Report for Congress
LL File No. 2014-010233
Regulation of Bitcoin in Selected
Jurisdictions
Alderney • Argentina • Australia • Belgium • Brazil • Canada
Chile • China • Croatia • Cyprus • Denmark • Estonia
European Union • Finland • France • Germany
Greece • Hong Kong • Iceland • India
Indonesia • Ireland • Israel • Italy • Japan
Malaysia • Malta • Netherlands
New Zealand • Nicaragua • Poland
Portugal • Russia • Singapore
Slovenia • Spain • South Korea
Taiwan • Thailand • Turkey
United Kingdom
January 2014
The Law Library of Congress, Global Legal Research Center
Regulation of Bitcoin in Selected Jurisdictions
Global Legal Research Directorate Staff
I. Introduction
This report surveys forty foreign jurisdictions and the European Union, reporting on any
regulations or statements from central banks or government offices on the handling of bitcoins as
well as any significant use of bitcoins in business transactions.
1
Topics covered include whether
bitcoins are recognized as legal tender, the possibility of negative impacts on the national
currency, concerns about fraud, and how transactions using the Bitcoin system are viewed by
tax authorities.
Of those countries surveyed, only a very few, notably China and Brazil, have specific regulations
applicable to bitcoin use. There is widespread concern about the Bitcoin system’s possible
impact on national currencies, its potential for criminal misuse, and the implications of its use for
taxation. Overall, the findings of this report reveal that the debate over how to deal with this new
virtual currency is still in its infancy.
II. Jurisdictional Surveys
Alderney (Channel Islands)
There are no official statements on the Alderney government’s website regarding its position
towards the bitcoin, and it appears to be unregulated on the island. However, journalists have
reportedly obtained documents indicating that Alderney is trying to take the lead and become the
central hub for the bitcoin, by minting and issuing physical bitcoins and creating an international
center with a bitcoin storage vault service that complies with anti-money laundering rules. As
Alderney is a Crown Dependency of the United Kingdom, the UK’s Royal Mint would need to
be involved in issuing any physical currency, and the Head of New Development at the Royal
Mint confirmed to the Financial Times that discussions about issuing the currency have
occurred, but at this time, it remains merely a concept.
2
1
Bitcoin is a peer-to-peer payment system and digital cryptocurrency developed in 2009. This report follows the
convention established by the official Bitcoin website of capitalizing “Bitcoin” when describing the concept of
Bitcoin, or the entire network itself, and not capitalizing “bitcoin” when describing the bitcoin as a unit of account
(last visited Jan. 15, 2014).
2
Jane Wild, Alderney Looks to Cash in on Virtual Bitcoins with Royal Mint Reality, FINANCIAL TIMES (London)
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Regulation of Bitcoin in Selected Jurisdictions
Argentina
Under the National Constitution of Argentina
3
the only authority capable of issuing legal
currency is the Central Bank.
4
Bitcoins are not legal currency strictly speaking, since they are
not issued by the government monetary authority and are not legal tender. Therefore, they may
be considered money but not legal currency, since they are not a mandatory means of cancelling
debts or obligations. Although bitcoins are not specifically regulated, they are increasingly being
used in Argentina, a country that has strict control over foreign currencies.
5
According to some
experts
6
a bitcoin may be considered a good or a thing under the Civil Code,
7
and transactions
with bitcoins may be governed by the rules of the sale of goods under the Civil Code.
8
Australia
In June 2013, a senior Australian Taxation Office (ATO) official told The Australian Financial
Review that the ATO is monitoring the bitcoin, including “its volatility, how widely it is
accepted, its interaction with conventional currencies through exchange mechanisms and
international developments.”
9
The article indicated that the ATO intends to catch misconduct
and subject the currency to the same taxation requirements that apply to conventional
commercial transactions, including the Goods and Services Tax (GST). Another ATO
spokesman said that those speculating in bitcoins may face tax implications and should “keep
detailed records and evidence about what trades they make and the source of any assumptions
about the value of any transaction in Australian dollars.”
10
In December 2013, the governor of the Reserve Bank of Australia (RBA) indicated in an
interview with The Australian Financial Review that the bitcoin has not caused the RBA any
3
CONSTITUCIÓN DE LA NACIÓN ARGENTINA [NATIONAL CONSTITUTION OF ARGENTINA], Aug. 22, 1994, art. 75,
4
Ley No. 24.144, Carta Orgánica del Banco Central de la República Argentina [Law No. 24,144, Charter of the
anexos/0-4999/542/norma.htm. (Arg.)
5
Bitcoin: Fiebre Argentina por la Máquina de Dinero Digital [Bitcoin: Argentine Fever for the Digital Money
6
See, e.g., Andres Chomczyk, Situación Legal del Bitcoin en Argentina,
ELBITCOIN.ORG, (Oct. 10, 2013),
7
texact.htm (last visited Dec. 31, 2013) (Arg.).
8
Id. art. 1323.
9
Kate Walsh & Jason Murphy, ATO Targets Bitcoin Users, AUSTRALIAN FINANCIAL REVIEW (June 24, 2013),
10
Liz Tay, The ATO Says Bitcoins Have Been Taxable Since the Get-Go, BUSINESS INSIDER AUSTRALIA (June 25,
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Regulation of Bitcoin in Selected Jurisdictions
“material problem yet,” but that there were risks for speculators.
11
He said that there was
nothing to stop people holding or transacting in other currencies in Australia, including the
bitcoin.
In October 2013, an Australian Bitcoin bank was hacked, resulting in the theft of over US$1
million of the currency.
12
Belgium
There are no specific laws or regulations regarding Bitcoin in Belgium.
The Belgian Finance Minister, in response to a question by a Belgian senator, stated in July 2013
that while the Bitcoin system seems to be somewhat problematic as a potential tool for money
laundering and other illegal activities, such problems should not be overstated. He also stated
that, based on studies from the Belgian central bank (Banque nationale de Belgique) and the
European Central Bank, the bitcoin does not present any significant risks to price stability, to the
financial system in general, or to its individual users. Finally, in this same statement, the
Minister of Finance indicated that government intervention with regard to the Bitcoin system
does not appear necessary at the present time.
13
Brazil
On October 9, 2013, Brazil enacted Law No. 12,865, which created the possibility for the
normalization of mobile payment systems and the creation of electronic currencies, including the
bitcoin. The Law provides, among other things, for the payment arrangements and payment
institutions that comprise the Brazilian Payment System (Sistema de Pagamentos
Brasileiro, SPB).
14
Law No. 12,865 defines “payment arrangement” as a set of rules and procedures that regulate the
rendering of a particular service to the public that is accepted by more than one recipient,
through direct access by end users, payers, and recipients.
15
“Payment institution” is defined as a
legal entity that, by adhering to one or more payment arrangements, has as a principal or
11
Bianca Hartge-Hazelman, Glenn Stevens Says Bitcoins Show Promise, But So Did Tulips, THE AUSTRALIAN
FINANCIAL REVIEW (Dec. 13, 2013),
Glenn Stevens on the $A, Rates and Growth, THE AUSTRALIAN FINANCIAL REVIEW (Dec. 13, 2013),
12
Jim Urquhart, Bit-Heist: Over $1mn in Bitcoins Stolen from Australian Online Bank,
RT.COM (Nov. 8, 2013),
13
Question écrite no. 5-8723 de Martine Taelman du 16 avril 2013 au ministre des Finances [Written Question No.
