Bitcoin in the UK: HMRC suggests bitcoins are ‘taxable vouchers’
As Tom Gullen described on his blog, Her Majesty’s Revenue & Customs (HMRC) seems to be classifying bitcoins as vouchers, which means VAT would be due on any sales. A 20% mark-up on bitcoin prices would make UK exchanges untenable. In addition to Gullen’s statement, an independent source told us that HMRC had given them the same classification. We also spoke to Dr Tom Robinson of the UK-based bitcoin exchange BitPrice and consulting firm Blockchain Consulting, who recently attended the Financial Innovators Summit at 10 Downing Street. At the time, it was said that he “left the meeting feeling largely optimistic”. However, his subsequent communications yielded the following statement from HMRC: “Our Policy teams’ view is that these are not currency. It is our view that the provision of bitcoins is the sale of vouchers. These arelikely to be ‘single purpose’ vouchers.”
Robinson said: “This is obviously an entirely inappropriate classification for
bitcoin: they aren’t issued by anyone, they don’t have a ‘face value’
and they can be redeemed for a wide range of goods and services.”
Robinson also posted to reddit, saying: “We do now have a commitment from the Treasury that they will seriously consider how bitcoin might achieve official recognition in the UK. In doing this the government is seeking input from bitcoin businesses.” Any businesses that want to submit a comment should do so through this link. HMRC told CoinDesk that “There is a VAT exemption for currency transactions but the currency in question must be legal tender. We will of course listen to arguments for alternative VAT treatments under existing VAT law.”
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There are dozens of digital currencies that are all going insane right now
We just told you why another cryptocurrency, Litecoin, has been able to ride Bitcoin’s digital coattails to a 400% gain over the same period. But Litecoin is not alone.
According to that site, Peercoin, which now has the third-largest
market cap among digital currencies, is up 22% in the past 24 hours.
Peercoin‘s main feature is that it’s based on a protocol which, though
different from Litecoin‘s, achieves the same effect of preempting mining
cartels from forming and gaining too much control over prices.
Namecoin, with the fourth-largest market cap, is up 70% in the past
24 hours. Its principal attribute is that it exists outside the regular
Internet and therefore beyond control of The Internet Corporation for Assigned Names and Numbers (ICANN), the Internet’s regulatory body.
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Korea announces favorable tax policy for Bitcoin
The bitcoin community in Korea is small, but growing, and it seems that governments around the world are taking the US Senate’s recent hearings as a signal to begin determining at least temporary policies regarding our favorite cryptocurrency.
Posted in Korea’s Bitcoin Community on Facebook is a statement from Korea’s National Tax Service stating that Koreans will not be taxed for capital gains on bitcoin for the time being.
While this is clearly good news for the few long-time miners in Korea as well as speculators that have experienced a windfall in the past month, it is important to remember that this is not a good long-term position toward bitcoin. Essentially, the Korean government is taking the stance that bitcoin investments are not real.
Currently, bitcoiners are happier to be left alone by the governments of the world and such a policy supports this in the long term. But if we hope to see bitcoin rise to a more commonly-accepted and competitive currency, we will need governments to recognize that BTC does, in fact, bear value and follow “safe and sane” regulatory procedures. While this is not the time to hold the argument over how much and what kind of regulation would be appropriate and positive, I think that most bitcoiners will agree that we don’t want it to be seen as monopoly money forever. Near-universal recognition and respect is needed.
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Bitcoin defeats PayPal thanks to massive transaction of 194,993 BTC
(BitcoinExaminer) The end of last week brought a symbolic milestone for Bitcoin. The cryptocurrency network recorded over $447 million in transactions in a single day, topping PayPal and Discover.
in the amount of daily transactions in US dollars and becoming the world’s fifth biggest payment network. Above cryptocurrency you could only find “giants” like Visa, MasterCard, China UnionPay and American Express.
With the Bitcoiners getting curious, some experts discovered the transaction involved a large number of sending addresses. Some of them were from blocks mined in February 2010 or even earlier. Of course, it’s impossible not to think about Satoshi Nakamoto, Bitcoin’s mysterious founder.
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This Senate hearing is a Bitcoin lovefest
(WashingtonPost) The Senate Committee on Homeland Security and Governmental Affairs,
chaired by Sen. Tom Carper (D-Del.), is holding the first congressional
hearing on the future of Bitcoin. The first panel features senior
figures from the Obama administration. And their comments about Bitcoin
have been remarkably positive.
