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G-20 Summit Results: Crypto Is Important for Global Economy, Needs to Be Regulated and Taxed

Recap of the G-20 summit in Argentina.

Members of the Group of 20 (G-20), an international forum for the governments and central banks of countries with developed and developing economies, addressed cryptocurrencies in their recent declaration on sustainable development of the global economy.

Declaration summary: Crypto is important, but it needs to be put under scrutiny and tax regulations

On Dec. 1, the G-20 declaration titled “Building Consensus for Fair and Sustainable Development” was published on the official website of the Council of the European Union and the European Council. The document summarized the 13th gathering of G-20 nations that took place on Nov. 30 and Dec. 1 in Buenos Aires, Argentina.

The declaration addressed crypto regulation, albeit briefly: Cryptocurrencies are mentioned just once there, in the broader context of an “open and resilient financial system” that “is crucial to support sustainable growth.”

While recognizing the importance of the cryptocurrency industry for the global economy, the G-20 also noted that it will introduce Anti-Money Laundering (AML) and anti-terrorist measures per standards of Financial Action Task Force (FATF), an intergovernmental body formed to fight money laundering and terrorist financing:

“We will regulate crypto-assets for anti-money laundering and countering the financing of terrorism in line with FATF standards and we will consider other responses as needed.”

Further, in the same segment of the declaration, G-20 participants expressed a positive stance on non-bank financial institutions, pointing out the potential advantages of technology in the financial sector, given that the tech innovators are managing associated risks:

“We look forward to continued progress on achieving resilient non-bank financial intermediation. We will step up efforts to ensure that the potential benefits of technology in the financial sector can be realized while risks are mitigated.”

There is more crypto-related news coming from the international summit, however. On Dec. 2, Japanese news outlet Jiji reported that the G-20 countries have also called for the international taxation of cryptocurrency. According to the publication, the final text of a document cooperatively prepared by G-20 leaders outlines “a taxation system for cross-border electronic payment services.”

The article specifies that — under current laws — foreign companies that do “not have a factory or other base in Japan” cannot be taxed by the local government, while the G-20 leaders seek to “build a taxation system for cross-border electronic services.”

The Japanese news outlet also mentioned an estimated deadline for the system, saying that the final version of regulations, after considering proposals from each member state, is expected to be introduced by 2020. The issue will reportedly be discussed next year, when Japan will become the host of the summit and Japanese Prime Minister Shinzō Abe will take the position of G-20’s president.

Previous G-20 commentary on crypto

G-20 officials have previously maintained a ‘hands-off’ approach on crypto. In March 2018, after a call from France’s finance minister, Bruno Le Maire, the G-20 participants concluded the first public debate on virtual currencies.

The meeting resulted with a “firm” July deadline that had been put forward for “very specific recommendations” on how to regulate cryptocurrencies globally, despite the Financial Stability Board (FSB) — the group which coordinates financial regulation for the G-20 economies — resisting calls from some G-20 members to discuss regulating cryptocurrencies at the conference.

Moreover, many of the G-20 participants decided that cryptocurrencies needed to be examined further before making a concrete regulatory move, albeit some countries including Brazil stated that they won’t be following the G-20 recommendations.

Nevertheless, the G-20 members agreed that the FATF would have its standards applied to the cryptocurrency markets in the respective countries, a position they recently reiterated in Buenos Aires:

“We commit to implement the FATF standards as they apply to crypto-assets, look forward to the FATF review of those standards, and call on the FATF to advance global implementation. We call on international standard-setting bodies (SSBs) to continue their monitoring of crypto-assets and their risks, according to their mandates, and assess multilateral responses as needed.”

In July, a summary of provisional decisions made by the dedicated Finance Ministers & Central Bank Governors said that “technological innovations, including those underlying cryptoassets [sic], can deliver significant benefits to the financial system and the broader economy.” Nevertheless, the document also listed various related problems, including tax evasion and AML concerns:

“Crypto-assets do, however, raise issues with respect to consumer and investor protection, market integrity, tax evasion, money laundering and terrorist financing.”