5-8723 of April 16, 2013, from Martine Taelman to the Minister of Finance], SÉNAT DE BELGIQUE (July 31, 2013),
14
br/Legislacao/leis/2013/lei12865.htm (Braz.).
15
Id. art. 6(I).
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Regulation of Bitcoin in Selected Jurisdictions
secondary activity, alternatively or cumulatively, one of the activities listed in article 6(III).
“Electronic currency” is defined as resources stored on a device or electronic system that allow
the end user to perform a payment transaction.
16
Article 7 lists the principles that must be observed by the payment arrangements and payment
institutions, according to the parameters to be established by the Brazilian Central Bank in
accordance with the directives of the National Monetary Council (Conselho Monetário Nacional,
CMN). Article 9 defines the competence of the Brazilian Central Bank, pursuant to the
directives established by the CMN. Article 11 determines that the penalties provided for in the
legislation applicable to financial institutions applies to the infractions set forth in Law No.
12,865 and in the directives and norms established, respectively, by the CMN and the Brazilian
Central Bank.
Law No. 12,865 authorizes the Brazilian Central Bank to issue the necessary norms and
instructions for the fulfillment of its provisions; this must be done within 180 days of the
publication of the Law and in accordance with the guidelines established by the CMN.
17
Canada
Canada does not have a specific law or regulation that regulates bitcoins. In an emailed
statement to The Wall Street Journal in January 2014, a Canadian official from Canada’s
Department of Finance stated that Canada does not consider bitcoins to be legal tender. The
official reportedly stated that “[o]nly Canadian bank notes and coins are recognized as legal
tender in Canada. Bitcoin digital ‘currency’ is not legal tender in Canada.”
18
However, the
official also stated that the government of Canada would continue to “monitor developments
involving virtual currencies.”
19
The Wall Street Journal article also quoted a spokesman for Bank of Canada, Canada’s central
bank, who stated that Bank of Canada has been taking a greater interest in bitcoins and other
alternative forms of payment owing to “financial stability considerations.”
20
According to
the spokesman,
16
Id. art. 6(VI).
17
Id. art. 15.
18
David George-Cosh, Canada Says Bitcoin Isn’t Legal Tender, THE WALL STREET JOURNAL (Jan. 16, 2014),
19
Id.
20
Id.
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Regulation of Bitcoin in Selected Jurisdictions
[s]maller, stand-alone payment systems for which there are many substitutes – like
bitcoin – should generally require much less intensive oversight and regulation because
they pose much less risk to the Canadian financial system as a whole. . . . Nevertheless,
these payment systems should be designed and operated to meet the needs of Canadians
which would include convenience and ease of use, price, reliability, safety, and effective
redress mechanisms.
21
In April 2013, Canada’s Revenue Agency reportedly stated that users of bitcoins will have to pay
tax on transactions in the digital currency, based on two separate tax rules that apply to barter
transactions and things that are bought and sold for speculative purposes.
22
According to another
news report, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC),
Canada’s financial intelligence unit, sent out letters to a number of major Canadian Bitcoin
service operators stating that their bitcoin exchanges were not at this time “engaged as a money
services business in Canada as per the Proceeds of Crime (Money Laundering) and Terrorist
Financing and its associated Regulations,” and would not be subject to its rules or have to be
registered with FINTRAC.
23
Chile
According to news reports, there are no merchants that accept bitcoins in Chile as of yet. Buying
virtual currencies in Chile is still very cumbersome.
24
However, there is a community of
information technology professionals who are promoting the use of bitcoins, and have even
opened the first virtual money exchange store in the country. Interest in acquiring bitcoins is
slowly growing. However, because there is no regulation on the use of bitcoins, transactions are
informal in nature and mainly conducted among friends.
25
In 2013, a group of American Libertarians founded a self-sustaining organic farming community
called Galt’s Gulch Chile in central Chile with an economy based on bitcoins.
26
21
Id.
22
business/revenue-canada-says-bitcoins-aren-t-tax-exempt-1.1395075.
23
Jasper Hamill, Canadian Regulators Welcome US Bitcoin Refugees with Open Arms, REGISTER (May 20, 2013),
24
Bitcoin, la Revolución del Dinero [Bitcoin, the Money Revolution], CAPITAL ONLINE (Aug. 12, 2013), http://www.
25
Moneda Virtual Bitcoin Crece en el Mundo y Suma Adeptos en Chile [Virtual Money Bitcoin Grows in the World
26
libertarian-enclaves (registration required); Galt’s Gulch Chile Becomes First Libertarian Community Accepting
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Regulation of Bitcoin in Selected Jurisdictions
China
On December 3, 2013, the central bank of China and four other central government ministries
and commissions jointly issued the Notice on Precautions Against the Risks of Bitcoins.
27
Defining it as a special “virtual commodity,” the Notice said that by nature the bitcoin is not a
currency and should not be circulated and used in the market as a currency.
28
Banks and payment institutions in China are prohibited from dealing in bitcoins. The Notice
required that, at this stage, financial and payment institutions may not use bitcoin pricing for
products or services, buy or sell bitcoins, or provide direct or indirect bitcoin-related services to
customers, including registering, trading, settling, clearing, or other services; accepting bitcoins
or using bitcoins as a clearing tool; and trading bitcoins with Chinese yuan or
foreign currencies.
29
The Notice further required strengthening the oversight of Internet websites providing bitcoin
registration, trading, and other services. It also warned about the risks of using the Bitcoin
system for money laundering.
30
Croatia
On December 6, 2013, the Croatian National Bank (CNB) reportedly conducted a discussion on
the circulation of digital currencies and concluded that the bitcoin is not illegal in Croatia:
31
[CNB] said that it is not electronic money since it’s not debt to the issuer (although it has
some similarities with electronic money), and that it is not legal tender in Croatia but can
be legally used. Croatian kunas (HRK) are the official means of payment in Croatia, but
in some cases payment in other currencies is allowed, such as when person/company
from Croatia is transacting with another entity from outside of Croatia.
32
No specific guidelines were issued and no formal statement was found on CNB’s website.
According to the same report,
27关于防范比特币风险的通知 [Notice on Precautions Against the Risks of Bitcoins] (issued by the People’s Bank
of China, the Ministry of Industry and Information Technology, China Banking Regulatory Commission, China
Securities Regulatory Commission, and China Insurance Regulatory Commission, Dec. 3, 2013) YIN FA, 2013, No.
251_.html (China). An unofficial English summary of the Notice is available at BTC CHINA, https://vip.btcchina.
com/page/bocnotice2013 (last visited Jan. 13, 2014).
28
Id. § 1.
29
Id. § 2.
30
Id. § 3–4.
31
32
Croatian Central Bank Establishes that Bitcoin Is Legal in Croatia,
REDDIT.COM (Dec. 9, 2013), http://www.
