Group tasks govts on virtual currencies

By Tunde Akinola, London   |   31 August 2015   |   2:35 am  

Bitcoin is a virtual currency.

Bitcoin is a virtual currency.

A Commonwealth working group has urged member governments to review their legislative response to virtual currencies, such as bitcoin, to ensure they are addressing associated risks and avoid stifling innovation.

A virtual currency is a type of unregulated, digital money, which is issued and usually controlled by its developers, used and accepted among the members of a specific virtual community.

At the end of a three-day conference at the Commonwealth Secretariat in London, the newly formed Commonwealth Virtual Currencies Working Group concluded that such payment instrument has the potential to benefit countries and drive development.

The group is made up of Nigeria, Australia, Barbados, Kenya, Singapore and Tonga, together with the International Monetary Fund and World Bank.

The role of the group is to raise awareness, develop capacity among member states and provide technical guidance.

After hearing from experts from the banking sector, academia, virtual currency operators, users and law enforcement agencies, the group issued a set of recommendations, which urged countries to regulate virtual currencies and strengthen law enforcement to counter risks such as criminal misuse.

The group noted that member states should consider the applicability of their existing legal frameworks to virtual currencies and where appropriate, they should consider adopting them or enacting new legislation to regulate the payment instrument.

The group also called for governments to provide education and funding for training for law enforcement, prosecutors, judges, regulatory authorities and the financial sector.

A Nigerian member of the group and founder of the fashion label-Minku, Kunmi Otitoju, accepted bitcoin for high-end handbags.

With a background in computer science and fashion design, she was an early adopter of bitcoin in Nigeria.

Otitoju stated: “Bitcoin opened up a new interest base for me. There’s been a lot of talk about how it can transform Africa but to acquire or mine bitcoin you need really powerful computers.

“Africa has not been a place that has generated many bitcoin, so you have to buy them and when you factor in the volatility of their value, it’s very risky.

“Globally, digital currencies such as bitcoin are a new thing. No one knows what their usefulness will be, what the ‘killer app’ that will make them indispensable will be. We just have to keep using them and creatively expanding their use. Their value will emerge over time,” she said.

Tonga’s Acting Attorney-General and one of the members of the working group, Aminiasi Kefu, said: “From Tonga’s perspective, virtual currencies are a phenomena that has already arrived. Today real estate, buildings and businesses held or owned by individuals resident in Tonga are being advertised for sale on the Internet for virtual currency, namely bitcoin.

“Small jurisdictions such as Tonga must therefore, prepare themselves for this new wave of development, both to allow our citizens to embrace and advance their prosperity through this new technology, but at the same time protect our citizens and infrastructure from the criminal usage of virtual currencies,” he added.

Virtual currencies- decentralised, digital representations of value traded between individuals bypassing banks, are gaining traction globally and have taken centre stage in debates about transparency, fairness and financial inclusion.

Some experts argue that these relatively new currencies, including bitcoin, could provide solutions to economic inequality by reducing transaction costs for remittances and providing secure mobile banking and payment systems for a large percentage of the global population that does not have a bank account or credit card.



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