Virtual Currencies: International Actions And Regulations

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Explore:  Virtual Currency

No Legal Advice or Attorney-Client Relationship: This chart is provided by Perkins Coie LLP’s Decentralized Virtual Currency industry practice group for informational purposes only.

Country

Current Summary

Developments Over Time

Date

Occurrence

Australia

Virtual currency transactions are subject to goods and services, incomes, and capital gains taxes. Further regulation is unlikely for now.

12.13.2013

Interview with Bank of Australia governor Glenn Stevens suggests that Australia sees potential risk and volatility with bitcoin, but didn’t show any intent to regulate for the time being.

06.24.2013

Australian Taxation Office (ATO) confirms Bitcoin transactions are subject to goods and services (GST) and income tax and says  that speculators should keep records for capital gains taxes and that bitcoin is expected to be means of electronic payment or money.

Belgium

Although the National Bank of Belgium has warned investors and the public of the dangers of virtual currencies and declared that they are not legal tender, there is not any current indication that regulation is forthcoming.

1.16.2014

National Bank of Belgium (NBB) and Belgian Financial Services and Markets Authority (FSMA) warned investors about investing: virtual currencies are not issued by a central bank; there is no current regulation; risks associated with security, hacking, and fraud; value fluctuates; exchange rate is variable; and they are not legal tender.

01.08.2014

NBB does not have plans for financial regulations to regulate Bitcoin (not an official position, but expressed in a meeting between the bank and industry reps). National Bank likely to issue warnings similar to those issued by the EBA and other European nations

09.11.2013

Minister of Finance Koen Geens commented that Belgian National Bank does not object to Bitcoin, which was being used by only a handful of traders at this time, and that there was no indication that Bitcoin was being used for money laundering

Brazil

The Central Bank of Brazil has not yet regulated virtual currencies, but has issued the now-standard warnings about their use.

02.19.2014

Central Bank of Brazil says that virtual currencies are not “electronic currency” under Brazilian law. It warned that virtual currencies are not guaranteed or issued by a central authority, are not guaranteed by real assets, may be subject to volatility and total loss of value, can be used in illegal activities, and may be insecure due to the possibility of hacking. Finally, the Bank said that it was following the evolution of virtual currencies, and would consider adopting measures.

10.09.2013

Brazil adopted  Law No. 12,865, which specifically referenced regulation of electronic currency.  While the definition of “electronic currency” appeared to cover virtual currency, the Central Bank of Brazil later distinguished electronic currency from virtual currency.

Canada

Virtual currencies are not legal tender in Canada and, reportedly, virtual currency exchanges are not subject to money laundering regulations. Virtual currencies, however, are subject to goods and services and capital gains taxes.

02.14.2014

The Canadian Federal Budget included a reference to intended legislation regarding anti-money laundering and anti-terrorist financing that would apply to virtual currencies.

01.16.2014

Official from the Office of the Superintendent of Financial Institutions says that virtual currencies are not “legal tender.”

05.20.2013

Financial Transactions and Reports Analysis Centre (FinTRAC) reportedly wrote to several prominent Bitcoin exchanges that they are exempt from Canadian money laundering laws

04.26.2013

Canada Revenue Agency says barter transaction rules apply to use of Bitcoin for goods or services and are subject to tax. Also, Bitcoin bought or sold as a commodity is subject to capital gains taxes.

China

Financial institutions and third-party payment providers are banned from accepting, using, or selling virtual currencies. Although its use remains legal, the Peoples’ Bank of China has required exchanges to register with the appropriate regulatory authorities and has suggested it will closely watch the markets.

12.17.2013
12.18.2013

In wake of 12.5.13 PBOC statement, BTC China no longer accepts yuan. PBOC extends ban on accepting, using, or selling bitcoin to third party payment providers. Bitcoin remains legal, however, for individuals to use but without providers, is effectively impossible.

12.05.2013

People’s Bank of China (PBOC) says that bitcoin is not currency, that financial institutions and payment institutions cannot be involved in bitcoin-related transactions, websites.exchanges that deal in bitcoin-related services need to register with appropriate regulatory agencies, PBOC will pay close attention to potential uses of bitcoin for money laundering, and PBOC will educate the public about the risks of using, trading, or dealing in bitcoin (specifically, the lack of a central authority that administers or provides redress)

Croatia

Informal statements by the Croatian National Bank in favor of the legality of bitcoin.

