Cryptocurrencies Like Bitcoin: Is it Money or an Asset?

For a broader coverage of this topic, see Bitcoin. The legal status of bitcoin varies substantially from country to country and is still undefined or changing in many of them. While some countries have explicitly allowed its use and trade, others have banned or restricted it. According to the European Central Bank, traditional financial sector regulation is not cryptocurrencies Like Bitcoin: Is it Money or an Asset? to bitcoin because it does not involve traditional financial actors.

Others in the EU have stated, however, that existing rules can be extended to include bitcoin and bitcoin companies. The European Central Bank classifies bitcoin as a convertible decentralized virtual currency. In July 2014 the European Banking Authority advised European banks not to deal in virtual currencies such as bitcoin until a regulatory regime was in place. You can help by adding to it. The purchase, sale, use, and holding of so-called virtual currency is prohibited.

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Virtual currency is that used by internet users via the web. It is characterized by the absence of physical support such as coins, notes, payments by cheque or credit card. Any breach of this provision is punishable in accordance with the laws and regulations in force. On 19 December 2017, Abdellatif Jouahri, governor of Bank Al-Maghrib, said at a press conference held in Rabat during the last quarterly meeting of the Bank Al-Maghrib’s Board of 2017 that bitcoin is not a currency but a “financial asset”, He also warned of its dangers and called for a framework to be put in place for consumer protection. It noted that “Central bank cannot control or regulate bitcoin. Central bank cannot control or regulate blockchain.

Just the same way no one is going to control or regulate the Internet. Payments System Department at CBN, Mr. This ban is expected to be temporary as reported by CBC to evaluate the “evolving market” of bitcoin and other currencies. In September 2016, a federal judge ruled that “Bitcoins are funds within the plain meaning of that term”. In June 2018, Supreme Court of the United States debated bitcoin future for the first time. Ecuador’s new project would be controlled by the government and tied directly to the local currency—the dollar. Users will be able to pay for select services and send money between individuals.

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This was slated to begin in mid-February 2015. Gerhard Schubert, Chairman of the Board for Regal Assets DMCC. DMCC’s Crypto-commodities license is for Proprietary Trading in Crypto-commodities only. The Central Bank of Jordan prohibits banks, currency exchanges, financial companies, and payment service companies from dealing in bitcoins or other digital currencies. While it warned the public of risks of bitcoins, and that they are not legal tender, bitcoins are still accepted by small businesses and merchants.

The government does not recognise cryptocurrency as legal tender or coin and will take all measures to eliminate the use of these cryptoassets in financing illegitimate activities or as part of the payments system,” Jaitley said. In early 2018 India’s central bank the Reserve Bank of India announced a ban on the sale or purchase of cryptocurrency. The bank has issued an official notice on its website and has also posted the news on its official Twitter account. On 16 December 2013 it was speculated that the PBOC had issued a new ban on third-party payment processors from doing business with bitcoin exchanges, however a statement from BTC China suggests this isn’t accurate, and rather payment processors had voluntarily withdrawn their services. On 1 April 2014 PBOC ordered commercial banks and payment companies to close bitcoin trading accounts in two weeks. Trading bitcoins by individuals is legal in China.

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On 9 February 2017, multiple bitcoin exchanges in China delayed or paused bitcoin withdraw service, with or without announcement. In early 2018 the People’s Bank of China announced the State Administration of Foreign Exchange led by Pan Gongsheng would crack down on bitcoin mining. He also decided that bitcoins will not be regulated by HKMA. However, the authority will be closely watching the usage of bitcoins locally and its development overseas.

On 7 March 2014, the Japanese government, in response to a series of questions asked in the National Diet, made a cabinet decision on the legal treatment of bitcoins in the form of answers to the questions. The decision did not see bitcoin as currency nor bond under the current Banking Act and Financial Instruments and Exchange Law, prohibiting banks and securities companies from dealing in bitcoins. According to Nikkei Asian Review, in February 2016, “Japanese financial regulators have proposed handling virtual currencies as methods of payment equivalent to conventional currencies”. The city of Hirosaki is officially accepting bitcoin donations with the goal of attracting international tourists and financing local projects. In 2017, the country’s government officially recognized bitcoin as a method of payment. There are no laws in South Korea regulating the use of bitcoin at present.

