[2018-01-03] ECB governor calls for tax, regulation on bitcoin

[Telemaque]

A top European Central Bank official on Wednesday called for governments to regulate and tax bitcoin, labelling the cryptocurrency an object of speculation and a tool for money laundering.

“One ought to apply what the basic rule is in any other financial transaction: everyone involved should reveal their identity,” ECB governing council member Ewald Nowotny told the German daily Sueddeutsche Zeitung.

“We need a value-added tax on bitcoin, since it’s not a currency,” said Nowotny, who is head of Austria’s central bank.

Nowotny’s comments echo those by other ECB officials, who regard the bitcoin’s spectacular surge in value as a bubble, rather than a sign it could be a digital competitor to the euro single currency used by its 19 member nations.

Nevertheless, the “digital gold” is a concern for central bankers as it can allow money launderers to dodge around increasingly strict rules in the traditional financial system.

“It can’t be allowed that we’ve just decided to stop printing 500-euro notes to fight money laundering, that we’ve slapped strict rules on every tiny savings club, and then have to watch people blithely laundering money around the globe with bitcoin,” Nowotny said.

Bitcoin, launched in 2009, is a virtual currency created from computer code. It and other virtual currencies use blockchain, which records transactions that are updated in real time on an online ledger and maintained by a network of computers.

Bitcoin is perhaps the best known and most popular virtual currency and its value surged as high as $19,500 in December from around $1,000 in January, but has slipped back after a series of warnings from governments and analysts about the risk and volatility associated with cryptocurrencies.

While blasting the cryptocurrency’s bubble-like characteristics, Nowotny acknowledged the topic had “reached the heart of society,” with people now asking him on the Vienna metro whether they should buy bitcoin, rather than gold as in the past.

But “the central bank would only have to intervene if (bitcoin) were to change people’s behaviour. There are no signs of that yet,” he said, noting that wild gyrations in bitcoin’s value and slow transaction speeds made it hard to use for everyday payments.

Source: https://citizen.co.za/news/news-world/1771994/austria-ecb-eurozone-cryptocurrency-bank/

[1714845818]

1714845818

[1714845818]

1714845818

[1714845818]

1714845818

[iram1011]

This is actually better then banning it . Regulating might put the authenticity of bitcoin on risk but that would not totally vanish its existence .
People would still have access to it and will be able to use it freely . The certain tax that has to be paid on its exchange seems  very irritating to every user who had never thought of paying tax on bitcoin . Some of them joined bitcoin in the first place just because of its tax free quality . But to be honest that seems to be fading everyday since every other government is planning to regulate it and impose taxes on its use.                         

[darkangel11]

This is actually better then banning it . Regulating might put the authenticity of bitcoin on risk but that would not totally vanish its existence .            

Are you really that scared of the government's attack on BTC that you are ready to willingly accept any regulation? It's not going to disappear simply because a government decides to ban it just like alcohol didn't disappear in the USA during prohibition, torrents didn't disappear after the governments seized TPB and put its founders in jail.

The certain tax that has to be paid on its exchange seems  very irritating to every user who had never thought of paying tax on bitcoin

There's one thing to pay a tax on income that you've cashed out and another to pay taxes on the coins that you're holding. The first one is quite normal while the second is a robbery in my view. It's demanding from you money that you don't physically have.

[1Referee]

Instead of talking about what the plans are, or how things should be, enforce these regulations for once. Even though I personally am part of the no tax over my holdings camp, I don't mind tax related regulations, and it in reality shouldn't be so difficult to put Bitcoin into one of the main categories that people need to declare on a yearly basis. If I am not trading at all, and just solely hold Bitcoin through, the tax I am subject to is near 1.5% every year. In all honesty, it's not all that bad, but the problem is that if you don't cash out anything, which then would require you to pay another form of tax on top of the 1.5%, you are losing out. It means that you have to pay the money out of your own pocket each and every year.