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Regulation of Bitcoin in Selected Jurisdictions
CNB commented that money is [a] social institution, and that it’s not unusual that money
is evolving as influenced by the Internet, and established that Bitcoin is at the moment
not regulated or directly monitored, but that regulation will probably in the future fall
under the jurisdiction of central banks.”
33
Cyprus
The use of bitcoins is not regulated in Cyprus. On December 11, 2013, the Central Bank of
Cyprus issued a statement on bitcoins, stating that “it considers the use of any kind of virtual
money as particularly dangerous, given that it is not under any regulatory system and its
operation is unchecked.”
34
Denmark
Denmark’s Finanstilsynet (Financial Supervisory Authority) has issued a statement rejecting the
bitcoin as a currency and stating that it will not regulate bitcoin use.
35
In its statement the
Finanstilsynet emphasizes that it has evaluated the use of the Bitcoin system and found that
Bitcoin does not fall under any of the financial services categories, including the issuing of
electronic money, payment for services, currency exchanges, or the issuing of mortages; thus,
Bitcoin activity is not covered under current financial regulation.
36
This statement by the
Financial Supervisory Authority suggests that Bitcoin should be treated as an electronic service
and earnings from its use would therefore be taxable. However, the Danish Tax Authority has
not published any comment as to whether Bitcoin earnings should be taxed.
Estonia
In Estonia, the use of bitcoins is not regulated or otherwise controlled by the government.
Because of the Bitcoin service’s growing popularity and increasing use by the country’s
population, however, the Bank of Estonia (the nation’s central bank) monitors financial
arrangements that use Bitcoin.
37
According to Google’s search statistics, Estonia is the country
with the second largest number of Internet searches for the term “Bitcoin”; Russia has the most
such searches.
38
33
Id.
34
Cyprus Central Bank Warns About Risks in Use of Bitcoin, FAMAGUSTA GAZETTE (Dec. 10, 2012), http://fama
35
Advarsel mod virtuelle valutaer (bitcoin m.fl.) [Warnings Against Digital Currencies (Bitcoins etc.)],
36
Id.
37
38
Emma Rowley, Russians Most Interested in Bitcoin, Searches Show, THE TELEGRAPH (Apr. 6, 2013), http://www.
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Regulation of Bitcoin in Selected Jurisdictions
On December 19, 2013, the Estonian business information Web portal
Dv.ee published
comments by Michkel Nymmel, the head of the Payment Processing Department of the Bank of
Estonia, concerning the increased use of various financial schemes related to digital currencies.
Nymmel said that according to Bank of Estonia estimates, the bitcoin does not create any threat
to financial or price stability because of its limited virtual area of circulation. He did warn that
“[w]hile Bitcoin provides users with an alternative to traditional payment systems, the bank
believes that there are numerous risks to customers owing to [the] absence of security
mechanisms and credit protection measures.”
39
European Union
The European Union (EU) has passed no specific legislation relative to the status of the bitcoin
as a currency. In October 2012, the European Central Bank issued a report on virtual currency
schemes that discusses the Bitcoin system and briefly analyzes its legal status under existing EU
legislation.
40
Some commentators have suggested that the bitcoin may fall within the definition
of the Electronic Money Directive 2009/110/EC.
41
That Directive defines electronic money
based on three criteria: (a) electronic storage, (b) issuance upon receipt of funds, and (c)
acceptance as a means of payment by a legal or natural person other than the issuer.
42
The report
states that the bitcoin meets the first and third criteria but not the second. Other experts suggest
that the bitcoin falls within the definition of Payment Services Directive 2007/64/EC.
43
In
general, this Directive prescribes rules related to the execution of payments through electronic
money. However, as the report concludes, the bitcoin falls outside the scope of Directive
2007/64/EC because this Directive does not deal with electronic money and because payment
institutions introduced by the Directive are not permitted to issue electronic money.
44
The report also notes that the bitcoin issue has been raised with the European Commission’s
Payments Committee.
45
On December 13, 2013, the European Banking Authority (EBA), the regulatory agency of the
EU responsible for advising EU institutions on banking, e-money regulation, and payments,
issued a warning on the dangers associated with transactions, such as buying, holding, or trading
39
40
other/virtualcurrencyschemes201210en.pdf.
41
Directive 2009/110/EC of the European Parliament and of the Council of 16 September 2009 on the Taking Up,
Pursuit and Prudential Supervision of the Business of Electronic Money Institutions, Amending Directives
42
Id. art. 2(2).
43
Directive 2007/64/EC of the European Parliament and of the Council of 13 November 2007 on Payment Services
in the Internal Market, Amending Directives 97/7/EC, 2002/65/EC, 2005/60/EC and 2006/48/EC and Repealing
0001:0036:EN:PDF.
44
EUROPEAN CENTRAL BANK, supra note 40, at 43.
45
Id.
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Regulation of Bitcoin in Selected Jurisdictions
virtual currencies. The EBA pointed out that since the bitcoin is not regulated, consumers are
not protected and are at risk of losing their money and that consumers may still be liable for
taxes when using virtual currencies.
46
Finland
The Finish Tax Authority, Vero Skatt, has issued instructions for the taxation of virtual
currencies, including the bitcoin. When transferred to another currency, the rules on taxation of
capital gains apply. When the currency is used as a form of payment for goods and services, it is
treated as a trade, and the increase in value that the currency might have gained after it was
obtained is taxable.
47
The sale of bitcoins at a loss in value compared to the original purchase
price is not deductible under the Finish Income Taxation Act, because such a loss in value is not
specifically described as deductible in the Act.
48
France
There are no specific laws or regulations regarding the Bitcoin system in France.
Banque de France, France’s central bank, has recently released a report on the bitcoin, warning
about the dangers of such “virtual currencies.”
49
This report explains that the bitcoin cannot be
considered a real currency or means of payment under current French laws,
50
and criticizes it as a
vehicle for speculation as well as an instrument for money laundering and other illegal
activities.
51
This report also suggests that the conversion between the bitcoin and real currencies
should be considered a payment service, which therefore could only be performed by payment
service providers authorized and supervised by the French Prudential Supervisory Authority
(Autorité de contrôle prudentiel et de resolution).
52
This would help limit the risk of fraud
during the sale or purchase of bitcoins, and also help ensure that such operations are subject to
existing regulations regarding money laundering and terrorism financing.
53
46
Press Release, European Banking Authority, EBA Warns Consumers on Virtual Currencies (Dec. 13, 2013),
47
Vero Skatt, Inkomstbeskattning av virtuella valutor [Income Taxation of Virtual Currencies] (Aug. 28, 2013,
beskattning_av_virtuella_valutor%2828454%29.
48
Id.
49
Banque de France, Les dangers liés au développement des monnaies virtuelles: l’exemple du bitcoin [The Dangers
of the Development of Virtual Currencies: The Bitcoin Example], FOCUS No. 10 (Dec. 5, 2013),
50
Id. at 1.
51
Id. at 2–3.
52
Id. at 6.
53
Id.
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A 2011 court decision that is mentioned in the Banque de France report found that a company
that acted as an exchange for bitcoins should be considered a payment service provider, subject
to oversight from the French Prudential Supervisory Authority.
54
Germany
The German Federal Financial Supervisory Authority (Bundesamt für Finanzdienstleistungen,
BaFin) issued a communication on bitcoins on December 19, 2013.