Still, the actual recommendations for how to approach the cryptocurrency sphere at the international level were not presented, and the deadline was pushed to October 2018:

“[W]e ask the FATF to clarify in October 2018 how its standards apply to crypto-assets,” the summary read. It is unclear if those recommendations have been presented to date, as there has been no information from the G-20 regarding that issue.

On Oct. 22, as the G-20 remained silent, Jeremy Allaire, the CEO of the Goldman Sachs-backed crypto investment app Circle, stated that crypto-related regulatory matters have to be addressed “at the G20 level.” Prior to that, on Oct. 19, the FATF said that by June 2019, jurisdictions will be obliged to license or regulate cryptocurrency exchanges and some firms providing encrypted wallets internationally as part of AML and anti-terrorism procedures.  

More international action

In separate news regarding international adoption and regulation of crypto technology, on Dec. 4, seven southern EU countries — including France, Italy, Spain and Malta — formed an alliance called the “Mediterranean seven” with the aim to promote the use of Distributed Ledger Technology (DLT) among governments, as per Financial Times. The EU, as well as Italy and France, are members of the G-20 alliance.

More specifically, the EU countries have reportedly signed a declaration stating that areas like “education, transport, mobility, shipping, land registry, customs, company registry, and healthcare” can be “transformed” and boosted with the use of DLT.

“This can result not only in the enhancement of e-government services but also increased transparency and reduced administrative burdens, better customs collection and better access to public information,” the declaration reportedly states.

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Seven EU States Sign Declaration to Promote Blockchain Use

During an EU meeting, seven southern EU member states released a declaration asking for help in the promotion of blockchain.

Seven southern European Union member states have released a declaration calling for help in the promotion of Distributed Ledger Technology’s (DLT) use in the region, the Financial Times (FT) reports Dec. 4.

The declaration was reportedly initiated by Malta and signed by six other member states, France, Italy, Cyprus, Portugal, Spain and Greece, during a meeting of EU transport ministers in Brussels on Tuesday.

The participating governments explained that DLT –– one type of which is blockchain –– could be a “game changer” for southern EU economies.

Namely, the document cites “education, transport, mobility, shipping, Land Registry, customs, company registry, and healthcare” as services which can be “transformed” by this technology. The group also cites blockchain tech’s use for protecting citizens’ privacy and making bureaucratic procedures more efficient.  

The report further notes that this technology has potential beyond digital government services:

“This can result not only in the enhancement of e-government services but also increased transparency and reduced administrative burdens, better customs collection and better access to public information.”

In mid-November, a member of the Executive Board of the European Central Bank, Benoit Coeure, declared that he considers Bitcoin the “evil spawn of the [2008] financial crisis.”

Also in November, banking groups BBVA and Banco Santander joined the EU International Association for Trusted Blockchain Applications (IATBA), Cointelegraph reported. The association itself is set to be launched Q1 2019 and aims to develop blockchain infrastructure and standards.

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Global Retail Giant Auchan Expands Blockchain Tracking Solution to Five More Countries

French retail giant Auchan has expanded its blockchain products’ traceability solution after successful a 18-month pilot in Vietnam.

Global retail giant Auchan is expanding TE-FOOD’s blockchain solution to improve the transparency of products’ history, U.S.-based news agency Cision PRWeb reports today, Dec. 4.

The French retail group, which is reportedly the 13th largest food retailer globally with operations in 17 countries, has extended TE-FOOD’s FoodChain solution to five more countries.

FoodChain is the international traceability information ledger by TE-FOOD, first applied by Auchan in its Vietnam branch. After a 18-month test of TE-FOOD’s blockchain tool in Vietnam, Auchan has now decided to deploy the products’ traceability solution in France, Italy, Spain, Portugal, and Senegal.

The blockchain-powered retail monitoring system provides tracking for selected product categories from farm-to-table, as well as recording food quality data and related logistics information. Auchan consumers are able to check products’ history via their smartphones by scanning the products’ QR codes and getting access to authentic data recorded on FoodChain.

