The legality of cryptocurrency is a bit tricky in Bangladesh. A cautionary notice issued by the Bangladesh bank on December 24, 2017, said:
My translation:
Recently, it has been known from various news media outlets and the internet that online-based virtual currencies or cryptocurrencies namely Bitcoin, Ethereum, Ripple, Litecoin, etc. are being transacted on various exchange platforms. These virtual currencies are not legal currencies (legal tender) issued by the legal authority of any country, and therefore there will be no financial claim recognized against these virtual currencies. Transactions done using these currencies are not approved by the Bangladesh Bank or any other regulatory organization, and therefore the use of these virtual currencies is not supported by The Foreign Exchange Regulation Act, 1947; The Anti Terrorism Act, 2009, and The Money Laundering Prevention Act, 2012. The laws related to money laundering and the prevention of the financing of terrorism may be violated unintentionally when transactions with a nameless/pseudonymous partner are done using virtual currencies. Mainly: payment and settlement of monetary value take place through an online-based network, and as it is not recognized by any central authority/payment system/regulatory authority, customers (users) can face various risks including financial and legal risks.
Under the circumstances, to avoid the probable financial and legal risks, the general people are being requested to refrain from performing, assisting, and advertising transactions through virtual currencies such as Bitcoin.
Also, to understand the background information better, I'll append some commentary provided by Barristers-at-Law and Associates, Mahbub & Company below:
However, from the two cautionary notices published by the central bank, it is evident that the regulator has fallen short of “banning” or “criminalising” the use of bitcoin except in cases where it is used to commit an existing offence under the Foreign Exchange Regulation Act, the Anti-Money Laundering Act and the Anti-Terrorism Act. It could be argued that the use of regular currency to commit crimes under the same Acts would be similarly punishable, and as such while bitcoin itself is not illegal, its use to commit crime is.
Bangladesh Bank's declaration that it is not legal tender finds resonance with the regulatory response in most countries. However, it could be argued that bitcoin not being accepted or recognised as legal tender does not necessarily make it illegal. The legal basis of a “warning” published by the Bangladesh Bank is also questionable.
The Foreign Exchange Regulation Act and Money Laundering Prevention Act contain provisions for punishment and criminal liability, for trading, importing, and exporting currencies without authorisation of the Bangladesh or if not performed through an authorised dealer, and for illegally laundering proceeds of crime or foreign currency. The definition of currency is given in section 2(b) of the Foreign Exchange Regulation Act, which includes:
(i) all coins, currency notes, bank notes, postal notes, money orders, cheques, drafts, traveler's cheques, letters of credit, bills of exchange and promissory notes; and
(ii) such other similar physical or non-physical instruments, or both as may be notified by the Bangladesh Bank from time to time;”
Despite its name, bitcoin is not a coin, and also does not match any of the items listed in section 2(b)(i). As for section 2(b)(ii), there is a positive obligation upon Bangladesh Bank to make a statutory notification and declare that cryptocurrency or bitcoin is “currency” for it to be classified as such, but it has not done that till date. Thus, it appears that bitcoin or other virtual cryptocurrencies may not fall within the purview of the definition of “currency” under section 2(b) of the Foreign Exchange Regulation Act. That being the case, criminal offences relating to trading foreign currency without authorisation, arguably do not explicitly catch bitcoin or cryptocurrencies.
According to section 2(s) of the Money Laundering Prevention Act, foreign currency means any foreign exchange defined under section 2(d) of the Foreign Exchange Regulation Act. However, similarly, the definition of foreign currency in Money Laundering Prevention Act is referred to foreign “currency”, which, as discussed earlier, apparently does not cover bitcoin and cryptocurrencies.
It is not clear, upon what basis, the “warnings” regarding legality of bitcoin have been issued so far. The warnings also refer to the Anti-Terrorism Act which criminalises funding of terrorism, but the Act does not make any reference to bitcoin, cryptocurrency or any other currency whatsoever.
Despite Bangladesh Bank's warnings discussed above, the Acts of Parliament which they apparently are based upon, fall short of criminalising or even banning bitcoin or crytocurrency. However, the fact remains that Bangladeshi authorities are adamant to stop the use of bitcoin and are reportedly hunting bitcoin traders and miners.
In the wake of the global trend in the use of cryptocurrency, it is high time that Bangladesh comes up with a properly formulated regulatory response to bitcoin instead of going after users on an ad hoc basis. It is also vital for the central bank and lawmakers to join the global discussion on regulating cryptocurrency immediately and participate in concerted efforts to ensure that the use of this new technology is only for the good of the society and economy.
Miscellaneous: National Blockchain Strategy: Bangladesh
My question:
- Will it be illegal for me to code smart contracts for my potential clients in fiverr/upwork etc.? As far as I know, coding NFT smart contracts and minting websites don't require the transaction of cryptocurrencies. However, will I not be "assisting" cryptocurrency transactions? Bangladesh bank asked me to refrain from that when it said
Under the circumstances, to avoid the probable financial and legal risks, the general people are being requested to refrain from performing, assisting, and advertising transactions through virtual currencies such as Bitcoin.
Example gig: I'd like to do gigs like this. Will this be illegal in Bangladesh?