55
According to BaFin,
bitcoins are legally binding financial instruments that fall into the category of units of account,
according to the first sentence of section 1(11) of the German Banking Act.
56
Within that group
of financial instruments, the bitcoin is related to foreign currencies. Accordingly, bitcoins are
units that are not expressed in the form of legal tender. Instead, they are units of value that have
the function of private means of payment within private trading exchanges, or they are substitute
currencies that are used as a means of payment in multilateral trading transactions on the basis of
legal agreements of private law. The manner in which bitcoins are currently given as payment,
accepted as payment, or “mined”
57
does not require bank supervisory licensing. However,
licensing could become necessary under various circumstances, such as the creation or
maintenance of a market in bitcoins.
The tax treatment of bitcoins has been discussed in some statements by the Federal Ministry of
Finance. Among the opinions voiced by the Ministry is a statement on the possibility of valueadded tax liability for bitcoin transfers, the lack of income tax effects for the underlying
transaction when bitcoins are used as a means of payment, and the lack of long-term capital
gains liability for bitcoins that are held for longer than one year.
58
Greece
No specific legislation on bitcoins exists in Greece, nor has the National Bank of Greece issued
any statement on bitcoins. A private company has listed a few businesses that accept bitcoins as
a form of payment, however.
59
54
Id., referring to SAS Macaraja c/ SA Crédit Industriel et Commercial, Tribunal de commerce [Commercial
Tribunal] Créteil, 2è ch., Dec. 6, 2011.
55
Jens Münzer, Bitcoins: Aufsichtliche Bewertung und Risiken für Nutzer [Bitcoins: Supervisory Evaluation and
2014/fa_bj_1401_bitcoins.html.
56
Kreditwesengesetz [Banking Act] (updated Sept. 9, 1998), BUNDESGESETZBLATT I at 2776, as amended,
57
“Bitcoin mining is the process of making computer hardware do mathematical calculations for the Bitcoin
network to confirm transactions and increase security. As a reward for their services, Bitcoin miners can collect
transaction fees for the transactions they confirm, along with newly created bitcoins.” BITCOIN, supra note 1.
58
Franz Nestler, Deutschland erkennt Bitcoins als privates Geld an [Germany Recognizes Bitcoins as Private
59
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Hong Kong
As of January 8, 2014, Hong Kong had not adopted any legislation specifically regulating the
Bitcoin system, while “the Government and the relevant regulators have been keeping a close
watch on the use of bitcoins locally.”
60
The Secretary for Financial Services and the Treasury
addressed this issue in the Legislative Council on January 8 with the statement that, “[l]ike many
other regions, Hong Kong at present has no legislation directly regulating bitcoins and other
virtual currencies of [a] similar kind. However, our existing laws (such as the Organised and
Serious Crimes Ordinance) provide sanctions against unlawful acts involving bitcoins, such as
fraud or money laundering.”
61
Iceland
In a written response to Iceland’s Morgunblaðið newspaper, the Central Bank of Iceland
reportedly stated that engaging in foreign exchange trading with bitcoins is prohibited, based on
the country’s Foreign Exchange Act, which sets forth general restrictions on foreign exchange
trading and capital movements between Iceland and other countries. According to the Bank’s
statement, “[i]t does not appear that the provisions of the Act that exempt goods and services
from the aforementioned restrictions can be applied to trading in the bitcoin or that other
exemptions from restrictions of the Act apply to such transactions.”
62
India
There appears to be no explicit legal framework that regulates, restricts, or bans bitcoins in India.
However, India’s central bank recently cautioned the public about the possible risks of
cybersecurity attacks and money laundering related to the use of this virtual currency. On
December 24, 2013, the Reserve Bank of India (RBI) issued a public notice to “users, holders
and traders of virtual currencies (VCs), including Bitcoins,” regarding the potential “financial,
operational, legal, customer protection and security related risks that they are exposing
themselves to.”
63
Following the RBI’s public advisory, India’s largest Bitcoin trading platform,
60
Press Release, Government of Hong Kong, LCQ1: Monitoring the Use of Bitcoins (Jan. 8, 2014), http://www.
61
Id.
62
Höftin stöðva viðskipti með Bitcoin [Controls Stop Trading in Bitcoin], MORGUNBLAÐIÐ (Dec. 19, 2013),
article and comments, see Saevarg, Bitcoin Trading Illegal in Iceland According to Icelandic Central Bank, REDDIT,
Jan. 10, 2014). In connection with Bitcoin mining in Iceland, in particular a business called Cloud Hashing set up in
February 2013 that uses over one hundred computers and has mining contracts for 4,500 customers, “keeping 20
63
Press Release, Reserve Bank of India, RBI Cautions Users of Virtual Currencies Against Risks (Dec. 24, 2013),
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64
Also, two days after the
advisory, India’s Enforcement Directorate raided the premises of the person in Ahmedabad who
65
According to news reports, the raid
occurred because of alleged violations of India’s Foreign Exchange Management Act rules.
66
Recent news reports cite the resumption of operations of some Bitcoin operators and the
emergence of new players in the market.
67
Indonesia
A spokesman for Bank Indonesia reportedly issued a statement on Bitcoin in December 2013,
saying that “[b]itcoin is a potential payment method, but it’s different than ordinary currency. . . .
It is not regulated by the central bank so there are risks. . . . At the moment, we’re studying
bitcoin and we have no plan to issue a regulation on it.”
68
Ireland
The Central Bank of Ireland has not published a statement on its website regarding bitcoins.
However, it was quoted in the Dáil Éireann (the Assembly of Ireland, the principal chamber of
the Oireachtas, the Irish Parliament) as stating that it does not regulate bitcoins, and they are not
considered to be legal tender within the European Union.
The Revenue Commissioners in Ireland are monitoring the development of the bitcoin and
considering its implications for possible taxation, with the most likely areas of taxation being in
the taxation of any gains, as well as value-added tax, which is a charge on goods and services.
The government did raise concerns about the use of bitcoins and noncompliance with tax laws,
but reported that it was advised that “currently, the threat posed to the Exchequer is likely to be
small. It is probable too that for some evaders, it represents a new opportunity for existing noncompliance, rather than a new form of evasion.”
69
64
bitcoin-exchanges-shut-shop-in-india/article5504407.ece.
65
First Time in the Country, ED Raids a Bitcoin Seller in Ahmedabad, DNA INDIA (Dec. 27, 2013), http://www.
66
Id.
67
business/indian-bitcoin-operators-resume-operations-cautiously/article5578640.ece.
68
Faisal Maliki Baskoro, Bitcoin Finds Itty-Bitty Market in Indonesia, JAKARTA GLOBE (Dec. 1, 2013), http://www.
69
webpack.nsf/takes/dail2013121000054?opendocument (Ir.).
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Israel
As of December 23, 2013, Israel had not adopted any specific legislation regulating bitcoins.
The Israel Tax Authority, however, has reportedly been considering taxing profits derived from
trading in bitcoins. In its opinion, “whoever profits from Bitcoin trading owes tax although at
this stage it is not yet clear what model for taxing profits will be used.”
70
According to media reports, officials from the Ministry of Justice and Bank of Israel have been
conducting discussions on the implications of using bitcoins, particularly in illicit transactions.
