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22 August 2016 10:23

Where is it easier to launch a bitcoin startup? Where is it possible to buy food or a car for bitcoins? CoinFox has made a list of five countries where cryptocurrency owners feel at ease.

17 August 2016 11:08

With all that blockchain media hype, to follow the emerging new applications of the distributed ledger becomes a challenge. CoinFox has listed five use cases that look the most promising as of August 2016.

11 August 2016 21:35

What does it mean to be a politician and support bitcoin? What are the political and ideological values of the crypto community? CoinFox made an effort to overview the whole range of bitcoin politics.

10 August 2016 17:30

Bitcoin is no longer reserved for geeks and gains more publicity every day, together with control from the state. Here are 5 countries with the tightest bitcoin regulations, which does not always mean a ban.

Iceland

Iceland became one of the few states to legally forbid trading operations with bitcoin. As its central bank states, “it is prohibited to engage in foreign exchange trading with the electronic currency bitcoin, according to the Icelandic Foreign Exchange Act.” However, it did not prevent the birth of the local cryptocurrency – auroracoin, whose creator bears the pseudonym Baldur Friggjar Óðinsson derived from Scandinavian mythology. Besides, Iceland remains a significant bitcoin mining centre.

USA

The USA are considered a bitcoin-friendly country, but its government seeks to control bitcoin operations the same way it does with traditional currencies. In March 2013, the Internal Revenue Service considered virtual currency as property liable to federal taxation and ruled that professional miners are subject to the self-employment tax.

In September 2015, the US Commodity Futures Trading Commission (CFTC) defined bitcoin as a commodity subject to the existing legislative regulations. Thus, CFTC clarified its position regarding bitcoin and, in addition, accused bitcoin operator Coinflip of illegal trade and swap operations. This step was regarded by a part of the community as an act of bitcoin legalisation and incorporation of the cryptocurrency into the existing legal framework. Licensing matters remain at the discretion of each state.

On 24 June 2015, the New York State Register officially published the final “Regulation of the Conduct of Virtual Currency Businesses.” This provided that all bitcoin companies need to apply for a licence in order to prove compliance with the conditions announced by the New York Department of Financial Services. According to the so-called BitLicense, bitcoin companies are obliged to follow strict KYC (Know your customer) and AML (Anti-money laundering) rules. The deadline for submission of applications was 8 August. Any company that failed to apply by this date or whose application was rejected would not be allowed to operate in the state of New York any longer. The bitcoin community interpreted the document as an intrusion into the emerging free cryptocurrency market. Several companies left New York State immediately after the publication of the regulations, including ShapeShift, Kraken, Bitfinex, LocalBitcoins and BitQuick.

Japan

Since March 2016, virtual currencies are recognised in Japan as “asset-like values that can be used in making payments.” A set of rules has been also adopted to fight money laundering and protect customers of digital currency exchanges. The new regulations also place bitcoin exchanges under the authority of the Japanese Financial Services Agency (FSA). They are obliged to register with the Agency, have a minimum capital of ¥10 million, submit annual financial reports and undergo auditing by certified accountants. This is expected to help prevent money laundering and drive out of business smaller enterprises incapable of protecting customer funds.

According to attorney Motokazu Endo,

“Cryptocurrencies' prices fluctuate sharply, and they're highly speculative. Many exchanges have weak financial bases, and should they go bankrupt, it would be tough to protect creditors' assets.”

Currently, people in Japan who buy bitcoin have to pay an 8% consumption tax. It is levied every time a Japanese citizen purchases bitcoins with yens through a Japanese exchange because this bitcoins fall under the definition of “imported goods”. However, bitcoins can be bought on foreign exchanges and “smuggled” into the country avoiding taxation.

Australia

The current rules of the Australian Taxation Office attribute to bitcoin the status of “intangible assets” rather than money making it subject to goods-and-services tax (GST). Bitcoin businesses also can be liable for the tax if they receive payments in bitcoin. Meanwhile, in March 2016, it was announced that the authorities will seek to introduce legislation on digital currencies and address the problem of its double taxation by exempting bitcoin from GST. The legal base for this is to be developed by the end of the year. Since 2014, Australian bitcoin businesses are obliged to submit detailed customer reporting and inform the law-enforcement authorities about suspicious deals.

Last August, the Senate Economics References Committee’s inquiry into digital currency recommended bitcoin along with other cryptocurrencies to be recognised as regular money. In October 2015, Australian governmental report assured that the emerging payment systems, such as bitcoin, will be regulated “in a graduated way”. Despite official declarations, Australian banks adopted rather a hostile attitude towards the bitcoin industry. In September, a group of leading banks, including Westpac Banking Corporation and CBA, made an unexpected announcement to the founders of at least 17 bitcoin startups, saying their accounts would be closed, without any further explanation. This attack on bitcoin companies made the Australian Competition and Consumer Commission open an investigation whether the closing of the accounts complied with the law.

Early in August 2016, government agency Australian Transaction Reports and Analysis Centre published a report stating that “electronic, online and new payment methods” are increasingly used by terrorist groups. The document suggests a further tightening of cryptocurrency regulations in the country.

China

The official attitude towards bitcoin in China is ambiguous. Its legal status is far from being equal with that of fiat currency: financial companies are directly forbidden to own it. The cryptocurrency is not recognised as a means of payment by the official structures: banks do not accept it and Chinese financial system does not protect bitcoin owners in the case of stock exchange crisis. Bitcoin, however, is not forbidden for private use. Citizens may sell and buy bitcoins between each other as well as make deals with foreigners. They are allowed to pay with digital currencies to merchants who accept them.

In July 2016, China started developing a law that would reportedly give bitcoin the status of a “civil rights object” equalling it to personal belongings, property, bank deposits and other objects of private property, and therefore, will provide owners of bitcoin legal protection in case of theft. However, these reports have not been officially confirmed.

 

Finally, there are a few non-competition governments that have completely banned bitcoin operations: Bolivia, Ecuador and Bangladesh. However, Ecuador does intend to introduce its own cryptocurrency: on 23 July 2014, this initiative was supported by the country’s National Assembly.

 

Lyudmila Brus