According to the article, TE-FOOD’s blockchain solution implemented by Auchan is reportedly the world’s largest farm-to-table food traceability program in Vietnam, with over 6,000 clients including major global food giants such as AEON, CP Group, Lotte Mart, and others.

In mid-November, another French retail giant Carrefour revealed it was implementing a blockchain-enabled food tracking platform powered by Hyperledger for tracing poultry in Spain.

Earlier in September, U.S. retail giant Walmart and its division Sam’s Club, a membership-only retail warehouse club, also announced that they will require suppliers of leafy greens to deploy farm-to-store tracking system based on blockchain.

In late November, a fintech expert predicted that market value of blockchain in global retail will see a 29-fold increase in value in the next 10 years.

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26 French Companies, Five Banks Complete Blockchain-Based KYC Trial Based on R3’s Corda

26 French companies along with five banks have successfully completed a blockchain-enabled KYC trial with R3 consortium.

26 French companies and five major banks have completed a Know Your Customer (KYC) test based on blockchain, according to a press release by the entrant firm RCI Bank and Services released Dec. 3.

RCI Bank and Services, a French automotive financing and insurance firm unveiled details of a customer knowledge-focused blockchain solution trialed in partnership with blockchain consortium R3.

According to the press release, the Proof-of-Concept (PoC) test has been conducted in cooperation with the Association Française des Trésoriers d’Entreprise (AFTE), a local network of treasury and finance professionals.

As revealed by a participant of the test, RCI Bank and Services, which is also a member of the R3 consortium, trial participants were able to implement KYC requests within a shared network, with banks having to request access to data and enterprise clients able to approve and revoke access, with all the data recorded on the blockchain.

R3’s Corda KYC solution test reportedly involved five French banks, including the financial conglomerate BNP Paribas and Société Générale. The trial has also featured companies specializing in various fields such as insurance, consulting, the automotive and food industries, and retail, including such firms as Allianz France Insurance Company and Natixis Insurance.

Ignacio Sánchez-Miret, chairman of AFTE Fintech Commission, commented that the Corda KYC solution has achieved two major goals, including “bridg[ing] the gap and demystif[ying] blockchain for corporates,” as well as “bring[ing] together banks, insurers and corporates to work together at the same level,” according to U.K.-based fintech media FinTech Futures.

In early November, BNP Paribas participated in a blockchain-powered syndicated loan of $150 million in partnership with the second largest bank of Spain, Banco Bilbao Vizcaya Argentaria (BBVA).

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Energy Firm ENGIE Partners With Consulting Firm to Create Blockchain Software Offering

French energy group ENGIE has teamed up with consulting firm Maltem to establish a blockchain software offering geared toward commercial clients.

French electric utility company ENGIE and consulting firm Maltem Consulting Group have jointly established a blockchain development firm designed for commercial customers, according to a press release published September 7.

The new project called Blockchain Studio received seed funding totalling €1.9 million (around $2.1 million). Blockchain Studio has created a software suite for commercial enterprises comprised of two fundamental tools. One tool is focused on the development of smart contracts and enables its application by users without technical background. The other tool manages the creation of cloud-based or server-based blockchain infrastructure.

According to the announcement, the company is planning to roll out its services primarily on the Asian market at the beginning of 2019, with an office in Singapore. By the end of the first financial semester of next year, Blockchain Studio will also open operations in Southern Europe.

Yves Le Gélard, ENGIE’s Executive Vice-President and Chief Digital Officer expressed enthusiasm towards the new project:

“We are very pleased to be contributing to this development, which should allow Blockchain technology to be made accessible to many actors. It is an excellent example of an innovative tool contributing to ENGIE’s digital transformation.”

ENGIE has previously explored blockchain applications in its energy business. In July, the corporate research center of the ENGIE Group, ENGIE Lab CRIGEN, signed a Memorandum of Understanding with the IOTA Foundation. The collaboration is focused on the exploration of and experimentation with IOTA Tangle technology in the energy sector.