12.16.2013

The Croatian National Bank indicated in an informal discussion that the use and sale of virtual currency would not be unlawful in Croatia.

Cyprus

Virtual currencies are not illegal in Cyprus, but Central Bank has warned about their use.

02.25.2014

Central Bank acknowledged that virtual currencies are not illegal, but reiterated earlier warnings about their use and exchange.

02.07.2014

Central Bank issues warnings like those of the EBA and Bank of France that virtual currencies have no guarantee of reimbursement, are inherently speculative, pose money laundering and other criminal activity risks, and are risky speculative investment vehicles.

Czech Republic

[pending translation]

09.16.2013

[pending translation]

Denmark

Financial Supervisory Authority has issued warnings about the risks of virtual currencies, similar to other European nations, and has suggested there may be amendments to regulate virtual currencies. Currently, it does not appear that virtual currencies are regulated, at least under money laundering or financial institution regulations. They may be subject, however, to capital gains taxes.

12.18.2013

Chief Legal Advisor to FSA says that most likely development will be to amend existing financial regulations to cover exchanges and to have money laundering regulations cover cryptocurrency transactions. Member of Parliament suggested, however, that this would be done on a European-wide basis, not just in Denmark.

12.17.2013

Financial Supervisory Authority (“FSA”) releases statement re: risks for cryptocurrencies: (1) losing money to exchanges, (2) theft from virtual wallets, (3) might not be able to exchange it for fiat currency, (4) rapid price fluctuation, (5) links to criminal activity and (6) taxes. FSA also provides that cryptocurrencies are not covered by existing regulatory framework for electronic money, currency exchanges, brokerages, or deposit services. They are unregulated electronic money and there is no permission needed to run an exchange there.

Estonia

Informal cautions against use of bitcoin in response to e-mail inquiries.

01.31.2014

Head of the Estonian central bank payment and settlement system expresses concerns in an e-mail about risks associated with bitcoin, including the nature of the decentralized system and the potential for a Ponzi scheme.

EU

European Banking Authority has issued warnings to the public about the risks associated with virtual currencies.

10.29.2012

The European Central Bank releases a detailed report regarding virtual currency and its potential for regulation under EU regimes.

12.12.2013

European Banking Authority (“EBA”) warns consumers on virtual currencies because (1) consumers can lose value, (2) can be stolen from virtual wallets, (3) EU refund rights do not protect, (4) value can change quickly, (5) can be used for criminal activity, including money laundering, and (6) consumers may be subject to tax liability.

Finland

Based on informal interviews, the best indication is that virtual currencies are treated as commodities in Finland.

1.19.2014

Bank of Finland says, through interview with head of oversight Paeivi Heikkinene, that Bitcoin is not “currency” or a “payment instrument,” but is “more comparable to a commodity.”

08.28.2013

The Finnish Tax Authority released tax interpretations regarding bitcoin, indicating that capital gains treatment would be given to an exchange of bitcoin for another currency, but that losses would not be deductible.

09.12.2012

In television interview, Finnish Central Bank says that bitcoins are legal and can be invested in and used however people would like. There are no guarantees, however, that unregulated virtual currencies can be exchanged back into traditional money.

France

Bank of France has issued warnings similar to other European nations. There are informal indications that France may be willing to allow virtual currency companies to operate as payment service providers under French law.

12.05.2013

Bank of France warns about risks associated with virtual currencies: (1) security risks, (2) absence of central regulatory authority, (3) speculation and huge volatility, (4) legal risk, and (5) use of currencies for illegal and illicit activities.

12.07.2012

Bitcoin Central, an exchange operating through a partnership with Aqoba, reportedly was approved by French regulators to operate as a “bank” (actually a payment services provider) under French law.

Germany

Virtual currencies are financial instruments under German law and, more specifically, are a form of “private money” that can be taxed as capital.  Certain uses may also require a license or permit.  Earlier guidance from the German financial supervisory authority also suggested virtual currencies are commodities.

12.19.2013

BaFin releases an overview of risks related to virtual currency, and indicates that commercial use of BTC may require licensure and permitting in certain circumstances.

08.19.2013

German Finance Ministry says that virtual currency is not e-money or foreign currency but is still a financial instrument under German banking rules. Virtual currency is therefore more akin to “private money” that can be used in “multilateral clearing circles” (suggesting that virtual currency would be taxed as capital).

12.22.2011

Bafin (German financial supervisory authority) says that Bitcoins are exempt from definition of e-money because they are not tied to legal tender currency. Instead, it is a commodity subject to taxation.