71
While Israeli pro-Bitcoin activists highlight the advantages of using virtual currency,
72
commentators argue that because of current price fluctuations, bitcoins are “not yet a reliable
store of value, an important feature of functional currency. . . . [In addition, their] near
anonymity makes [them] attractive for illicit transactions as well, a problem that government
oversight may be able to address.”
73
An incident of an alleged attempted extortion involving a request for payment in bitcoins was
reported on December 19, 2013. At least three Israeli banks have received emails from an
unknown individual threatening to release the personal details of millions of their customers
unless the payment was made. According to news reports, the Bank of Israel has been
cooperating with the Shin Bet security service and the Prime Minister’s Office to help secure the
banks’ computer systems.
74
Italy
Italy’s stance on the Bitcoin system parallels the stance taken by the EU. On October 29, 2002,
the European Central Bank published a report titled Virtual Currency Schemes,
75
which studies
relevant economic and legal aspects of the Bitcoin system. A European Directive of 2009
regulates the use of electronic currencies (including the bitcoin) with the aim of harmonizing
payment methods, increasing competition, and facilitating market access.
76
Italy implemented
this Directive through Legislative Decree No. 45 of April 16, 2012,
77
which defines the concept
70
Ela Levy-Weinrib, Government Considers Taxing Bitcoin Profits, GLOBES (Sept. 12, 2013), http://www.
71
Niv Elis, Bank of Israel Mulls Regulating, Recognizing Bitcoin Virtual Currency, THE JERUSALEM POST (Dec. 3,
72
95%d7%90-%d7%9c%d7%91%d7%99%d7%98%d7%a7%d7%95%d7%99%d7%9f/ (in Hebrew) (last visited
Dec. 23, 2013).
73
E.g., Elis, supra note 71.
74
Sivan Aizescu, Israeli Banks Report Extortion Attempt by Hacker Demanding Payoff in Bitcoin, HAARETZ (Dec.
75
European Central Bank, supra note 40.
76
Directive 2009/110/EC, supra note 41.
77
Decreto Legislativo 16 Aprile 2012, n. 45 [Legislative Decree No. 45 of April 16, 2012], NORMATIVVA,
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Regulation of Bitcoin in Selected Jurisdictions
of electronic currency, including the cases in which it is issued electronically in exchange for
funds to be used as a means of payment, and identifies the persons authorized to issue electronic
money. The Decree allows the use of electronic currencies in accordance with the EU Directive
at the level of the European Central Bank, and by the central banks of European Members, the
Italian public administration at the regional and local government levels, and the Italian postal
system. However, the use of electronic currency is restricted to banks and electronic money
institutions—that is, private legal entities duly authorized and registered by the Central Bank of
Italy. Aside from these developments, Italy does not regulate bitcoin use by private individuals,
and currently the implementation of initiatives concerning the use of electronic currencies lies
with the EU.
78
Japan
There are at present no laws in Japan regulating the use of bitcoins. Haruhiko Kuroda, governor
of the Bank of Japan (BOJ), recently stated that BOJ was “researching issues of bitcoins, but I
have nothing to say regarding bitcoins at the moment.”
79
Malaysia
Bank Negara Malaysia officials apparently met with local bitcoin proponents in November 2013
to learn more about the currency.
80
However, no official statement regarding the meeting or the
Bank’s views of the Bitcoin system was located.
Malta
Malta currently does not have any regulations specifically pertaining to bitcoins, nor does there
appear to be any official government statement on the recognition or policy towards the bitcoin.
According to news reports, the bitcoin is not deemed as a regulated instrument under the EU’s
Markets in Financial Instruments Directive 2004/39/EC (MiFID),
81
thus there are no licensing
requirements for companies that deal in bitcoins to obtain a license from the Malta Financial
Services Authority.
82
78
Giulia Arangüena De La Paz, Bitcoin, moneta virtuale e mezzo di pagamento reale: l’UE meglio degli USA? (In
teoria, sì) [Bitcoin, Virtual Currency and Actual Payment Method: Is the EU Better than the USA (In Theory, Yes)],
_di_pagamento_reale_218903.html.
79
kaiken_2013/kk1312c.pdf (in Japanese).
80
Mark Smalley, Bank Negara’s Officially Unofficial Statement on Bitcoin Is No Statement, BETANOMICS (Nov. 4,
81
Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on Markets in Financial
Instruments Amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European
82
malta_bitcoin_company (last visited Jan. 8, 2014).
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Regulation of Bitcoin in Selected Jurisdictions
In October 2012, a Maltese company launched the first bitcoin hedge fund. The fund was
“incorporated as a Bermuda exempted company and is registered as a segregated account
company receiving funds at Citibank London.”
83
Netherlands
Virtual currencies such as bitcoins currently do not fall within the scope of the Act on Financial
Supervision (Wet op het financieel toezicht) of the Netherlands, as the Dutch Minister of
Finance, Jeroen Dijsselbloem, recently emphasized.
84
“The ‘alternative virtual currency’
[bitcoin] cannot be seen as ‘electronic money,’ ” he stated, “because it fails the definition set by
the Dutch law.”
85
The Act defines “electronic money” as “a monetary value stored on an
electronic device or stored on-distance in a central accounting record,” and an “electronic money
institution” as “a party, not being a bank, whose business it is to obtain the disposal of funds in
exchange for which electronic money with which payments can be made is issued, also to parties
other than the party issuing the electronic money.”
86
Thus, under the Act, electronic money can
be described as having the following features: it “is stored electronically; represents a claim on
the person or organization who issues it; is issued in exchange for money, in order to make
payments; and it can be used to pay both the issuer and others.”
87
Because bitcoins “do not
represent a claim on the issuer and they aren’t necessarily issued in exchange for money, they
aren’t electronic money,” a Dutch Internet lawyer, Arnoud Engelfriet, has explained.
88
Nor does
Engelfriet consider bitcoins financial products, so value-added tax would be due on
bitcoins received.
89
83
Jon Matonis, First Bitcoin Hedge Fund Launches from Malta, FORBES (Aug. 3, 2013),
84
The Minister recently pointed this out in response to written questions posed by the Dutch parliament. See
Minister Dijsselbloem: virtuele valuta’s zoals Bitcoin vallen niet onder toezicht AFM [Authority for Financial
Markets] en DNB [Dutch Central Bank] [Minister Dijsselbloem: Virtual Currencies Like Bitcoin Do Not Fall Under
digitale betaalmiddelen zoals de Bitcoin [Answers to Parliamentary Questions on the Use and Control of New
Digital Means of Payment Such as Bitcoin] (Dec. 19, 2013), available on the Government of the Netherlands
85
Branko Collin, Bitcoin Income Shall Be Taxed, Dijsselbloem Says, 24 ORANGES (June 17, 2013), http://www.24
86
Wet op het financieel toezicht [Act on Financial Supervision] (Sept. 28, 2006, as last amended Sept. 19, 2013, in
2009/11/16/engelse-vertaling-van-de-wft.html (click on “Download ‘Engelse vertaling van de Wft’ ”
PDF document).
87
Collin, supra note 85.
88
Id.
