The 3 best and worst places to hold Bitcoin
The debate about how to deal with the virtual currency Bitcoin is still in its infancy, according to a report released by the Law Library of Congress.
The report surveys 40 jurisdictions and the European Union on any regulations or statements from central banks and governments on the handling of Bitcoin.
Of the countries surveyed only a handful have specific regulations governing the use of Bitcoin. Over recent months Bitcoin has endured various obstacles as governments place restrictions on use of the digital currency or class it as commodity subject to taxation.
Out of the jurisdictions surveyed here are three of the friendliest to the cryptocurrency:
Alderney (Channel Islands)
Alderney's government has no regulation with regard to Bitcoin. However, journalists have acquired documents indicating that Alderney is attempting to become a central hub for Bitcoin. This to be achieved through physical minting and issuing of Bitcoins and creating an international centre with a Bitcoin storage vault service.
As a crown dependency of the UK the Royal Mint would need to be involved in the issuing of any physical currency.
Belgium
The Belgian finance minister stated in July 2013 that problems associated with the cryptocurrency, such as money laundering, should not be overstated. Based on studies conducted by the Belgian central bank, the minister concluded that Bitcoin represents no threat to the financial system or the individual user. The Belgian government said it had no plans to intervene in the Bitcoin system.
Estonia
Bitcoin has been growing in use and popularity amongst the Estonian population. Estonia has the second largest number of internet searches for Bitcoin anywhere in the world, with Russia taking first place. In December, the web portal Dv.ee published comments made by Michkel Nymmel, the head of the Payment Processing Department of the Bank of Estonia, saying Bitcoin did not pose any threat to financial stability. Bitcoin remains unregulated by the Estonian government.
These jurisdictions came out as some of the worst for Bitcoin users.
China
Last year, the People's Bank of China (PBoC) and four government ministries issued a notice stating Bitcoin was not a currency and should not be circulated and used as such. Banks are now banned from handling Bitcoin transactions, with financial institutions unable to buy and sell Bitcoin or provide direct or in-direct Bitcoin services to customers. China has also strengthened supervision of websites providing Bitcoin registration and trading.
Finland
Finnish tax authorities have issued instructions that Bitcoin should be subject to capital gains tax. When the digital currency is used to pay for goods or services, it is treated as a trade and the increase in value that the currency may gain after it was obtained is taxable.
The Finnish government deems the digital currency a commodity, rather than a currency.
In January, Paeivi Heikkinen, head of oversight at the Bank of Finland in Helsinki, told Bloomberg:
Considering the definition of an official currency as set out in law, it’s not that. It’s also not a payment instrument, because the law stipulates that a payment instrument must have an issuer responsible for its operation.
Iceland
In response to questions from Iceland’s Morgunbladid newspaper, the Central Bank of Iceland said engaging in foreign exchange trading with Bitcoins is banned, based on the country’s Foreign Exchange Act.
According to the Bank’s statement, “it 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.”