October 15, 2014
Bitcoin, the popular virtual currency is gaining traction in global markets as a form of currency. An array of merchants supports Bitcoin including retailers, e-commerce sites, hotels, restaurants and many others. All of this is possible thanks to legal approvals by Governments and financial bodies. Some prominent nations and financial bodies which approve Bitcoin are:
Companies are allowed to trade in Bitcoins. The Australian Taxation Office intends to work with Bitcoins and release tax guidelines for the same. The governor of Reserve Bank of Australia has positive views towards usage of Bitcoins.
The Canada Revenue Agency has clarified the tax treatment of Bitcoin. Numerous acts and legislations framed by the federal government now apply to Bitcoin as well.
The country’s Financial Supervisory Authority is amending existing financial legislations in order to cover virtual currencies as well. The Danish Tax Board has decided not to tax profits and losses occurring through Bitcoin trading.
The Finance Industry officially recognizes Bitcoin as a unit of account and has allowed its use for tax and trading in the country. It can now be used in multilateral clearing circles as well.
Although the government prohibits banks and securities from dealing in Bitcoins, but individuals and legal entities can receive Bitcoins in exchange of goods and services.
The government is only concerned about illegal usage of Bitcoin and will develop legal framework protecting those dealing in Bitcoins.
The Monetary Authority of Singapore recognizes the use of Bitcoin by businesses, for exchange of goods and services, as a commercial activity and approves it. The Inland Revenue Authority of Singapore has issued series of tax guidelines on Bitcoins.
At the beginning of this year, trading of Bitcoin was officially approved by the Bank of Thailand. The bank does not plan to expand the laws to regulate Bitcoins.
Bitcoin is treated as ‘private money’. It can be exchanged for other foreign currencies. Profits and losses on Bitcoin are imposed upon by capital gains tax.
The Internal Revenue Service considers ‘Bitcoin’ as a form of property and implies that each Bitcoin transaction is subject to capital gains tax. US Treasury authorities subject Bitcoin to money transmitter regulations.
Speaking of financial bodies…
World Bank and International Monetary fund have put up positive views for Bitcoin in their annual meetings. Discussions included aspects like Fundamental Property Rights, technology infrastructure and policies as well.
ARIF an independent financial regulatory body in Switzerland has approved Bitcoin as valid means of payment. It implies that companies accepting deposits in Bitcoin can apply for a banking license.
If you want to know the legality status of Bitcoin country wise, click on the following image to access an insightful Wikipedia page:
But some Governments and Financial Bodies are not looking at Bitcoin positively. Coutries like China, Taiwan, India, Indonesia, Iceland have clearly restricted the use of Bitcoins for any form of financial activities.
European Banking Authority (EBA)
Last year, the European financial body had issued warnings on a number of risks derived from buying, holding or trading virtual currencies. It is of the view that currencies like Bitcoin are not stable enough to be a means of payment and customers may be at a risk of losing money.