On 12 December 2013, the president of the Bank of Korea recommended at a press conference that bitcoin be regulated in the future. Regulators in South Korea have reportedly banned the trade of futures contracts and other derivatives tied to bitcoin. Securities and Shinhan Financial Investment to cancel seminars marketed towards bitcoin futures investors. Regulators have warned the public that bitcoin does not have legal protection, “as the currency is not issued by any monetary authority and is therefore not entitled to legal claims or guarantee of conversion”.

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While bitcoin is not illegal in Taiwan, financial institutions have been warned by regulators that necessary regulatory actions may be taken if they use it. On 6 December 2013, Perng Fai-nan said that bitcoin is only used in certain communities. Besides, he also opined that the value of bitcoin is a bubble and is highly volatile. Therefore, he advised the public against the speculation of bitcoins to prevent making a loss during the process.

The central bank is closely watching the development of bitcoin and plan to impose regulations in the future. CBC issued a joint statement which warns against the use of bitcoins. It is stated that bitcoins remains highly volatile, highly speculative, and is not entitled to legal claims or guarantee of conversion. On 5 January 2014, FSC chairman Tseng Ming-chung stated that FSC will not allow the installation of bitcoin ATM in Taiwan because bitcoin is not a currency and it should not be accepted by individuals and banks as payment. However, despite this, three of the four major convenience store chains in Taiwan make available purchases of bitcoin through their kiosk systems, and the largest chain now allows bitcoin to be used for purchases of goods.

On 4 October 2017, BNM announced that The decision on whether cryptocurrencies should be banned in Malaysia will be taken by them before the end of the year. Thai based bitcoin exchanges can only exchange Digital Currencies for Thai Baht and are required to operate with a Thailand Business Development Department e-commerce license. The SEC Thailand encourages access to funding for businesses, including high potential tech startups, and realizes the potential of ICO in answering startups’ funding needs. As of February 2018 the Thai central bank has prohibited financial institutions in the country from five key cryptocurrency activities. Advising customers on cryptocurrency investing and trading.

This will require all customers of Bitcoin Exchanges to provide purchase price information to the Exchange, who will be required to track and report all trades. The State Bank of Vietnam has declared that the issuance, supply and use of bitcoin and other similar virtual currency is illegal as a mean of payment and subject to punishment ranging from 150 million to 200 million VND, but the government doesn’t ban bitcoin trading as a virtual goods or assets. Szymon Woźniak of the Ministry of Finance made an official announcement on the legality of bitcoin on 18 December 2013 at a conference at the Warsaw School of Economics stating that the Ministry of Finance does not consider bitcoin illegal and does not want to hinder its development. Swiss government to evaluate the opportunities for utilization of bitcoin by the country’s financial sector.

In response to the parliament postulates, the Swiss Federal Council issued a report on virtual currencies in June 2014. The report states that since virtual currencies are not in a legal vacuum, the Federal Council has concluded that there is no need for legislative measures to be taken at the moment. In 2016, Zug added bitcoin as a means of paying city fees, in a test and an attempt to advance Zug as a region that is advancing future technologies. Extension of the validity period of the special legal regime of the High-Tech Park until January 1, 2049, and expansion of the list of activities of resident companies.

Social Protection Fund according to the national average figures, and not the actual salaries. Exemption of foreign companies providing marketing, advertising, consulting and other services to the residents of the High-Tech Park from paying value-added tax, as well as paying income tax, which allows to promote IT products of Belarusian companies in foreign markets. Simplification of the regime of currency transactions for residents of the High-Tech Park, including the introduction of a notification procedure for currency transactions, the cancellation of the mandatory written form of foreign trade transactions, the introduction of confirmation of the conducted operations by primary documents drawn up unilaterally. Simplification of the procedure for recruiting qualified foreign specialists by resident companies of the High-Tech Park, including the abolition of the recruitment permit, the simplified procedure for obtaining a work permit, and the visa-free regime for the founders and employees of resident companies with a term of continuous stay of up to 180 days. The Estonian Ministry of Finance have concluded that there is no legal obstacles to use bitcoin-like crypto currencies as payment method.