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Greek Supreme Court Rules to Extradite Alleged BTC-e Owner Alexander Vinnik to Russia

The Supreme Civil and Criminal Court of Greece has ruled to extradite alleged BTC-e owner Alexander Vinnik to Russia to face several cyber fraud charges, Russian state news agency RIA Novosti reports Tuesday, September 4.

The formal decision on extradition to Russia will be issued September 14, coming into force the same day.

During the actual hearing, the Supreme Court will also consider France’s request on the alleged BTC-e owner’s extradition.

According to RIA, Vinnik agreed with his extradition to Russia. “[This case] is now up to politicians and their will,” his attorney Timofey Musatov stated.

The U.S., France, and Russia are currently arguing about the location of Vinnik’s extradition. Several Greek courts have previously ruled in favor of all three countries, with the final decision taken by Greek Minister of Justice.

Vinnik was arrested by Greek police back in July 2017 as the U.S. Department of Justice convicted him of fraud and money laundering around $4 billion worth amount of Bitcoin (BTC).

France later charged Vinnik with “defraud[ing] over 100 people in six French cities between 2016 and 2018”.

In the same time, the Russian government also intervened in the case, asking to extradite the Russian national to his home country. The amount of fraud Vinnik is charged with in Russia is equal to 667,000 rubles (around $9,800), RIA had reported last year.

Days before the final hearing in the Supreme Court, Vinnik’s attorney Makarov accused French prosecutors of trying to question Vinnik without Greek officials’ permission, Cointelegraph reported last week.

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France’s Interrogation of Alleged BTC-e Owner Alexander Vinnik Was ‘Fake’, Says Attorney

Alleged former owner of crypto exchange BTC-e Alexander Vinnik was indicted and subjected to a “fake” interrogation by French prosecutors on Tuesday, August 28, his attorney Timofey Musatov told Russian news outlet Izvestiya Thursday, August 30.

Musatov claims that his client Vinnik was brought to a court in Greece where he is currently awaiting extradition and then informed about official charges in France.

Musatov also told Izvestiya that French prosecutors attempted to hold a “fake” interrogation without informing his lawyers, which he insists was a violation of Vinnik’s rights.

He further explains that under Greek law only local security forces can conduct investigation procedures in the country. Vinnik’s attorney raises the question to reporters of why “French citizens though involved in prosecution can proceed with investigation in another country with no relevant permission.”

According to Izvestiya’s report, Musatov did not specify which particular accusations Vinnik is facing in France nor did he mention the questions Vinnik was allegedly asked during the examination.

Vinnik was arrested by Greek police in July 2017 under the order of the U.S. Department of Justice, who accused him of fraud and laundering $4 billion in Bitcoin over the course of six years.

As Cointelegraph reported this July, France charged Vinnik in absentia of “defraud[ing] over 100 people in six French cities between 2016 and 2018” and requested his extradition. That same month a Greek court ruled to extradite Vinnik to France, but his attorneys appealed against the court’s decision in the Greek Supreme Court.

At the time of Greece’s ruling, the Russian government also intervened in Russian national Vinnik’s case, asking the court to extradite him to his home country.

The decision over which country will eventually apprehend Vinnik is up to Greece’s justice minister. The next hearing will reportedly be held on Tuesday, September 4, in the Supreme Civil and Criminal Court of Greece.

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OECD Announces ‘First Major International Conference’ Dedicated to Blockchain in Public Sphere

The Organisation for Economic Co-operation and Development (OECD) has officially announced a Blockchain Policy Forum in a release on the OECD website August 28.

The OECD states that the event will be held in Paris September 4-5 and will mark the first major international event of its kind, dedicated to blockchain technology. Organizers plan to focus on the use of blockchain tech in government activities and public initiatives as well as regulatory aspects.

The Blockchain Policy Forum also plans to discussing the technology’s potential global economic impact, privacy and cybersecurity, inclusiveness, the promotion of green growth and sustainability, and governance and enforcement practices.

More than 400 “senior decision makers” are visiting the forum, the OECD reports. According to the event schedule, top officials from Slovenia, Israel, Russia, Finland, Italy, Serbia and other countries are to participate in discussions.

