bank prepared a report on the topic of virtual currency. In 2012, he was brought to the public. The report pointed out that certain communities are creating their own cryptocurrency. It is used by system participants to pay for goods and services. According to the report, virtual currency is a digital means of payment that is outside the sphere of government control. In this case, the role of controlling entities is played by developers, as well as members of the relevant community who use virtual money. This position has practically not changed at present.

According to the European Central Bank, money must meet certain criteria:

    be used as a legal tender;
    take an active part in money circulation;
    be a means of payment of a certain state.

Thus, regular paper currency and coins are considered legal tender. At the same time, the legal regime of virtual money does not provide grounds for their inclusion as real currency. After all, they do not have the necessary details listed above. They can be used in some areas, but do not have an official status in any state. They can be seen as a kind of substitute for fiat currency. Accordingly, the question of the applicability of banking secrecy in relation to payment transactions made using electronic money remains open. 

What do users themselves think about this?

According to people who actively use virtual money, they have the same value as fiduciary currencies. Cryptocurrency is quite possible to pay for the necessary goods or services. It also has a number of undeniable advantages over paper notes:

    Prompt execution of payment transactions. Currently, electronic money makes it possible to instantly pay. This is helped by numerous payment systems, for the use of which a small commission is charged.
    The availability of cryptocurrency is also important. After all, electronic payment systems work around the clock, seven days a week and holidays. This is very convenient for a client who does not need to adjust to the work schedule of a financial institution.
    The ability to make payments all over the world. Payment systems work with almost all countries of the world. Therefore, there is no difficulty in sending a payment to the other side of the world.
    High level of security for payment transactions. Cryptocurrency is actually an encrypted digital format that is very difficult to crack. User accounts of payment systems are reliably protected thanks to modern technologies. In order to legally confirm the execution of a transaction with electronic money, it is necessary to enter not only the login and password for the account, but also a one-time code that comes to the mobile phone of the system participant.
    Free convertibility. Numerous payment systems and exchange services allow you to easily exchange cryptocurrency for regular money. Experienced users recommend performing exchange operations on specialized services and exchanges, since the internal rate of most payment systems is always below the market rate.

Despite the fact that the legal regime of electronic money remains uncertain, the position of cryptocurrency in the market is strengthening every day. This is evidenced by the increase in outlets where you can pay with virtual funds. And all business on the Internet is based on electronic means of payment.
 

The state of virtual currency at the present stage

Currently, the banking systems of some European countries have issued a warning against making payments using electronic money. From a legal point of view, most states have not outlawed cryptocurrency. Only the governments of Ecuador and Bangladesh decided on such actions. It should be noted that in these countries only national means of payment can be used.

At first, the Thai authorities also banned virtual money, but after a short time this restriction was lifted. For the sake of fairness, it must be said that operations with cryptocurrency are allowed to be carried out under certain conditions. The Chinese people can use electronic money at their own risk. But it is not possible to make an operation in the bank.

As for Europe, in many countries the issue of the legal regime for the use of electronic money has been positively resolved at the highest legislative level. The Spanish authorities have recognized Bitcoins as an electronic payment system. Cryptocurrency transactions are governed by local laws. So, gambling establishments working with virtual currency must have an appropriate license. Some retail establishments in Madrid sell goods for electronic money. They plan to create the so-called Bitcoin Boulevard on one of the busiest streets in the city.

The authoritative German publication quotes the words of the Minister of Finance, according to which the government recognized the cryptocurrency as a means of mutual settlements between individuals. In the near future, it is planned to amend tax legislation so that such transactions are subject to fees. Such a decision will make Germany the first country in the world to officially allow business using electronic money. It is worth mentioning that it is in Germany that a well-known financial institution called Fidor is located. This bank quite officially serves cryptocurrency exchanges located in Europe.

As for the USA and Australia, in them the cryptocurrency is equated to property assets. The Hong Kong authorities consider it to be a virtual value that can be used as payment for goods purchased or services received. Cryptocurrency machines have already been installed in most European countries. Restrictions at the legislative level are still introduced in Kyrgyzstan and Iceland. But even there, everyone can keep virtual money without the right to use it.
 

How is the situation in Russia

At the present stage, electronic money in Russia has not been legally recognized. And its not even about the lack of a legislative base, because relatively few countries can boast of developments in this direction. The negative attitude on the part of the prosecutors office and the Central Bank has borne fruit. Most of the companies that have already worked or were ready to start activities using cryptocurrency have abandoned their intentions. Many of these businesses have gone through a series of unpleasant inspections. The official position of the authorities was very clearly formulated in a statement from the prosecutors office, in which virtual money was called a surrogate for legal currency. A law banning virtual currencies is expected to be passed in the near future.