Discuss about the Features of Legal Regulation of Electronic.
Among every other profession, the legal profession is considered as a pious and noble profession and the people practicing it are said to hold a strong dogma of ethics and morals in order to put and give an honest and service to the society through the role played by them in their profession. Over time, strict rules regarding the profession have been developed throughout the world. However, in this case, special reference is made regarding the legal norms and ethics which prevail in South Africa, which like those in any other part of the world, are very strict and severe as to their implication and violation respectively. Breach of any professional ethics may even dismiss the practicing licence of the concerned legal practitioner and stuck his name out of the enrolment of names of legal practitioners. One important feature of the rules and ethics of the profession is that they are not mentioned in any legislation and are hence identified on the basis of the ideologies and principles of the senior practicing professionals and guided as per their perspective and outlook.
Coming down to the issue of virtual money in South Africa, there is one important aspect which requires to be mentioned giving due importance and mention. The tax legislation in South Africa covers a very vast extent as to its application, and therefore, analysis of every aspect of it would be difficult due to its extensive nature. The current legislation of South Africa although does not make any distinctive and particular provision regarding Bit coin, it has suggested a provision as to the issue stating that the concerned authorities of South Africa have the privilege to to make amendments and alterations in the country’s legislation as they consider it to be convenient and essentia.
Every related provision regarding the banking services and the financial services in South Africa include a series of activities which are highly regulated. In this aspect, financial technology has done a great deal in making a significant and distinct challenge to the existing framework. This challenge has been however, accepted by the South African Reserve Bank and initiatives are duly taken to figure them out and meet them. In this aspect it is important to mention that financial technology has a great potential to alter and frame down the existing model of financial and banking working structure, which essentially follows the traditional way of working. Financial technology has a related aspect known as Block Chain which gives a provision to the concerned people according to which the working of the middleman and the associated cost as to his service can be cut short or eliminated from the whole range of activities in this aspect. This system can be disruptive as it has the users have the ability to record the transactions of any person with any other person. As a result of all these aspects, the traditional provisions relating to financial and banking services have become greatly irrelevant and the financial technologies which are based on solutions which are framed upon self service framework which have gained prevalence.
Certain risks have been associated with virtual currencies which are figured out by the South African Reserve Bank, and some of them are claimed to be related with the Block Chain technologies. Certain risks associated with this system include risks related to credit and liquidity, stability of price, money laundering risks and customer risks. An important aspect regarding Block Chain system is that, it is not regulated and controlled by a single person and hence, the entire system lacks in a well defined provider of centralised services who could be inquired by any regulator in case of any supervision. An effective study of the entire process gives an assumption that the regulating framework regarding payment can be easily accommodated with the use of the Block Chain services. Some hold the assumptions that similar regulating framework regarding payment processes can be easily synchronised with the use of Block Chain services. Another set of intermediary ideas have been brought by many researchers which state that the same regulatory framework as followed by the concerned financial technologies are adopted in the Block Chain services. As a consequence to all these factors, if the regulating framework intends to the entire system with the help of a central figure or a well defined management body, such services or programmes shall prove to be insufficient and inadequate, which means that due consideration and analysis is required for the fundamental and philosophical planning’s in the system of payment regulation.
The various researches regarding the affect and extended popularity of virtual currency has given rise to several hypothesis or ideologies which are needed to be discussed along with the other aspects related to the concept. Virtual currency does not exactly fall under the definition of money or currency in general terms under the ascertained legal perspective. It is more appropriately considered as digital money which is not issued by banks or by any credit insurance, or by any e-commerce institution. The emerging business models are an important factor in making any kind of research analysis regarding virtual currencies. They assess, store and transfer the units of virtual currency. Some of the researches are designed with an entirely different and new technical characteristic with the aim to improve the functioning and working of certain essential ingredients in the ecosystem dealing with virtual currencies. Apart from all these factors, there is a unit called VCS which have grabbed the attention of a number of international institutions. The research works as made in accordance with VCS bring out the various disadvantages associated with the entire process which include lack of factors like transparency, clarity, and an attitude to continue, highly volatile character and excessive dependency on information technology management. However, the international institutions supporting VCS, after making sufficient research on such related issue have stated that all the researches have brought positive aspects regarding financial innovations and also by providing extra and additional means of providing payment alternatives to the customers.
The Financial Action Task Force (FATF) has issued a report which states that the coming of the issue of virtual currencies have not only emerged as a completely new dimension, but has also attracted the idea of investing in payment infrastructure which is entirely build on their particular working protocols. The main intention behind the working of these new payment mechanisms is providing new methods for transferring transaction and related data over the internet. FATF has brought with it a new aspect of financial innovations; while on the other hand, concepts and services like virtual currency programmes have initiated the matters of money laundering and terrorist financing, giving rise to several money risks and crime risks. The researches have thus, confined the approach regarding virtual currency to only payment, excluding products and services, thus limiting the entire discussions to only payments.
