Sanctions against dealing in Bitcoin

Question

Some countries are treating dealing in Bitcoin as seriously as drug-dealing and money laundering [0]. Suppose that

• you are a citizen of another country (and normally live in it) that does not have any wide-ranging laws against Bitcoin.

• you have a Bitcoin account in your own country (e.g. an authorised online crypto exchange).

• You then go on holiday to a country that does have such laws against Bitcoin, but you do not get involved in any buying/selling while you are there.

Assuming that the country you are visiting somehow comes to find out about your Bitcoin account back home, even though you never got involved in any buying/selling while you were on holiday, can that country's laws be applied against the Bitcoin account in your original country (or any other country)? In other words, for that particular country you are visiting (and as long as you are present in that country), is it an imprisonable felony for residents and visitors alike to have a Bitcoin account anywhere in the world?

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[0] Draft law proposes 10-year jail term for dealing in cryptocurrency (7 June 2019)

Answer 1

Yes

When you enter the jurisdiction of a country, you are subject to its laws.

You are not, in general, subject to punishment for things you did before you entered its jurisdiction but if possession of bitcoin (or anything else) is illegal in that country, then possessing that thing makes you subject to prosecution.

Answer 2

It usually depends on the law in question. For the most part countries don't worry about what non-citizens get up to abroad. If you steal a car in France you are not going to be prosecuted by Japan if you should travel there, even though theft is a crime in both countries. However if you are in country X and trade bitcoins with someone in country Y in violation of the law of Y, then Y will probably view you as having broken their laws.

For instance, the USA applies this principle to computer misuse, as Gary McKinnon found out the hard way. He was in the UK, but attacked American computers.

Answer 3

This is going to depend on the law in question, and how that law is interpreted by the courts of the nation in question.

The news story linked in the question said that the proposed law would make it a crime to "hold" bitcoins. However, that story was not based on the final text of the law, which was not yet final when the story was written.

I have not seen the actual text of the law. If it does make it a crime to "hold" bitcoins, than any Bitcoin owner who visits the country would, at least in theory, be committing a crime d be subject to arrest and prosecution.

Whether the officials of the country (apparently India) would enforce such a law on a short-term visitor who did not engage in any cryptocurrency-based transactions while in the country is questionable, but the authorities could choose to take such action.

However, according to the November 30, 2021 story "A look at cryptocurrency’s journey so far in India" from The Indian Express:

From an outright ban on cryptocurrencies in 2016 to an upcoming Bill for regulation—the government’s stance on digital assets has changed considerably over the past few years. The upcoming Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 is different from the earlier one – ‘Banning of Cryptocurrency and Regulation of Official Digital Currency Bill, 2019.’

While the older law sought to impose a complete ban on all crypto-related activities including mining, buying, holding, selling, and dealing, the new one will look to make a clear distinction when it comes to its often used categorisation as a currency.

Currently, there is no regulation or any ban on the use of cryptocurrencies in the country. The Reserve Bank of India’s (RBI) order banning banks from supporting crypto transactions, was reversed by the Supreme Court order of March 2020.

So it does not seem (if that news story is correct and current) that there is no such law in force at the moment. But if such a law were passed and upheld by the courts of the country that passed it, it might be enforced even against tourists if the country chose to do so.

Answer 4

for that particular Country you are visiting (and as long as you are present in that Country), is it an imprisonable Felony for Residents and Visitors alike to have a Bitcoin account anywhere in the World?

It largely depends on (1) the terms of the enacted law, (2) the legislative intent thereof, (3) the constitutionality of that law, and (4) its compatibility with the international treaties to which that country is a party.

It is common for legislative drafts to be amended multiple times before enactment. The nature of that back-and-forth process is political. The article reflects that the matter is just in its drafting stage. The terms and scope of initiative might be toned down if/when it becomes legislation.

The alleged motive for the prohibition is "the high chances of cryptocurrencies being misused for money laundering". Based on that, outlawing any and all use of cryptocurrencies seems excessively stringent because not all crypto-trading is for purposes of money laundering. Instead of deciding that some vague, probabilistic criterion (i.e., the "high chances") is a reasonable premise for a 10-year imprisonment, a smart legislator would ask experts in the crypto-industry for their estimate of what percentage of crypto-trading relates to money laundering.

Globalization and trading agreements de facto require lawmakers to ponder the ramifications their legislative initiatives would have in the economy and relations of that country. For instance, a needlessly stringent prohibition would lead crypto-exchanges to relocate --and pay taxes-- elsewhere.

Lastly, a prohibition across the board might raise constitutional issues as to commerce and also for impliedly presuming that all holders of cryptocurrencies (which is a form of barter) are money launderers.