89
Id. A “financial product” is defined under the Act on Financial Supervision as “an investment object; a current
account including the ancillary payment facilities; electronic money; a financial instrument; credit; a savings
account including the ancillary savings facilities; an insurance not being a reinsurance; or another product to be
specified by Decree.” Act on Financial Supervision § 1:1.
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Regulation of Bitcoin in Selected Jurisdictions
In response to a question from the Dutch Parliament as to the likelihood of the formal legal
definition of electronic money being revised in anticipation that virtual currencies will
increasingly function as money, the Minister of Finance indicated that such a change is not yet
desirable, given the bitcoin’s limited scope, relatively low level of acceptance, and limited
relationship to the real economy. He emphasized that currently, despite the watchful eye of
government authorities on the future development of virtual currencies, in principle the
consumer is solely responsible for their use.
90
The Dutch Central Bank (De Nederlandsche Bank, DNB) recently called attention to the risks
posed by the purchase of virtual currencies, including bitcoins and litecoins,
91
and warned
consumers to be wary.
92
It noted that the development of such currencies is growing but that
exchange rates are volatile and that the DNB does not supervise them.
93
The former President of
the DNB, Nout Wellink, has called dealings in bitcoins a bubble that is “pure speculation” and
“hype” and “worse than the tulip mania” of the seventeenth century because “at least then you
got a tulip [at the end], now you get nothing.”
94
New Zealand
The website of the Reserve Bank of New Zealand states the following:
The Reserve Bank of New Zealand Act prohibits the issuance of bank notes and coins by
any party other than the Reserve Bank. However, the Reserve Bank has no direct power
over any form of alternative payments medium.
Non-banks do not need our approval for schemes that involve the storage and/or transfer
of value (such as ‘bitcoin’) – so long as they do not involve the issuance of physical
circulating currency (notes and coins).
95
90
Ministry of Finance, supra note 84, Question/Reply 5.
91
Litecoin is a peer-to-peer Internet currency based on the Bitcoin protocol but differing from Bitcoin in that it
provides faster transaction confirmations and can be more efficiently mined with consumer-grade hardware. What is
92
Consumers Should Be Aware of the Risks of Virtual Currencies, DE NEDERLANDSCHE BANK (Dec. 3, 2013),
93
Id.
94
Alex Hern, Bitcoin Hype Worse Than ‘Tulip Mania’, Says Dutch Central Banker, THE GUARDIAN (Dec. 4, 2013),
a partly tongue-in-cheek article in The Atlantic noted that “you can buy more than 700 tulips with one bitcoin.
That’s a precipitous rise in value—at the beginning of October 2013, you couldn’t even buy 90 tulips with one
bitcoin. And two years ago? A single bitcoin could buy you almost exactly two measly tulips.” Robinson Meyer,
nology/archive/2013/12/how-many-tulips-can-you-buy-with-one-bitcoin/282062/.
95
and_coins/0094941.html (last visited Dec. 23, 2013).
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Regulation of Bitcoin in Selected Jurisdictions
On December 11, 2013, The Wall Street Journal reported that the assistant governor of the
Reserve Bank had urged the country’s banks and businesses to exercise caution with regard to
the bitcoin, saying “[y]ou have to worry about where’s the supply, how it’s controlled, how it’s
monitored. Who knows at this point? There is still a lot for the world to learn on this issue.”
96
New Zealand’s Commerce Commission says the bitcoin is covered by the Fair Trading Act and
the Commerce Act.
97
Nicaragua
It appears that Nicaragua has not yet promulgated any legislation regulating bitcoins, nor has the
Central Bank of Nicaragua issued any rulings or guidelines on the subject. However, news
reports indicate that bitcoins are being used in the country.
The Nicaraguan daily El Nuevo Diario reported on January 13, 2014, that an American banker,
Greg Simon, recently bought a 1,200-square-meter plot of land in San Juán del Sur, one of the
most important tourist areas in Nicaragua, for 80 bitcoins, currently the equivalent of about
US$72,000. Simon is reportedly interested in promoting the use of bitcoins in Nicaragua and
advanced some ideas related to their use. The article indicated that the real estate agency
involved in the transaction, Century 21 Nica Life Realty, has received many emails from people
welcoming the sale and from others interested in using bitcoins to buy land in San Juán del Sur.
98
Poland
The use of the bitcoin in Poland is not regulated by a legal act at present. On December 18,
2013, the Warsaw School of Economics conducted a conference entitled “Poland – A Bitcoin
Superpower: Opportunities and Threats.” According to information published on the school’s
Facebook page, an official representative of the Polish Ministry of Finance, Szymon Wozniak,
participated in the conference and stated that the Ministry of Finance does not view the bitcoin as
an illegal means of payment, but also cannot recognize it as a legal currency.
99
On December 21, 2013, the Russian website
Coinspot.ru reported that at the Warsaw conference,
Wozniak said that Polish financial institutions define their position on digital currencies in
accordance with the position of the European regulatory financial institutions. He was cited as
saying that Poland “does not attempt to prevent the development of Bitcoin. . . . [W]e expect that
96
Rebecca Howard, New Zealand Central Bank Joins Others in Warning on Bitcoins, THE WALL STREET JOURNAL
97
digital-living/30008862/bitcoin-beauty-or-bubble.
98
Andrea Sepúlveda, Nicaragua Ya Acepta Moneda Virtual Bitcoin, EL NUEVO DIARIO (Jan. 13, 2014),
99
Wojciech Milczarek et. al., Polska potęgą bitcoin – szanse i zagrożenia [Poland – A Bitcoin Superpower:
5255 (last visited Jan. 16, 2014).
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Regulation of Bitcoin in Selected Jurisdictions
the users will decide by themselves if the government needs to regulate and protect this area or
everything shall stay as it is.”
100
Wozniak was more certain about the taxation of bitcoin transactions. He said that all types of
income must be taxed under Polish law, and the law makes no distinction among the types of
payments used to conduct transactions, including bitcoin payments. According to him, all
income received from bitcoin transactions is subject to reporting and taxation.
101
Portugal
On November 22, 2013, the Bank of Portugal issued a press release addressing bitcoins
102
in
which the Bank makes reference to a recent study of the European Central Bank (ECB). The
study asserts that Bitcoin is considered a bidirectional virtual currency payment model (virtual
currency scheme type 3) in which users can both buy and sell virtual currency with legal tender
and with which they can purchase goods and services in both the real and virtual worlds.
103
The press release states that because there is no central authority to ensure the finality and
irrevocability of payment orders and no certainty of their acceptance as a means of payment,
bitcoins cannot be considered a safe currency. Their issuance is made by unregulated and
unsupervised entities and is therefore not subject to any prudential requirements. The system is
also not subject to any oversight activity. Users bear all the risk, since there is no fund to protect
depositors/investors.
104
The bitcoin has no specific legal framework in Portugal, either at the level of its creation or at the
level of its use, that defines clear rights and responsibilities for all parties involved in the
payment model. As its creation is decentralized and there is no “owner” of the system, it is
difficult to define the jurisdiction under which procedures and rules applicable to the model
should be established.
105
In its report, the ECB recognizes the existence of Bitcoin as an innovative model of virtual
currency. However, neither the ECB nor the Bank of Portugal oversees the issuance or use of
bitcoins in Portugal or in Europe.