After the officials gave their opening statements, Carper’s first
question drew a parallel to the Internet. He pointed out that in the
early days of the Internet revolution, many people raised concerns about
illicit use of Internet technologies. Yet in the long run, he argued,
the Internet has had a hugely beneficial effect on peoples lives, making
possible previously unimagined services like Facebook and YouTube.
Carper wanted to know if the witnesses saw Bitcoin in the same light.
Jennifer Calvery, director of the Financial Crimes Enforcement
Network, agreed with Carper. “Innovation is a very important part of our
economy. It’s something for us to be proud of,” she said.
“We are attuned to the criminal use,” added Mythili Raman of the
Justice Department. But “there are many legitimate uses. These virtual
currencies are not in and of themselves illegal.”
“There is good reason for us to remain watchful” about Bitcoin being
used for illicit purposes, Raman added. “But we also intend to balance
that against the need for legitimate users” to use the technology.
Later in the same panel, Edward Lowery of the Secret Service
testified that cyber criminals “have not by and large gravitated toward
peer-to-peer cryptocurrencies.” Rather, they “have by and large
gravitated toward centralized digital currencies that are based in a
locale that may have less regulatory guidelines and less aggressive law
enforcement.”
That’s been the tenor of the entire hearing so far. All three Obama
administration officials expressed concern about Bitcoin being used for
illicit uses. But they also stressed that Bitcoin has important
legitimate uses and that regulators need to be careful not to stifle
innovation in virtual currencies. And they seemed to believe that the
situation was under control, and none asked for new regulatory powers to
crack down on illicit uses of the currency.
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Virgin Galactic to accept Bitcoin for space flights
flight venture created by the billionaire entrepreneur Richard Branson,
is accepting Bitcoin: this means the new crypto-millionaires and space
aficionados can now use their digital coins to pay for an exciting and unique trip. The news was announced by Branson himself on CNBC’s show “Squawk Box”.
Branson said. The lucky space traveler is a flight attendant from
Hawaii. Apparently, the woman made “quite a lot of money getting into
Bitcoin early on”, he told CNBC.
and then Virgin Galactic converted the amount into US dollars,
specifically $250,000. “There’s a fixed price [and] we can actually pay
her money back, if she changes her mind about going to space in a few
months”.
and is holding on for the long-term. “I have invested in some Bitcoins
myself and find it fascinating how a whole new global currency has been
created”, he wrote on Virgin’s website. Brason even compared the virtual coin with his own business.
aren’t yet formally recognized by governments as a currency, but with some regulation I hope that it will become more widely accepted.
A few years ago many people had doubts about whether Virgin Galactic
would ever get off the ground. Now we have gone supersonic, are a long
way along the testing process, and are looking forward to launching
commercial space travel”.
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Cypriot university to accept Bitcoin payments
(YahooFinance) Cyprus’ biggest private university said Thursday it will start
accepting the digital currency Bitcoin as an alternative way to pay
tuition fees.
been a hub for international banking before suffering a collapse in its
financial system this year, leading the government to impose controls on
the flow of capital as it accepted an international bailout.
But
the University of Nicosia said the move to accept Bitcoin was unrelated
to the controls. Rather, it was meant to help foreign students in
countries where traditional banking transactions are either difficult or
costly to pay for programs such as online degrees.
The
university’s chief financial officer, Christos Vlachos, said the
institution, which has about 8,500 students enrolled, is the first in
the world to take Bitcoin payments.
Bitcoin is a
cryptography-based digital currency that advocates say is
counterfeit-proof. Its value is determined by supply — which is limited
by its design — and demand. Among the various criticisms leveled at
Bitcoin are that it is too prone to price swings against other
currencies to be useful.
Vlachos said payments are free of risk
for the university since it immediately converts the digital currency to
euros at the day’s exchange rate.
He said that the university is
also offering a new Masters’ degree in digital currency, a field he says
is the monetary equivalent of the Internet in its infancy.
“It’s the gold of tomorrow,” Vlachos told the Associated Press.
He
said the Cypriot government should set up a regulatory framework to
attract digital currency trading companies and boost the bailed-out
country’s foundering economy.
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A map of Bitcoin-friendly businesses
(WashingtonPost) The tech-crazed Bay Area seems like an obvious place to find
bitcoin-friendly businesses. But you’ll also find them in less likely
locations. Rooks Comics and Games, in Bozeman, Mont., for instance. An
antique shop in the French Quarter of New Orleans. Alberty’s Broadway
Liquor in Muskogee, Okla., about an hour out of Tulsa. And the Church of
Saint John the Evangelist in Goshen, N.Y.