Hyperledger, Ripple, IOTA and other blockchain company’ executives will also speak on blockchain application in different areas, according to the OECD’s published schedule.

As a prelude to the event, the OECD’s Directorate for Financial and Enterprise Competition Committee has launched a leaflet called “Blockchain Technology and Competition Policy,” which briefly explains the technology and its utilization for government and public needs. Taxation and regulation issues worldwide are also mentioned in the document.

The OECD was established in 1961 to “promote policies that will improve the economic and social well-being of people around the world.” There are currently 36 members states of the OECD, including the U.S., Germany, Mexico, the U.K., South Korea, and Turkey.

In March of this year, cryptocurrency and blockchain regulation formed a topic of discussion at the G20 summit in Argentina. For the G20 financial leaders, the conclusion of the meeting was that they needed more time, plus more data from a number of other bodies before instituting anything specific.

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Money or Assets? How World Governments Define Cryptocurrencies

Cryptocurrencies — what are they? Money? Commodities? Securities? Utility tokens? Or something else? Few national governments seem to be in any kind of agreement on this question, and for now, at least, their divisions have given such currencies as Bitcoin and Ethereum a floating, indeterminate status on the global stage.

As a result, cryptocurrencies lack a single, definite existence, with some nations treating them as money (e.g., Japan, Germany) and others treating them as an unregulated, speculative asset (e.g., Mexico, Denmark), making them the financial equivalent of Schrödinger’s cat. However, as this review of classifications of crypto throughout the world will show, cryptocurrencies are all these things and more, which is why they deserve to be classified by future legislation according their own, unique qualities.

United States: securities, commodities, property, money

As an indication of how difficult it may be for world governments to ever reach a global consensus on the status of cryptocurrencies, it’s worth pointing out that there’s currently little consensus within nations — let alone among them. This is nowhere more evident than in the United States, where five separate agencies have all had their own competing classifications of cryptocurrencies.

First up is the Securities and Exchange Commission (SEC), which — up until June — defined cryptocurrencies in general as securities, meaning assets in which someone invests in the expectation of receiving a return. In March, for example, it issued a public statement indicating that it would regulate anything being traded via an exchange platform as a security.

“A number of these platforms provide a mechanism for trading assets that meet the definition of a ‘security’ under the federal securities laws. If a platform offers trading of digital assets that are securities and operates as an ‘exchange,’ as defined by the federal securities laws, then the platform must register with the SEC as a national securities exchange or be exempt from registration.”

Bitcoin declined by 10 percent following this announcement, yet the statements of other American authorities and agencies differ with the SEC’s assertion that cryptocurrencies are securities. Because, also in March, a New York federal judge ruled that the Commodities and Futures Trading Commission (CFTC) can regulate BTC and other currencies as commodities, putting them on the same level as gold, oil and coffee.

If this wasn’t already confusing enough, the Internal Revenue Service (IRS) has defined cryptocurrencies as taxable property since March 2014, when it declared:

“For federal tax purposes, virtual currency is treated as property.”

Observers would be forgiven for supposing that three separate definitions were enough, yet two additional agencies treat cryptocurrencies as money. The U.S. Office of Foreign Assets Control (OFAC) is the bureau of the U.S. Treasury Department responsible for enforcing economic sanctions, which can include sanctions against certain cryptocurrencies (e.g., the Petro). In April, it announced that it would be treating “virtual currencies” in the same way as fiat currency, making any individual who handled a cryptocurrency covered by an economic sanction liable for prosecution.

Likewise, the Financial Crimes Enforcement Network (FinCEN) presides over the illegal use of money, including laundering and the financing of terrorism. It updated its regulations in March 2013 to cover all “persons creating, obtaining, distributing, exchanging, accepting, or transmitting virtual currencies,” which required exchanges (classified as “money transmitters”) to implement Know Your Customer (KYC) and Anti-Money Laundering (AMC) measures. By expanding its regulations, it brought cryptocurrencies under the concept of money, in contrast to the other governmental agencies who classified it as either a commodity, security or property.