106
100
polsha-ne-schitaet-bitkoin-tranzakcii-nezakonnymi/ (in Russian).
101
Id.
102
Press Release, Banco de Portugal, Meios de Pagamento: Bitcoin [Bank of Portugal, Means of Payment: Bitcoin]
pagamento.aspx.
103
European Central Bank, supra note 40.
104
Press Release, Banco de Portugal, supra note 102.
105
Id.
106
Id.
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Regulation of Bitcoin in Selected Jurisdictions
The press release reports that Bitcoin is understood as a payment model of bidirectional virtual
currency, in which the virtual currency competes with legal tender (e.g., the euro or the dollar).
At present, although its issuance and acceptance has been growing, it seems that the bitcoin’s
relationship with the real economy is still limited, with bitcoins exhibiting both low trading
volumes and low levels of acceptance. As this reality could change substantially in the future,
the European central banks are monitoring the phenomenon and may eventually recognize and
act on payment models of virtual currency.
107
Russia
There are at present no legal acts that specifically regulate the use of bitcoins in the Russian
Federation. According to a report prepared by the Russian law firm Tolkachev and Partners,
however, the use of bitcoins can be restricted according to article 140 of the Russian Civil Code,
which recognizes the Russian ruble as the exclusive means of payment in the Russian Federation
and requires that all prices for financial transactions conducted in Russia be defined in rubles.
108
According to the report, if the bitcoin is considered by the parties to be a foreign currency or
external security for the purposes of a particular transaction, such a transaction can be recognized
as an illegal currency operation subject to prosecution under the Russian law on
administrative responsibility.
109
German Gref, president of largest Russian government-owned bank, Sberbank, stated in a recent
interview that Russian authorities are monitoring developments related to the bitcoin.
110
He said
that global regulation of virtual currencies will be needed in the near future, and he did not
exclude the possibility of Russian involvement in this process. Additionally, he said that the
issuance of virtual currency can be initiated in Russia based on one of the existing national
online payment systems.
111
Singapore
In September 2013 a spokesman of Singapore’s central bank, the Monetary Authority of
Singapore (MAS), reportedly warned consumers to “be wary of . . . trading [in bitcoins].”
112
According to the news report, the MAS spokesman told the media that “[i]f Bitcoin ceases to
operate, there may not be an identifiable party responsible for refunding [consumers’] monies or
for them to seek recourse.”
113
107
Id.
108
Artem Tolkachev & Kseniia Osipova, Possibilities and Risks of Using Bitcoin in Russia,
ATPLAW.RU (Aug. 29,
109
Id.
110
Gref: Development of Virtual Currencies Cannot Be Stopped,
NEWSLAND.RU (Dec. 14, 2013), http://newsland.
com/news/detail/id/1293000/ (in Russian).
111
Id.
112
Irene Tham, Bitcoin Users Beware: MAS, STRAITS TIMES (Sept. 22, 2013), available at ASIAONE BUSINESS,
113
Id.
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Regulation of Bitcoin in Selected Jurisdictions
In December 2013, the MAS reportedly decided not to intervene on the question of whether
businesses can accept bitcoins as a means of transacting goods and services.
114
In an email to a
Singapore-based bitcoin trading platform, according to the news report, the MAS stated that
“[w]hether or not businesses accept Bitcoins in exchange for their goods and services is a
commercial decision in which MAS does not intervene.”
115
In January 2014, the Inland Revenue Authority of Singapore reportedly laid out tax advice
regarding the purchase, sale, and exchange of bitcoins for local businesses and individuals in an
email response to queries on bitcoins:
116
“Bitcoin itself is not considered a good, nor does it
qualify as money or currency, according to the IRAS and under Singapore’s GST [Goods and
Services Tax] Act. Instead, the supply of Bitcoins is examined under GST and varies according
to how the service is provided.”
117
Slovenia
On December 23, 2013, the Ministry of Finance of the Republic of Slovenia issued a formal
opinion about the status of the bitcoin and other virtual currencies in response to a request from
the Tax Administration of the Republic of Slovenia.
118
The opinion states that the bitcoin is not a
monetary means under Slovenian law and not a financial instrument. According to the Ministry
of Finance, the existing legislative framework does not contain provisions applicable to
businesses involved in bitcoin trading.
119
However, the Ministry stressed that taxation of bitcoin
income still warrants review on an individual basis.
Commenting on the opinion, the Slovenian news service
Beforeitsnews.com stated that it is
necessary to determine who actually generates the income and to classify what sort of income is
being generated:
Thus some income will be taxed. Income made by individuals is subject to standard
income tax provisions, irrespective of the form. Bitcoin income will apparently be taxed
by measuring the bitcoin/euro exchange at the time of the transaction. Personal income
tax is not paid on capital gains. Individuals who generate income by selling bitcoins will
114
Terence Lee, Singapore Government Decides Not to Interfere with Bitcoin, TECHINASIA (Dec. 23, 2013),
115
Id.
116
pore-issues-tax-guidance-on-bitcoins-7000024966/.
117
Id.
118
Tax Treatment of Virtual Currency Operations DOH-2 and CITA-2, REPUBLIC OF SLOVENIA, MINISTRY OF
_pojasnila/dohodek_iz_kapitala/dobicek_iz_kapitala/vrednostni_papirji_in_delezi_v_gospodarskih_druzbah_zadrug
ah_in_drugih_oblikah_organiziranja_ter_investicijski_kuponi/davcna_obravnava_poslovanja_z_virtualno_valuto_p
o_zdoh_2_in_zddpo_2/ (in Slovenian).
119
Id.
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Regulation of Bitcoin in Selected Jurisdictions
not pay income tax. At that [sic] profits derived from trading and mining Bitcoin are
taxed as income under the provisions of Slovenian personal income legislation.
120
Spain
Bitcoins have not yet been regulated in Spain and are not considered to be legal currency
since they are not issued by the government’s monetary authority. However, they may be
considered digital goods or things under the Civil Code,
121
and transactions with bitcoins
may be governed by the rules of barter contained in the Civil Code,
122
according to the
analysis of one Spanish law firm.
123
Merchants who accept bitcoins are required to issue an
invoice with value-added tax in euros.
124
Spain was the second country in the world to seize bitcoins during an investigation of fraudulent
transactions conducted with bitcoins, according to a November 2013 report by El Mundo.
125
South Korea
There are at present no laws in South Korea regulating the use of the Bitcoin system. However,
the president of the Bank of Korea recommended at a press conference on December 12, 2013,
that the bitcoin be regulated in the future.
126
Taiwan
As of January 13, 2013, Taiwan had not passed any legislation regulating the use of bitcoins. On
December 30, 2013, the Central Bank of the Republic of Taiwan and the Financial Supervisory
Commission (FSC) issued a warning to the public about the risks in dealing with bitcoins. The
regulators said the bitcoin is not a real currency, but a “highly speculative virtual commodity.”
