Bitcoin Gets Real World Treatment from Norway and China
Colleen Ahern
The digital currency, Bitcoin has enjoyed an essentially regulation-free existence since it’s inception in 2008. But that’s starting to change. For one thing, Norway has now declared that Bitcoins don’t count as real money. Director of general taxation in Norway, Hans Christina Holte has said, “Bitcoins don’t fall under the usual definition of money or currency.” Accordingly, Norway is in the process of deciding how to handle Bitcoins in its tax system. Like Germany, Norway plans to levy a capital gains tax on the digital currency, treating Bitcoins as an asset.
Norway’s decision comes on the heals of China’s devastating decision to ban real world use of Bitcoins. That announcement caused Bitcoin value to drop by $200 overnight. The announcement wasn’t unprecedented, though. At the beginning of December, China made clear that it did not condone Bitcoin dealings by financial institutions. Chinese press attribute the government’s recent decisions to the sudden shut down of Chinese Bitcoin trading company, GBL which disappeared, along with $4 million worth of it’s user’s money. It definitely seems likely that the move was also motivated by China’s desire to keep a tight hand on its currency.
China’s decision has brought Bitcoin into the real world. While the currency was once a free-reign tool for investors, this is a wakeup for Bitcoin and it’s users that Bitcoins can essentially lose their usefulness in an entire country in a matter of days.
Regulation might also be good for Bitcoin users—some of them, anyway. The top banking regulators reported that, “thefts from digital wallets have exceeded $1 million in some cases,” according to the Irish Times. Plus, users get no protection in the event of a virtual exchange collapse. All this makes it look likely that other countries will follow after China, Germany and Norway in their decisions to place at least some kind of regulation on digital currencies.
As things stand now though, the types of transactions using Bitcoin has never been more diverse. The website usebitcoin.info lists everything from cosmetics to chiropractic services for sale in Bitcoins. Students can even use the digital currency to pay for their tuition at a University in Cyprus. If other governments continue to crackdown on Bitcoin, the advantages of transacting business in digital currency may not outweigh those of using plain old money.