Of course, such classifications aren’t mutually exclusive, yet they introduce confusion and complexity for individuals and businesses that want to comprehend just where they stand legally with cryptocurrencies. Fortunately, there are growing signs that some of the above agencies are beginning to converge on shared definitions.

In June, the SEC finally clarified that it doesn’t regard either Bitcoin or Ethereum — as they are the two largest currencies by market cap — as securities and that it would focus instead on Initial Coin Offerings (ICOs). This move came a month after CFTC commissioner Rostin Behnam delivered a speech that emphasized the increasing collaboration between his commission and the SEC.

“I spoke about my position on the CFTC and the SEC efforts to harmonize rules. Given the large number of dually registered market participants and overlapping policy, there is a real opportunity for the CFTC and SEC to harmonize redundant rules and leave both market participants and regulators in a stronger position.”

Such steps are modest and preliminary, but given that the SEC no longer regards such currencies as Bitcoin and Ethereum as securities, they at least narrow down the field of what cryptocurrencies are in the United States. That said, they still aren’t legal tender, although that hasn’t stopped thousands of U.S.-based businesses from accepting Bitcoin and other currencies as a means of payment.

Canada, Mexico and South America: commodities, virtual assets, legal tender

Like the U.S., Canada doesn’t regard cryptocurrencies as legal tender. However, its approach to virtual currencies is slightly more unified, with the Canada Revenue Agency (CRA) currently defining them as commodities — a definition which would appear to apply in general throughout most government agencies. This is why purchases involving crypto are regulated by the CRA as if they were barter transactions, with the relevant taxation applying. That said, a parliamentary act passed in June 2014 also defined cryptocurrencies as ‘money service businesses’ for the purposes of updating anti-laundering laws, while the Canadian Securities Administrators (CSA) announced in August 2017 that “many” ICOs “involve sales of securities.”

In Mexico, the emphasis is also on cryptocurrencies as commodities. On March 1, the government passed the Law to Regulate Financial Technology Companies, which includes a section on “virtual assets,” — aka cryptocurrencies. Compared to the previous definitions of securities, commodities, property and money, this is an admittedly vague term, and the provisions of March’s law don’t currently narrow down its application (since the law is, in fact, awaiting secondary legislation). However, previous remarks by leading figures in Mexico indicate that the government would be inclined to translate it to ‘commodity,’ with Banco de Mexico governor Agustín Carstens stating in August 2017 that, because Bitcoin isn’t regulated by a central bank, it’s a commodity rather than a currency.

Travelling farther south, the picture is mixed. In Venezuela, the government (in)famously announced the oil-backed Petro in December, and in April, it decreed that the cryptocurrency must become legal tender for all financial transactions involving government ministries. However, while all other cryptocurrencies were immediately classed as financial assets and as securities as a result of the decree establishing the Petro, none have been declared legal tender. Even more confusingly, the Venezuelan parliament has opposed the Petro at every opportunity. In March, it even declared that the state-backed currency is in fact illegal, because it was created without congressional approval and without the involvement of the Central Bank of Venezuela.

While classifications of one kind or another generally apply in the above American nations, cryptocurrencies suffer from a partial non-existence in others. In Brazil, the Securities and Exchange Commission (CVM) declared in January that cryptocurrencies cannot legally be classed as financial assets, despite the fact that the Brazilian Revenue Office had previously stipulated in 2017 that they’re to be regarded as such for tax purposes. In Chile, cryptocurrencies are neither securities nor money, although the central bank has recently begun considering specific regulation.

And in Colombia, the Financial Superintendent has also declared that digital currencies don’t count as money or securities, while, for tax purposes, it can be considered a ‘high-risk investment.’ This makes it somewhat more accepting than Ecuador, where cryptocurrencies are not only not legal tender, but are also prohibited as a means of payment.

While South America often takes a restrictive stance toward cryptocurrencies, some nations within the continent are slightly more accepting. In Argentina, cryptocurrencies aren’t legal tender and they don’t have any regulation specifically applied to them. That said, they are treated as goods under the terms of the nation’s Civil Code, while a December update to tax regulation classifies them as income derived from shares and securities.