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Traders must therefore identify the buyer when establishing business relationship or if the buyer acquires more than 1,000 euros of the currency in a month. Rather than a currency or a security, a bitcoin transaction is considered a private contract equivalent to a contract for difference for tax purposes. EU VAT Directive, banking services and therefore VAT exempt. This is because the court classified bitcoins as payment instruments – whereas most countries treat their use as an unregulated method for the exchange of goods, or even as a crime.

On 12 March 2017, the Central Bank amended its rules. With the new rules, wide and general exemptions have been granted from the restrictions of the Foreign Exchange Act No. The Norwegian government stated in February 2017 that they would not levy VAT on the purchase or sale of bitcoin. The Swedish jurisdiction is in general quite favorable for bitcoin businesses and users as compared to other countries within the EU and the rest of the world.

In 2017, the country’s prime minister Joseph Muscat announced the approval of a national strategy to promote bitcoin and blockchain technology. Muscat specifically addressed the bitcoin blockchain’s ability to handle, store and process sensitive data in an immutable and decentralized ecosystem. In 2016 the National Bank of Republic of Macedonia published a press release regarding an investigation it made into ONECOIN, and discouraged the citizens from investing in it since it was most likely a scam. In the same press release the NBRM quoted the law on Foreign Exchange Operations, but since cryptocurrencies do not constitute a foreign currency as they are quoted by the law, it leaves them unregulated.

It should be noted that the only legal tender for payment in the country is the Macedonian Denar, which means payment with any other regular or crypto currency is prohibited. Bitcoin is treated as ‘private money’. When bitcoin is exchanged for sterling or for foreign currencies, such as euro or dollar, no VAT will be due on the value of the bitcoins themselves. However, in all instances, VAT will be due in the normal way from suppliers of any goods or services sold in exchange for bitcoin or other similar cryptocurrency. They have proposed a code of conduct that includes the provision of Anti-Money Laundering and extra security measures. Frequently Asked Questions Find answers to recurring questions and myths about Bitcoin.

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Is Bitcoin really used by people? How difficult is it to make a Bitcoin payment? What are the advantages of Bitcoin? What are the disadvantages of Bitcoin? Can I make money with Bitcoin? Is Bitcoin fully virtual and immaterial? What happens when bitcoins are lost?

Can Bitcoin scale to become a major payment network? Is Bitcoin useful for illegal activities? What about Bitcoin and consumer protection? Doesn’t Bitcoin unfairly benefit early adopters? Won’t the finite amount of bitcoins be a limitation?

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Won’t Bitcoin fall in a deflationary spiral? Isn’t speculation and volatility a problem for Bitcoin? What if someone bought up all the existing bitcoins? What if someone creates a better digital currency? How much will the transaction fee be? What if I receive a bitcoin when my computer is powered off?

Isn’t Bitcoin mining a waste of energy? How does mining help secure Bitcoin? What do I need to start mining? Hasn’t Bitcoin been hacked in the past? Is Bitcoin vulnerable to quantum computing? Bitcoin is a consensus network that enables a new payment system and a completely digital money. It is the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen.

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From a user perspective, Bitcoin is pretty much like cash for the Internet. Bitcoin is the first implementation of a concept called “cryptocurrency”, which was first described in 1998 by Wei Dai on the cypherpunks mailing list, suggesting the idea of a new form of money that uses cryptography to control its creation and transactions, rather than a central authority. The first Bitcoin specification and proof of concept was published in 2009 in a cryptography mailing list by Satoshi Nakamoto. Satoshi’s anonymity often raised unjustified concerns, many of which are linked to misunderstanding of the open-source nature of Bitcoin.

The Bitcoin protocol and software are published openly and any developer around the world can review the code or make their own modified version of the Bitcoin software. Just like current developers, Satoshi’s influence was limited to the changes he made being adopted by others and therefore he did not control Bitcoin. Nobody owns the Bitcoin network much like no one owns the technology behind email. Bitcoin is controlled by all Bitcoin users around the world. While developers are improving the software, they can’t force a change in the Bitcoin protocol because all users are free to choose what software and version they use. From a user perspective, Bitcoin is nothing more than a mobile app or computer program that provides a personal Bitcoin wallet and allows a user to send and receive bitcoins with them. This is how Bitcoin works for most users.