Greece

The Bank of Greece has adopted the EBA warnings regarding virtual currencies.

02.11.2014

Bank of Greece adopted the EBA’s warnings to consumers regarding virtual currencies.

Greenland

See Denmark, above; autonomous country but under kingdom of Denmark [pending confirmation]

Hong Kong

Informal guidance suggests that regulatory authorities are monitoring virtual currencies, particularly with regard to money laundering.

01.09.2014

Secretary for Financial Services and the Treasury says that there are high risks in exchanging, trading, and holding bitcoin; there are no physical currency guarantees; and its value is highly speculative. Also suggested that Hong Kong was monitoring the virtual currency market and was particularly concerned about money laundering.

Hungary

The National Bank of Hungary has issued warnings similar to those of other countries.

02.19.2014

National Bank of Hungary warns about the use of virtual currencies, including that they are not issued or guaranteed by a central authority, the possibility of loss of value or theft, their volatility, and the inability to seek recourse or refund.

Iceland

Regulates virtual currencies as electronic currency through the Icelandic Exchange Act, which effectively prohibits entities from engaging in the exchange of virtual currency.

12.19.2013

Icelandic Exchange Act applies to bitcoin exchanges, and bitcoin is not exempt as a good or service. Therefore, one cannot engage in foreign exchange that involves the electronic currency, bitcoin.

India

Reserve Bank of India has issued warnings to the public about the risks associated with virtual currencies and has suggested it is examining virtual currencies under India’s existing legal framework.

12.24.2013

Reserve Bank of India issues warnings to customers who buy, sell or trade in virtual currencies about security risks, absence of regulatory authority, speculation and volatility, legal risk, and use of currencies for illegal activities. Also says it is “presently examining” issues associated with using, holding, and trading VCs, including regulations for foreign exchanges and payments systems laws.

12.27.2013

India’s Enforcement Directorate raided the offices a virtual currency exchange, reportedly in response to violations of India’s Foreign Exchange Management Act.

Indonesia

Using virtual currencies violates the country’s information and electronic transaction laws and currency laws.

01.16.2014

Deputy Governor of Indonesian Central Bank says that using bitcoin violates information and electronic transaction laws and currency laws. DG also strongly urged Indonesians not to use bitcoin as a means of payment, and highlighted security risks of bitcoin too.

Ireland

The Central Bank of Ireland does not regulate bitcoin.  Ireland’s Revenue Commissioners are monitoring bitcoin for tax-related developments.

12.10.2013

The Central Bank of Ireland was cited by the Minster for Finance as stating that it does not regulate bitcoin or consider it to be legal tender.  The Minister for Finance also referenced a statement by the Revenue Commissioners that they are monitoring development of virtual currency and its tax implications, although they do not believe virtual currency represents a significant risk for tax evasion.  Currently, implications for taxation are varied, as bitcoin has elements both of a commodity and a currency.

Israel

The Israeli central bank and Finance Ministry has issued warnings to the public about the risks associated with virtual currencies.

02.19.2014

Central bank and Finance Ministry warns against the use of virtual currencies, similar to those of the European Banking Authority. It warned that virtual currencies are not legal tender, may be subject to volatility, can be used for money laundering or terrorist financing, and are subject to loss via a technical attacks by hacking.

01.16.2014

Reportedly, the Bank of Israel and the Israel Securities Authorities, and justice and finance ministries are waiting to see how other countries address virtual currencies before taking action.

Italy

A law requiring identification of parties in bitcoin transactions has been proposed in the Italian Parliament.

01.18.2014

A law is proposed in the Italian Parliament to require identification of a sender in a transaction involving more than 1,000 euros.

Jordan

Virtual currencies are not legal tender in Jordan and the Central Bank has warned against their use. Banks, currency exchanges, financial companies, and payment service providers operating in Jordan are prohibited from dealing in virtual currencies.

02.22.2014

Reportedly, the Central Bank of Jordan warned against the use of virtual currencies and said they are not legal tender. The warnings were similar to those issued by other countries: that there is a high risk of devaluation, that their value is highly volatile, that virtual currencies can be used for criminal activities, and that there is a risk of total loss because it is not backed by a central authority. Further, the Central Bank reportedly told all banks, currency exchange companies, financial companies, and payment service providers, that they are prohibited from dealing in virtual currencies.

Lebanon

Bank of Lebanon has issued warnings to the public about the risks associated with virtual currencies, and has said that financial institutions and exchanges cannot, be decree, deal in virtual currencies as “e-money.”