What such variations indicate is that, when it comes to the classification of cryptocurrencies, the economic and political situations of the nations concerned make a difference. The inherent abstractness of cryptocurrencies makes them adaptable in terms of their function, so their particular classification and usage all depends on the political and economic conditions prevailing in a particular nation, and what that nation wants to use them for. This is why, in countries where the national currency and economy are relatively weak — or where freedoms are restricted — cryptocurrencies tend to be denied legal status.

Europe: private money, units of account, contractual means of exchange, transferable value

This tendency becomes more apparent when the status of cryptocurrencies in Latin America is compared with their status in Europe. In Germany, the continent’s biggest economy, Bitcoin has been recognized as “private money” since April 2014. Prior to that, its finance ministry also recognized the cryptocurrency as a “unit of account” in August 2013, making it a financial instrument subject to taxation and requiring companies that trade it to register with the Federal Financial Supervision Authority. And this February, the government took a step further in recognizing cryptocurrencies as actual money, exempting crypto holders from the tax when they use their coins as a means of payment — as ruled by the European Court of Justice in 2015.

In the U.K., cryptocurrencies have generally been left undisturbed by regulation, and what’s interesting to note is that the government has recognized that comparing them to pre-existing currencies, commodities, securities or any other financial instrument would be inaccurate. In 2014, its HM Revenue & Customs department wrote:

“Cryptocurrencies have a unique identity and cannot therefore be directly compared to any other form of investment activity or payment mechanism.”

This would account for why the government has yet to propose or stipulate a definite status for crypto, even if the U.K. is part of the G20 group of countries that defined cryptocurrencies as assets rather than currencies in a March document, and even if crypto investment is subject to capital gains tax in Britain — making it an investment.

Across the English Channel, France has also held off applying any specific regulation to cryptocurrencies, although it has been making concerted efforts with Germany to propose laws that would be international in scope. Still, while it appears to be moving toward the creation of a favorable regulatory framework, the Banque de France has — since 2013 — held the position that cryptocurrencies are neither currencies nor a means of payment. On the other hand, the AMF (‘Financial Markets Regulator’) ran a public consultation in late 2017 that resulted in it defining two categories of cryptocurrencies: utility tokens and security tokens. Added to this, crypto traders — both private and commercial — are subject to taxation on their gains, with the government defining Bitcoin in 2016 as a “unit of account” for the purposes of collecting such tax.

Elsewhere in EU, the picture varies considerably, although there seems to be recurring agreement that cryptocurrencies aren’t money — except when authorities want to bring them within the scope of AML legislation. In Sweden, the central bank stated in March that “[Bitcoins] are not money.” This contradicted an October 2013 preliminary ruling from the Swedish Tax Board that stated Bitcoin isn’t subject to sales tax when traded, comes under the jurisdiction of Financial Supervisory Authority regulations and should be regarded as a currency.

In Denmark, the Financial Supervisory Authority delivered a statement in December 2013 that affirmed Bitcoin (and other coins) weren’t currencies, while in March 2014 the Danish central bank issued its own statement declaring much the same thing. As for what they are, the Danish Tax Council finally ruled in early 2018 that crypto-trading profits are taxable, implying that cryptocurrencies are regarded as (speculative) assets.

In the Netherlands, the central bank also denies the currency status of Bitcoin and other cryptocurrencies, having written in a January position paper:

“We do not consider cryptos as money.”

In contrast, a Dutch court ruled in March that Bitcoin can be considered a “transferable value,” making it equivalent to property. This bears some resemblance to a definition being worked on by the Italian Ministry of Economy and Finance in a draft decree, which describes cryptocurrencies as a “digital representation of value […] used as a tool of exchange for purchasing goods or services.” This classification doesn’t quite establish cryptocurrencies as currencies or as property, but it has parallels in a few other EU states. For example, in Latvia, the State Revenue Service and the Bank of Latvia have both asserted that cryptocurrencies represent a ‘contractual’ medium of payment —  a status that’s just short of money but close enough in functional terms.

