Bitcoin has been recognized for legal and tax purposes in
Germany, making it the first country to take an official stance on the status of
using the online currency as money.
Berlin has acknowledged the
virtual tender as a "currency unit" and "private money," according to German newspaper Die Welt.
The classification means that some commercial profits on
Bitcoin related endeavors may be taxable, but personal use of the currency will
remain tax-free, the paper reported.
The recognition was laid out in a Finance Ministry response to
a query from Frank Schaeffler, a member of parliament’s Finance Committee.
"For the first
time, the federal government recognizes Bitcoins as private money," said
Schaeffler.
In July, the first trading platform for Bitcoins in Europe with
direct cooperation with a bank regulated by the Financial Supervisory Authority
was set in Germany. Bitcoin Deutschland GmbH agreed to convey Bitcoins on its
platform as an intermediary through the German web 2.0 bank Fidor.
Bitcoin has been a popular form of payment around the globe
since it was first introduced in 2009, as people became dissatisfied with the
conventional banking system. Meanwhile, the currency’s viability has been
questioned because Bitcoins are backed by neither a government nor a central
bank.
At the beginning of August, a
US federal judge in Texas ruled that Bitcoin is a legitimate currency. The decision came
after Trendon Shavers, a 30-year-old businessman, was charged with running a
Ponzi scheme, scamming customers out of roughly US$4.5 million worth of the
crypto-currency through his online hedge fund. He argued
that Bitcoin is not real money and therefore is not subject to regulation by the
US government. However, the court dismissed his claim.
The ruling brought Bitcoin one step closer to being recognized
as a real currency. However, the decision opened up the possibility for the
virtual money to be regulated by governments, which oppose the original concept
of Bitcoin – a peer-to-peer, relatively anonymous payment.
Supporters of the virtual currency argue that it helps protect
the identities of users from theft and credit card fraud. Critics argue that the
lack of regulatory oversight and alleged greater privacy makes the currency more
attractive to scammers. In addition, skeptics question the currency’s volatile
exchange rate, inflexible supply, high risk of loss, and minimal use in trade.
An overseer
group called the Bitcoin Foundation standardizes, protects and promotes Bitcoin.
The economic rules are enforced collectively by the Bitcoin network, which
limits the total number of currency units to 21 million, according to the
official Bitcoin website. Currently, the price of a unit is around $ 110 (82
euros), according to online currency conversion sites.
RRT.com
