This is the first in a series of articles considering legal issues relating to bitcoin, cryptocurrencies and blockchain in the UAE.In this article we focus on the legal status of bitcoin and address the question of whether bitcoin is banned in the UAE.In part two we will consider the case for regulating bitcoin and cryptocurrencies and in part three we will consider legal issues relating to the adoption of blockchain technology by public and private entities in the UAE.Recent developments in the payments regulatory environment in the UAE have turned a spotlight on the legal status of bitcoin and other cryptocurrencies in UAE.On 1 January 2017, the UAE Central Bank published the “Regulatory Framework For Stored Values and Electronic Payment Systems” (see also United Arab Emirates – the New Digital Payments Regulatory Landscape).The focus of the Regulations was “to facilitate robust adoption of digital payments across the UAE in a secure manner,” but the Regulations contained the following statement which initially caused some concern among the cryptocurrency community in the UAE: “D.7.3.

Provisions for Virtual Currencies – All Virtual Currencies (and any transactions thereof) are prohibited” On its own terms, this statement was open to one possible interpretation as banning bitcoin and all other cryptocurrencies in the UAE.On 1 February 2017, the Governor of the UAE central bank, His Excellency Mubarak Rashed Khamis Al Mansouri, issued a statement to Gulf News saying that “these regulations do not cover ‘virtual currency’” and “these regulations do not apply to bitcoin or other cryptocurrencies, currency exchanges, or underlying technology such as Blockchain.” He further added that virtual currencies are under review by the Central Bank and new regulations will be issued as appropriate.This, and the report from the Dubai Supreme Legislation Committee in November 2016 that it was considering “the present and future of the legislative and legal frameworks related to cryptocurrency known as Bitcoin” is a very welcome signal that the UAE is seeking to develop mature regulatory environment for the use of bitcoin and other cryptocurrencies and we eagerly await further guidance from the UAE authorities on this subject.

In the interim, the question remains – what is the current legal status of bitcoin in the UAE?Bitcoin – a currency or a commodity?A threshold question in considering the legal status of bitcoin is whether it is classified in a jurisdiction as a commodity (like gold) or a currency (like dirhams or US dollars).There is no clear international consensus on this question at the moment – in the US, bitcoin has been treated as a commodity by the Commodity Futures Trading Commission and in the European Court of Justice, bitcoin has been treated as a currency for VAT purposes.valeur du bitcoin en directWhy does this matter?turn litecoin to bitcoinIt matters for a number of reasons: What about blockchain?bitcoin exodus addressIs it treated the same way as bitcoin and cryptocurrencies?sell bitcoin amsterdam

It is very important to make a distinction between blockchain as an enterprise and social technology and bitcoin as simply one use case, albeit the most successful use case to date, of that technology.At a very basic level, a blockchain is a distributed ledger that records bitcoin transactions and is akin to an electronic database ledger used by financial services organizations to record fiat currency transactions.ethereal wellness nycWe will discuss the laws applicable to the use of blockchain by a public or private sector entity in a future article, but in terms of asking whether or not blockchain is permitted in the UAE, it would appear that there are no laws that prohibit the use of blockchain as an alternative to a more traditional database ledger.bitcoin japan adoptionWhere next for bitcoin and blockchain in the UAE?rising bitcoin japan

Bitcoin and blockchain appear to be on the radar of the UAE Government and the UAE Central Bank.The above report from the Dubai Supreme Legislation Committee notes that the UAE, “should be among the first in the region and the world to establish a legislative framework and a financial and organisational structure for this technology.” This would be a welcome development and in the next article we will set out the case for regulating bitcoin and cryptocurrencies and outline some possible approaches to creating a regulatory environment that protects confidence in the UAE’s financial systems, protects the consumer, supports the UAE’s smart government initiatives and drives innovation and growth in the fintech, payments and blockchain sectors.bitcoin legal frameworkBlockchain 101Blockchain for businessBlockchain for investors Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of BlockgeeksAccording to VICE Motherboard, In June 2015 one Bitcoin transaction required the same amount of electricity as powering 1.57 American households for one day, of which the average sized home is approximately 2700 square feet.To give some global context, 1.57 American homes roughly equals 20 Hong Kong homes or 11 mainland China homes.bitcoin scams south africa