He matters regarding virtual money is important in several areas and fields which include those of enforcement of law, tax authorities and regulators of law or legal regulators. They all emphasise the ways and the related methods in which the aspect of virtual money fits into the framework of the above mentioned issues. The legality of virtual money would depend upon the identity of the person and the acts of the particular person regarding the work so done in order to gain of formulate the virtual money. The way to control the use of virtual money and the means to bring their circulation under control has made many legal practitioners and people working in the legal perspective conscious and alert. Also the means to control this issue of virtual money has been put in the forefront of the legal arena with sufficient interest and emphasis given to it. Whether virtual money is legal or not has been answered by many eminent legal practitioners in the most efficient way.
Virtual money can acquire the status of legal money and be considered to be legal based on the point and depending upon what its owner is doing with it, or how the owner of the virtual money is utilising it. Virtual money has been ever since the cause of money laundering and law professionals are always concerned about the fact that, currency has a feature of been decentralised. The law authorities of South Africa have made a distinction between decentralised digital currencies like web money, gold, etc and virtual money. Such authorities expressed their concerns that due to the improper regulation of off shore services, an opportunity may be given to the criminals in which they can use the acquired virtual money without been able to be traced. Such use of virtual money can be curbed essentially for fulfilling illegal and illicit initiatives. The virtual money so acquired is largely used for as a popular form of currency while trading in Silk Roads. Silk Roads are anonymous markets access to which can be attained only by browsing networks. The Silk Roads are primarily used for buying and selling of certain goods which are otherwise illegal throughout the world or globally, but are legal in many countries. Such goods include drugs like narcotics. Virtual currency has been named as ‘surrogate currency’ and a demand or call has been made to curb down its use and its availability as well and bring it in the category of ‘controlled substance’[12].
The regulations so put up may be on a nationalised basis or on the sub country level and they vary accordingly. Regulators and law practitioners work both at national and sub country level in order to draw a control over the possession and use of the virtual money. They allot guidelines regarding the way virtual currencies should be actually used and utilised on a welfare motive. Further, under these provisions, the transactions made with virtual currencies are classified as money service business or money transmitting business. In such cases, a distinctive feature called Anti Money Laundering Service is required to be undertaken along with another feature called Know Your Client measures in order to trace the business line and getting to know the people with whom the holders of virtual money are conducting business with.
A virtual stockholder is basically of three types. Each holder of virtual money can fall in more than one category and each such category has its own distinct features and its own individual legal considerations. Owners or holders of virtual money either spend them by investing in several businesses, or may hoard the virtual currency. As per the legal provisions dealing with virtual currency, those holders who hold them only for the sale and purchase of goods and services are using it legally. In this aspect, mention is to be given to the finCEN concept or guidance which deals with this issue which says that, any owner of virtual currency who creates a convertible unit of virtual currency which is essentially used for the purpose of buying and purchasing real goods and services, is not exposed to the rules and regulations as a money transmitter, rather, is the one who is the user of convertible virtual currency. However, as per the same concept, those owners or holders of virtual currency are actually the ones who create such currency and exchange them for flat notes, are the ones who can be termed as the danger or threat to the entire system or procedure, and are not considered to be safe. This concept further says that a person who owns virtual currency and uses it to make convertible units of such currency, so as to sale those created units of currency to people in exchange of real currency, so as to transmit the money to another location, are termed as money transmitters and pose a serious threat. The miners are considered to fall under this particular category, and they have asked for a real clarification for putting them under such category, which has been duly provided.
The third category includes those persons who work as an exchange and accepts the convertible currency which is decentralised, from one person and passes it to another, as a part of the exchange or transfer of the currency in the form of funds, or any other value, which can be substituted in the place of currency.
The entire study and analysis made in this project have clearly brought down all the related, virtual and direct aspects of virtual currency. Its main element of Bit coin has elaborately discussed by giving due emphasis on every term and issue related to it. The various ways in which the harmful effects of virtual currency can be duly regulated have also been discussed accordingly. The risks which are associated with regulating and efficiently dealing and regulating virtual currency gave been clearly chalked out. The research hypothesis and the research methodologies so associated have been keenly illuminated giving a spotlight on every research made on this upcoming topic of virtual currency. Lastly, the legal provisions associated with the limitation and control along with the analysis of the concept has been elaborately discussed.
Conclusion
The reports so made by the legal authorities of South Africa have been evaluated by the jurisdiction of several other countries and held to be apt and appropriate. The prescribed regulations and the given statements have been considered by several government offices who deal with the issues regarding virtual currencies and also by government offices who deal with virtual currency handling in business transactions. The various impacts and consequences are studied and appropriate measures are also reached and further innovations are planned to be achieved with progress of time.
References
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