On the East Coast, you’ll find at least four venues in Manhattan and
nine in Brooklyn. Washington, D.C., sadly, has only two places where you
can spend your digital cash, and one of them seems to be a think tank
of sorts. But take your bitcoins to Cambridge, Mass., and you’ll find a
welcome at a fusion eatery named Thelonious Monkfish and a diner called
Veggie Galaxy.
If you find a business that’s is accepting bitcoin, add it on Coinmap.org !
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Bitcoin price skyrockets as Senate hearing concludes
(CoinDesk) The price of bitcoin spiked dramatically last night and the
transaction volume on the Bitcoin protocol (in USD) eclipsed that of
Western Union.
The spike took place after Jerry Brito, Patrick
Murck and Jeremy Allaire presented their testimonies on bitcoin and the
future of virtual currencies to the Homeland Security and Governmental
affairs committee in the US senate at the Senate hearing titled Beyond Silk Road: Potential Risks, Threats and Promises of Virtual Currencies.
The CoinDesk BPI read $650 on conclusion of the hearings, with Mt. Gox reporting a jump to $750 and, later, BTC China reaching a record high of 6,989 CNY (approximately $1,147) before crashing to almost 60% of this value in seconds, and then recovering to about $850. At the time of writing, the CoinDesk BPI puts the price at $602.
The
senate hearing is being hailed as an historic moment for bitcoin, with
even Ben Bernanke, current chairman of the Federal Reserve remarking
that virtual currencies “may hold long term promise” in an open letter
to Senator Thomas Carper (D) published 12th November.
At the
hearing, Senator Carper listened to commentary, criticism and praise of
bitcoin with a temperament that left many in the bitcoin community
impressed and even delighted, whilst Jennifer Shaskey Calvery from
FinCEN was measured in her analysis and assessment of the promises and
threats that virtual currencies present.
This morning, data analysis website Coinometrics reported
that bitcoin passed Western Union in daily transaction volume,
transacting an average of $245m compared with Western Union’s estimated
$216m but is still behind on the average number of daily transactions at
approximately 62,000, with Western Union clocking up approximately
633,000 transactions per day by comparison.
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Bitcoin skyrockets to $600 after U.S. agencies label it legitimate
(DailyDot) The Department of Justice and Securities and Exchange Commission told senators that bitcoins are “legitimate financial instruments,” Bloomberg reports. The news comes just three days ahead of a U.S. Senate Committee on Homeland Security and Governmental Affairs hearing on Bitcoins,
Almost immediately following the article publication at 12:01am ET, the
average price of Bitcoins jumped over $50, from $495 to $554, sprinting
past the $500 milestone. It has continued to climb to a $583 average in the hours since. At Mt. Gox, the largest Bitcoin exchange, the currency is already selling for $630.
The Senate committee, which was scheduled immediately following the fall of the Deep Web black market Silk Road, aims “to explore potential promises and risks related to virtual currency for the federal government and society at large.”
“The FBI’s approach to virtual currencies is guided by a recognition
that online payment systems, both centralized and decentralized, offer
legitimate financial services,” Peter Kadzik, principal deputy assistant
attorney general, wrote according to Bloomberg.
“Like any financial service, virtual currency systems of either type
can be exploited by malicious actors, but centralized and decentralized
online payment systems can vary significantly in the types and degrees
of illicit financial risk they pose.”
Ben Bernanke, the chairman of the Federal Reserve, said he had no plans
to regulate the currency. In fact, Bernanke isn’t sure if the Fed even
has the authority to do so.
In an article on Sunday, Time reported that the Senate hearings were “just the beginning.”
“Honestly, the environment seems to be a game of hot potato where no
politician wants to be caught being pro or anti bitcoin,” Charles
Hoskinson, director of the Bitcoin Education Project, told the magazine.
“Once the market cap gets to around $10 billion or so, then expect real
hearings and a lot of lobbying.”
At nearly $7 billion and triple what it was just two weeks ago, the cap is closing in fast on Hoskinson’s milestone.
The reaction in the Bitcoin world has been ecstatic. After similar reports of Chinese authorities saying the government has no plans to
regulate the digital currency, news that the U.S. is following suit is
exactly what Bitcoin-backers had hoped for. Around the Internet, bitcoin
enthusiasts talked about the adrenaline they felt watching the price
surge this morning.
There is already widespread speculation in the community that the currency will soon enough reach $1,000—and beyond.
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