[squatter]

This is actually better then banning it . Regulating might put the authenticity of bitcoin on risk but that would not totally vanish its existence .            

Are you really that scared of the government's attack on BTC that you are ready to willingly accept any regulation? It's not going to disappear simply because a government decides to ban it just like alcohol didn't disappear in the USA during prohibition, torrents didn't disappear after the governments seized TPB and put its founders in jail.

What would happen if the world's most powerful governments coordinated to ban mining and bitcoin payments? That could have devastating effects on hashrate and would cause most services to shut down or massively scale back. Sure, it won't "disappear" in a literal sense, but how sure are you that Bitcoin can survive a coordinated attack by governments? To date, they have simply allowed it to blossom, virtually unfettered. But what if Bitcoin truly is a threat to central bank monetary sovereignty? Will they just take it lying down? AML regulations =/= prohibition on mining and payments.

There's one thing to pay a tax on income that you've cashed out and another to pay taxes on the coins that you're holding. The first one is quite normal while the second is a robbery in my view. It's demanding from you money that you don't physically have.

Is this referring to the Venezuelan tax proposal? I guess governments need to devalue your money somehow, even if you're not holding their fiat money.

[uslfd]

Adding VAT tax to bitcoin sounds very bad. However if you think about the numbers carefully, you only pay 20% when you buy it. So you'll be more likely to hold because the tax you need to pay will not increase with increasing profit

[odolvlobo]

One ought to apply what the basic rule is in any other financial transaction: everyone involved should reveal their identity

Sorry. That is not a "basic" rule. It is a tyrannical rule.

[iamTom123]

This is actually better then banning it . Regulating might put the authenticity of bitcoin on risk but that would not totally vanish its existence. People would still have access to it and will be able to use it freely . The certain tax that has to be paid on its exchange seems  very irritating to every user who had never thought of paying tax on bitcoin . Some of them joined bitcoin in the first place just because of its tax free quality . But to be honest that seems to be fading everyday since every other government is planning to regulate it and impose taxes on its use.                         

This is quite expected and the best thing that any country can do is to pass laws regulating Bitcoin and the whole cryptocurrency industry while it is still young and take advantage of the many economic benefits that can be derived from it. Any country can tax Bitcoin but of course they should also be careful as overtaxing anything can be not anymore healthy and will eventually defeat the very purpose which is to collect more revenues not unless, of course, if the main aim for taxing is to kill the very thing they are taxing. Now, all of these kind of comments from those in authorities are just telling us that Bitcoin is already working what it's supposed to do and that is to disrupt the normal financial settings we have globally. We should never be afraid of regulations and even if any country will eventually ban Bitcoin the Chinese showed us that they can still do business with Bitcoin under such an environment. Years from now, governments will realize the foolishness of controlling Bitcoin as the more they will stop it the more it will stay.

[darkangel11]

What would happen if the world's most powerful governments coordinated to ban mining and bitcoin payments? That could have devastating effects on hashrate and would cause most services to shut down or massively scale back. Sure, it won't "disappear" in a literal sense, but how sure are you that Bitcoin can survive a coordinated attack by governments? To date, they have simply allowed it to blossom, virtually unfettered. But what if Bitcoin truly is a threat to central bank monetary sovereignty? Will they just take it lying down? AML regulations =/= prohibition on mining and payments.

I don't know what would happen, but we can see that some governments are profiting from allowing the cryptocurrencies to thrive. That's why there will never be a consensus. It's possible that some governments will start working together to form an anti-bitcoin union, but the rest will find other solutions. Do you expect Japan that's been regulating and accepting it for months to ban it? I also believe that regardless of the regulations and bans it will continue to exist and be traded. People are defiant by nature.

Is this referring to the Venezuelan tax proposal? I guess governments need to devalue your money somehow, even if you're not holding their fiat money.

No, I'm talking about this proposal. They are talking about a "bitcoin tax" which means it's not a typical income tax that we are already forced to pay. They want to tax bitcoin holdings.