12.19.2013

Bank of Lebanon issued a warning about risks of digital currencies, including that transactions made through unregulated networks cannot be guaranteed and losses not recoded; transactions may be irreversible; the currencies are highly speculative and volatile; and can be used for criminal activities. It also reminded financial institutions and exchanges that “e-money” is prohibited by decree.

Lithuania

Central Bank of Lithuania has issued the standard EBA warnings but is holding off on further regulations for now.

02.10.2014

Central Bank of Lithuania clarifies that regulation of virtual currencies is under discussion but that it is likely to wait until further action from EU countries before pursuing regulation.

01.31.2014

[pending translation]

12.xx.2013

Central Bank of Lithuania adopts the EBA warnings to consumers.

Malaysia

Virtual currencies are not legal tender, are unregulated, and are risky.

01.02.2014

Central Bank of Malaysia has said that “The bitcoin” is not legal tender in Malaysia, that is does not regulate the operations of bitcoin, and that the public is advised to be cautious of the risks associated with the use of digital currencies.

Netherlands

The Netherlands do not regulate bitcoin under its Act on Financial Supervision, but its national bank has released consumer warnings regarding the use of virtual currency.

12.20.2013

Virtual currencies such as bitcoins currently do not fall within the scope of the Act on Financial Supervision of the Netherlands, as the Dutch Minister of Finance recently emphasized.

12.03.2013

The Dutch Central Bank released a warning listing risks of usage of virtual currency and stated that it does not supervise virtual currencies.

06.07.2013

[pending translation]

New Zealand

Informal warnings about the risks associated with virtual currencies; suggestion from Commerce Commission that virtual currency may be regulated.

12.11.2013

Reserve Bank of New Zealand Gov. John McDermott warned people to “tread carefully” because of supply, controls, and monitoring. Also warned of risks from volatility in pricing and speculation.

12.28.2013

New Zealand’s Commerce Commission reported as stating that bitcoin is covered by New Zealand’s Fair Trading Act and Commerce Act.

Norway

Indications are that virtual currencies are not “money” or “currency” but are assets subject to capital gains taxes.

12.13.2013

Norwegian Director of General Taxation says that virtual currencies are not “money” or “currency” (a widely accepted and agreed upon method of exchange for goods and services). Virtual currencies are, however, assets subject to capital gains taxes.

Poland

Virtual currencies are not illegal, but are also not legal tender. They are subject to capital gains taxes.

12.20.2013

Ministry of Finance announces that it does not consider bitcoin illegal, although it is not a legal currency either. Also clarified that profits from virtual currencies are subject to taxation as gains.

Portugal

Informal warnings from the Bank of Portugal about the risks of virtual currency, while clarifying that the Bank does not monitor bitcoin.

11.22.2013

The Bank of Portugal issued a press release highlighting the risks of using bitcoin and stating that the Bank of Portugal does not oversee or supervise the issuance or use of bitcoin.  The Bank concluded the release by indicating that banks are aware of the need to monitor and may eventually recognize and act on bitcoin.

Russia

Virtual currencies are banned as money surrogates under the federal law “On the Central Bank of the Russian Federation.”

02.07.2014

Central Bank of Russia says that, under existing regulations, virtual currencies are a money surrogate, not an official currency, and are prohibited. Entities that use or exchanges that trade in virtual currencies will be subject to suspicion based on the potential use of virtual currencies for money laundering or other criminal activities.

01.24.2014

Former economy minister and current chief of state-run OAO Sberbank Herman Gref says that banning virtual currencies in Russia would be a “colossal step backward” and had sent letter to the Kremlin, central bank, and Finance Ministry regarding the same.

01.15.2014

The Security Committee in the lower house of parliament, the State Duma, approved a draft counterterrorism bill that included restrictions on anonymous transactions, including virtual currencies.

Singapore

Virtual currencies are not “money” or “currency.” Informal reporting suggests that virtual currency sales are taxed as income, investments are taxed as capital gains, and may be subject to goods and services tax.

09.22.2013

Monetary Authority of Singapore cautions consumers regarding risks of trading in bitcoin.

01.09.2014

Inland Revenue Authority of Singapore (“IRAS”) reportedly  responds to request about taxation. Companies will be taxed on income based on virtual currency sales. When used as an investment, taxed as capital gains. Further, GST could vary depending on the level of services. Reminded that virtual currencies are not “money” or “currency” so they are a good or service for taxation.