The general public was warned about the specific risks associated with accepting, trading, or
holding bitcoins. If financial institutions use bitcoins, according to the warning, the Central
120
Slovenia Clarified the Question of Bitcoin Taxation,
BEFOREITSNEWS.COM (Dec. 25, 2013), http://beforeitsnews.
com/economy/2013/12/slovenia-clarified-the-question-of-bitcoin-taxation-2581938.html.
121
CÓDIGO CIVIL [CIVIL CODE] arts. 335, 337 & 345 (July 25, 1889, as amended), BOLETÍN OFICIAL DEL ESTADO,
122
Id. art. 1538.
123
Pablo Fernández Burgueño, 12 Cosas que Deberías Saber Antes de Usar Bitcoins (La Ley y el Bitcoin) [Twelve
Things You Should Know Before Using Bitcoins (The Law and Bitcoin)], ABANLEX ABOGADOS (Nov. 27, 2013),
124
Id.
125
Pablo Romero, Así se Incauta la Policía de Bitcoins [This is How Bitcoins Are Seized by the Police], EL MUNDO
126
Hanun “chongbu pit’uk’oin kyuje mandu rora” [Bank of Korea:“Government Needs to Make Bitcoin
5412370070.htm.
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Regulation of Bitcoin in Selected Jurisdictions
Bank and the FSC may, in accordance with laws and regulations, take necessary regulatory
actions at the appropriate time.
127
Thailand
According to news reports, the Bank of Thailand ruled the bitcoin illegal on July 29, 2013.
128
However, it appears that “it issued a preliminary ruling that using bitcoins . . . was illegal
because of a lack of existing laws” in the case of a currency-exchange license application by
Bitcoin Co. Ltd. Other businesses that have licenses have continued operating bitcoin exchanges
in Thailand.
129
Turkey
No formal regulations on the bitcoin exist in Turkey. The bitcoin, according to a press release
issued in November 2013 by the country’s Banking Regulation and Supervision Agency, is not
considered electronic money within the scope of the newly enacted Law on Payment and
Securities Reconciliation Systems, Payment Services, and Electronic Money Institutions,
130
“and
thus its surveillance and supervision are not possible within the frame of the Law.”
131
The press
release goes on to warn the public that the lack of identification of the parties involved in bitcoin
or similar virtual money transactions “creates a suitable environment for these virtual monies to
be used in illegal activities.”
132
It adds that the bitcoin or similar virtual money also poses risks
because its market value may be extremely volatile; it may be stolen from a digital wallet, lost,
or illegally used without the owners’ knowledge; and it may be subject to operational errors
resulting from irreversible transactions or to abuses inflicted by malicious vendors.
133
One Turkish commentator points out that because Bitcoin is independent of any control
mechanism, it is not possible to freeze or seize Bitcoin accounts.
134
Some financial experts in
Turkey liken Bitcoin, in terms of its features and pattern of development, to Tulip mania in
127比特幣並非貨幣，接受者務請注意風險承擔問題 [Bitcoin Is Not Real Currency; Accepters Please Look to the
128
Jake Maxwell Watts, Thailand’s Bitcoin Ban Is Not Quite What It Seems, QUARTZ (July 31, 2013),
http://qz.com/
110164/thailands-infamous-bitcoin-crackdown-is-not-quite-what-it-seems/.
129
Id. See also, Bangkok Pundit, Has Bitcoin Really Been Banned in Thailand?, ASIAN CORRESPONDENT (July 31,
130
Ödeme ve Menkul Kıymet Mutabakat Sistemleri, Ödeme Hizmetleri ve Elektronik Para Kuruluşları Hakkında
Kanun [Law on Payment and Securities Reconciliation Systems, Payment Services, and Electronic Money
Institutions] (June 20, 2013), No. 6493, 28690 RESMÎ GAZETE [OFFICIAL GAZETTE] (June 27, 2013), http://www.
131
Press Release, 2013/32, Banking Regulation and Supervision Agency, [untitled] (Nov. 25, 2013), http://www.
132
Id.
133
Id.
134
Ceren Savaser, Bitcoin and Taxation Under Turkish Legislation,
HG.ORG LEGAL RESOURCES (Dec. 9, 2013),
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Regulation of Bitcoin in Selected Jurisdictions
Holland, the Mississippi balloon in France, or the Enron or mortgage balloons in the United
States, because the bitcoin “has no use value, but only exchange value.”
135
Moreover, in their
view, because it has no intrinsic worth other than what others are willing to pay for it, “it is
always in a bubble.”
136
Nevertheless, bitcoin use is apparently flourishing in Turkey. There is a Turkish Lira-Bitcoin
exchange, called BTCTurk, and leftover foreign currency can be exchanged at the Istanbul
Ataturk Airport for bitcoins through a Traveler’s BOX, a machine like an ATM.
137
BTCTurk,
which was launched in July 2013, is reportedly the first company in Turkey “to enable the
exchange of Turkish lira for bitcoin and vice versa.”
138
United Kingdom
There has been no official statement published on the Bank of England’s website regarding its
position towards Bitcoin. In the latest quarterly reports from the Bank, Bitcoin is expressly
excluded.
139
The government of the United Kingdom has stated that the bitcoin is currently
unregulated.
140
A high-level review of bitcoin use took place in the summer of 2013, at which
time concerns were raised as to the lack of transparency with the use of the coin, but it was left
unregulated.
141
While bitcoins are not regulated, it has been reported that Her Majesty’s Revenue and Customs
has classed bitcoins as “single purpose vouchers,” rendering any sales of them liable to a valueadded tax of 10–20%. This has been strongly criticized by those selling bitcoins as being “a
show stopper for the UK Bitcoin industry.”
142
There is no specific reference on Her Majesty’s
Revenue and Customs site to bitcoins.
Several Freedom of Information requests for information about meetings involving discussions
of the bitcoin at different government departments and bodies have been rejected in accordance
135
Id.
136
Id.
137
Maria Santos, Travelers BOX at Turkish Airport Allows You to Exchange Currency Leftovers for Bitcoin
138
Emily Spaven, BTCTurk Becomes the First Turkish Lira-to-Bitcoin Exchange, COINDESK (July 31, 2013),
139
Mona Naqvi & James Southgate, Bank of England, Banknotes, Local Currencies and Central Bank Objectives,
publications/Documents/quarterlybulletin/2013/qb1304.pdf.
140
Banking: Bitcoins, PARL. DEB., H.L. (5th ser.) 4013 (Dec. 18, 2013), http://www.publications.parliament.
uk/pa/ld201314/ldhansrd/text/131218w0001.htm (U.K.).
141
Jane Wild, UK Taxmen, Police and Spies Look at Bitcoin Threat, FINANCIAL TIMES (London) (May 13, 2013),
142
Tom Gullen, The Challenge of Being a Bitcoin Trader, FINANCIAL SERVICES CLUB BLOG (Nov. 13, 2013),
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Regulation of Bitcoin in Selected Jurisdictions
with sections 31 and 35 of the Freedom of Information Act.
143
Section 31 provides that
information is exempt from the provisions of the Freedom of Information Act if it will prejudice
law enforcement, with the reasons cited as “prejudic[ing] the activities of one or more of the law
enforcement agencies.” Section 35 of the Act provides that information is exempt if it relates to
the formulation or development of government policy.
144
143
144
Gullen, supra note 142.
The Law Library of Congress 24