As the Bitcoin network grows so does electricity demand and today the average Bitcoin transaction costs as much as powering 3.67 average American homes for one day, or 46.75 Hong Kong homes and 25.7 mainland China homes, respectively.In June 2015 the Bitcoin network was consuming enough energy to power 173,000 American homes and today that figure has grown to 1,018,762 which represents a ~6x increase.trade bitcoin dogecoinIf we assume it’s still early days of this ecosystem where Bitcoin can process seven transactions per second, then just how energy efficient and sustainable will it be as we begin to imagine scaling out Bitcoin so transactional throughput and volume can compete with the likes of VISA and its 24,000 transactions per second?The average US household uses 10,000 to 12 000 kWh in electricity each year, about the same as would be required to generate four Bitcoins worth a little under $1,000.litecoin hash rate vs difficulty

But the same average household has about $6,000 in cash on hand and savings accounts, and around $15,000 in credit card balances.Switching even a small part of a typical household’s financial transactions to Bitcoins must therefore entail a massive increase in electricity use.[ 3]The price of Bitcoin has increased of late.However, kWh, fiat currency, and credit card balance variables have not and so the conclusion is still same; mass adoption of Bitcoin across US households will result in very large increases in electricity use relative to existing financial systems.Typically, counterarguments from Bitcoin maximalists describe the utility or importance of Bitcoin to humanity such as pundits like Trace Mayer who has compared Bitcoin’s importance or relevance to that of Copernicus observing the contraction and expansion of the monetary supply or Sir Isaac Newton giving us the gold standard (skip to 1:12 in the video below)Other counterarguments describe Fiat currency creation and distribution costs, such as printing bills or minting coins or the cost of building a bank or credit union branch, however the latter argument is less impactful given that substantial number of branches that have already closed and are projected to close over the next decade as consumer preferences switch to mobile banking.Over the next decade, as many as half of all U.S.instant bitcoin reddit

bank branches could still disappear, according to Keefe, Bruyette & Woods, a financial services research firm.To give some more comparative context with respect to the electricity cost of Bitcoin, CERN uses 1.3 terawatt hours of electricity annually to power the Hadron Collider particle accelerator versus the 11 terawatt hours (and rapidly growing) of electricity annually that Bitcoin consumes.berita bitcoin indonesiaSome may argue this comparison is too simplistic and ‘apples to oranges’ but the annual terawatt hour consumption figures persist none the less, and Bitcoin costs roughly 10x more energy than CERN Meanwhile, most, if not all of us will probably find it very difficult to demonstrate a cost/utility argument in support of Bitcoin having 10x more benefit than CERN.bitcoin adoption in indiaIt is also worth noting that the Hadron Collider recently upgraded and became more powerful, yet is unlikely to grow its consumption requirements anywhere near the pace of Bitcoin and, in fact, heavy emphasis is placed on sustainability and energy efficiency within the program.During the LHC’s 2015-2018 run, Claudet will be watching energy consumption closely, looking for ways to improve energy efficiency while still giving the scientists the energy they need.box bitcoin faucet

“We are funded by public budgets, and we have to be respectful of these public budgets in our attitude toward energy.”Bitcoin, on the other hand, has no such demonstrable ethos or regard for energy efficiency or sustainability.Instead, we’re seeing bigger and more energy intensive mining farms popping up with greater frequency coupled with growing exuberance and enthusiasm about the rising Bitcoin price.We’re also witnessing some questionable and unsubstantiated statements coming from the Bitcoin mining farm community such as this quote from Chinese mining farm magnate Chandler Guo who states“Today, the energy companies are jumping on the bitcoin mining business.bitcoin coxBefore that, we [miners] bought electricity from them [energy companies] to mine bitcoin.mt gox bitcoinToday, the seller who is selling electricity to us, they’re mining bitcoin by themselves.”In fact, we see numerous instances where Chinese Bitcoin mining operations steal electricity from various local sources including oil plants.bitcoin mt gox

On April 29, 2016, Yushulin Oilfield Power Management Branch discovered abnormal power consumption in two wells and reported it to local police.A house was discovered within 300 meters where 130 bitcoin machines were seized, presumably illegally siphoning the electricity from the production plant for bitcoin mining.The Oilfield Security Department then cracked down on electricity being stolen from oil fields resulting in 1,200 units of bitcoin miners from twelve locales having been seized.In any case, if no changes are made to the system, the viability of the currency itself might be challenged because the seigniorage (defined as the difference between the face value of money and what it cost to make it) could be minimal or negative.bitcoin api wiki/prestonjbyrne/status/815612748071632897 and thank you to Digiconomist for their excellent piece digiconomist.net/beci AboutLatest PostsLatest posts by john lilic (see all) Bitcoins Energy Consumption An Unsustainable Protocol That Must Evolve?wie bitcoin generieren