Regulatory attitudes toward digital currencies around the world are shifting. Hardly a day goes by without a central bank issuing a warning on the digital currency or new tax guidelines. However, it’s not all bad news – as some authorities are taking a far more positive approach.
In CoinDesk’s regulation roundup, Certified Public Accountant and ACFE Certified Fraud Examiner Jason Tyra examines the most significant digital currency news from the world’s regulators and law courts over the past two weeks.
Authorities' bitcoin squeeze continues
Chinese banks appear to have suspended relationships with all bitcoin-related businesses in the country, following “repeated directives” from the People’s Bank of China, the country's central bank.
In response, at least five bitcoin exchanges located in China withdrew from the Global Bitcoin Summit in Beijing: OKCoin, Huobi, BTC China, BtcTrade and CHBTC. Notably, BTC China CEO Bobby Lee recently won election to the Bitcoin Foundation’s Board of Directors as an industry representative.
Curiously, a report by the United States-China Economic and Security Review Commission (an advisory body to the US Congress) cited Chinese regulatory action as a threat to bitcoin’s continued proliferation.
Though the attitude of the US government could be described, at best, as ambivalent, the report pointed out what most bitcoiners already knew: a friendly Chinese government may not be essential to bitcoin’s success, but a hostile Chinese government is far from helpful.
Japanese regulators announce increased oversight of bitcoin
Japan seems to have finally caught up with other developed nations with its announcement this week that it will crack down on unlawful commerce using bitcoin and other virtual currencies.
Furthermore, the Japanese government will classify bitcoin transactions as being similar to those generated by credit cards and will not seek to apply capital gains taxes to bitcoin transactions.
Japanese economic policy under Prime Minster Shinzo Abe, colloquially referred to as 'Abenomics', seeks to stimulate and grow the economy by, among other things, engineering a decline in the price of the yen relative to other currencies through massive quantitative easing (ie: inflation).
Japanese bitcoiners who intend to use bitcoin as a refuge from inflation may find solace in the Japanese government’s less-than-hostile treatment.
Bitcoin salaries may violate Swiss law
A study commissioned by the Swiss Federal Council has suggested that paying Swiss workers wholly or partially in bitcoin may be unlawful if such payment shifts exchange rate risk from the payer to the payee.
Speaking in response to the study, a representative of Bitcoin Association Switzerland stated that “startups will continue to do what makes sense to them”.
Bitcoin-related companies located in Switzerland, like others around the world, have considered paying wages and bonuses in bitcoin as a way to expand the bitcoin economy and conserve fiat currency reserves.
Although commissioned by the Federal Council, the study is not a legal finding in itself. Swiss law explicitly permits both payments in foreign currency and payment in kind.
Political contributions in bitcoin get the green light
The US Federal Election Commission (FEC), the independent regulator that governs federal election policy and adjudicates electoral ethics issues, voted unanimously on 6th May to permit bitcoin donations to candidates in federal elections of up to $100 per donor, per election cycle. Candidates are currently limited to $2,600 in total donations per election.
Many US states incorporate FEC policy decisions by reference into their own bodies of election law. Texas Attorney General Greg Abbott previously announced that he would accept bitcoin donations in his bid for governor, as has US Representative Steve Stockman (Texas).
However, the Wisconsin Government Accountability Board forced a candidate to return a bitcoin donation as recently as 5th May. Whether that decision was reversed subsequent to the FEC ruling was unknown at press time.
Bitcoin industry reps detail banking setbacks at US hearing
BitPay’s Bryan Krohn, Xapo’s Karsten Behrend, CoinX’s Megan Burton, and SecondMarket’s Annemarie Tierney spoke before the Conference of State Bank Supervisors’ Emerging Payments Task Force on 16th May.
During a roughly two-hour hearing, the bitcoin industry representatives suggested that without clearer and more supportive regulatory standards, bitcoin companies will continue to struggle to build relationships with the banks and be held back in the broader consumer marketplace.
The task force, sponsored by a private organization of state-level banking officials, is considering whether and how digital currencies and other technological innovations in the financial sector will be impacted by current laws and whether recommendations for new laws or administrative regulations are necessary.
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