Slovenia

Bank of Slovenia has issued warnings to the public about the risks associated with virtual currencies.  Slovenia has also indicated that certain activities, including mining, would be subject to taxation.

12.24.2013

The Slovenian Ministry of Finance indicated that individuals selling bitcoin for capital gains would not pay income tax, but bitcoin miners would pay income tax.  Overall, Slovenia intends to review bitcoin taxation on a case-by-case basis.

12.12.2013

Bank of Slovenia reiterated EBA warnings about virtual currencies: (1) can lose money, (2) money may be stolen from virtual wallet, (3) EU refund rights do not protect when VC for payment, (4) value can change quickly, (5) can be used for criminal activity, including money laundering, and (6) consumers may be subject to tax liability.

South Africa

South African Reserve Bank has warned that virtual currencies have no legal status and are subject to lack of security, may lose value, and may not be convertible to legal tender.

02.20.2014

South African Reserve Bank issues warning similar to those of other countries that virtual currencies have no legal statute and cannot guarantee “security, convertability, or value.”

South Korea

Virtual currencies are not legal currency, are volatile and risky, and have no intrinsic value.

12.10.2013

Ministry of Strategy and Finance, Bank of Korea, Financial Services Commission, and Financial Supervisory Service said that “cyber currency” is not a “real legal currency” and does not meet the standard regulations governing currency transactions, either via the Internet or commercial institutions. Also warned about the high volatility in the value of bitcoin, and about its lack of intrinsic value.

Sweden

Informal statement from a tax official suggests that virtual currencies are not currencies in Sweden but instead will be treated as assets.

01.22.2014

Swedish Tax Agency official says that Sweden is likely to view virtual currencies as an asset, like art or antiques, and not a currency.

Taiwan

Central Bank and Financial Supervisory Commission issued warnings that virtual currencies have no legal protection. Has suggested it may regulate virtual currencies.

12.31.2013

Central Bank and Financial Supervisory Commission warned against use because virtual currencies do not have legal protection. Suggested they may regulate virtual currencies if country financial institutions begin to engage with virtual currencies.

Thailand

Thai law probably does not regulate virtual currencies, but that does not mean that exchanges are free to operate in Thailand.

02.20.2014

Reportedly, the Bank of Thailand concluded that Thai law does not regulate virtual currencies, but that exchanges still cannot operate to the extent that they cannot prevent virtual currencies from being exchanged for currencies other than the bhat.

07.29.2013

Bank of Thailand reportedly said, in the a meeting with Bitcoin Co., that there is an absence of applicable laws and capital controls and that, buying or selling bitcoin, buying or selling goods or service for bitcoin, or receiving bitcoin from outside Thailand is illegal.

Turkey

Turkey’s recently enacted law on payment services and electronic money does not apply to bitcoin.

11.25.2013

Turkey’s Banking Regulation and Supervision Agency announced in a press release that bitcoin is not covered by Turkey’s “Law on Payment and Securities Reconciliation Systems, Payment Services and Electronic Money Institutions” and is therefore not subject to regulation under the Law.  The Agency cautioned bitcoin users about risks associated with volatility and anonymity within the bitcoin system.

United Kingdom

Reportedly, exchanges do not have to register under money laundering regulations. Virtual currencies are taxed under goods and services taxes based on profits from a sale.

01.13.2014

HMRC reportedly considering categorizing virtual currencies as a “private currency,” which would eliminate profits taxes.

07.08.2013

HMRC reportedly wrote to FYB-UK that there is no requirement for an exchange to register under UK money laundering regulations.

06.19.2013

Her Majesty’s Revenue & Customs (HMRC) says that digital currencies are covered by the UK tax system and, when used to pay someone for goods and services, the profits are taxable.

United States

Please refer to the Perkins Coie Virtual Currency Report for analysis of U.S. law.

 

 

Vietnam

Virtual currencies are not money nor legal tender in Vietnam and the State Bank of Vietnam warns against investing in, holding, or transacting in virtual currencies.

02.27.2014

State Bank of Vietnam recommends not investing in, holding, or transacting in virtual currencies because of harm and risks of use for criminal purposes, lack of technical security and vulnerability to hacking, price volatility, and lack of a central government authority. It also determined that virtual currencies are not money nor are they a form of legal payment in Vietnam.

 

 

 

Topics:  Virtual Currency

Published In: Finance & Banking Updates, International Trade Updates, Science, Computers & Technology Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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