Beyond the EU, Switzerland is perhaps the most significant European nation when it comes to crypto, not least because it has aggressively positioned itself as a desirable place for crypto traders and businesses. In 2014, its federal government published a report in which cryptocurrencies were defined as assets, rather than as currencies or a means of payment. But since then, the landlocked nation has introduced several “regulatory simplifications” in order to attract fintech companies, and it’s in this climate that new approaches to cryptocurrencies have emerged. In November 2017, the regional district of Zug began accepting Ethereum and Bitcoin as payment for administration costs and municipal services, effectively recognizing both as money. It was soon followed by the city of Chiasso (in Ticino), which announced in February that it would start accepting Bitcoin as payment for tax on amounts up to 250 Swiss francs.

Such examples from Europe offer two major takeaways. The first is that EU (and non-EU) nations — much like the U.S. and Canada — are holding back on specific crypto-focused regulation, thereby giving cryptocurrencies the space and time to solidify into definite, stable forms. As such, nations are reluctant to attribute any single ‘definition’ or ‘status’ to digital currencies. Correspondingly, the current application of numerous different categorizations is merely the result of attempts to apply any relevant pre-existing laws that, in lieu of specific legislation, might curb abuses of crypto. These categorizations are stop-gaps and shouldn’t generally be taken for what certain nations or governments ‘really think’ about crypto.

But secondly, even though many European states are gearing toward the announcement of bespoke cryptocurrency legislation, it would seem unlikely that many will advance so far as to actually recognize Bitcoin, Ethereum or any other major coin as legal tender. With the notable exceptions of Switzerland and Germany, the majority of European states deny that cryptocurrencies are money and given how jealously governments and central banks tend to guard their financial powers, it’s unlikely they’ll shift from this stance anytime soon.

China and East Asia

Jealousy is particularly acute in China. In December 2013, the Chinese government issued a notice proclaiming that Bitcoin is not a currency.

“In terms of nature, Bitcoin is a specific virtual commodity that does not have the legal status equivalent to currency and cannot and should not be used as currency in the market.”

Nonetheless, the same notice also acknowledged that “[Bitcoin] transactions act as a way of buying and selling goods on the internet,” and given that it made no attempt to prohibit or discourage such activity, it’s arguable that the announcement acted as a tacit recognition of cryptocurrencies as a means of payment (i.e., as money).

Unfortunately, the Chinese government’s position has hardened considerably since 2013. It banned ICOs in September 2017, while it also prohibited crypto exchanges that same month and later blocked foreign exchanges, citing “financial risks” as its motivation for both acts. In other words, it effectively denied that cryptocurrencies are legitimate securities, assets or commodities in China, just as it had denied their status as currency four years previously. And given that it has also been taking steps to make mining more difficult this year, the current political and regulatory climate in China is now denying cryptocurrency any kind of official status.

Things aren’t so gloomy for crypto elsewhere in Asia. In Japan, the government has gone through an opposite process to China’s, classing Bitcoin as “not currency” in 2014 and then correcting its position in March 2016, when the Payment Services Act finally recognized cryptocurrencies as money. However, as an indication of the uniqueness of crypto, the actual definition included in the act described cryptocurrency more specifically as a “property value” that can be used to buy goods and services, rather than as a currency.

Over in South Korea, cryptocurrencies are recognized as an “asset with measurable value,” a verdict furnished by the nation’s supreme court on May 30. It is consistent with the regulation and guidelines issued by South Korean authorities to date. These include a June update to AML laws that requires crypto exchanges to undertake Customer Due Diligence (CDD) and Enhanced CDD (EDD) measures, something which makes good on the government’s February promise to help foster the “normal” trading of cryptocurrencies as assets.

In Singapore, the government is also inclined to view cryptocurrencies as assets rather than money. In August 2017, the Monetary Authority of Singapore (MAS) warned ICOs and crypto exchanges that it has jurisdiction over those tokens falling under the definition of securities, a warning it repeated in September and also this May to eight exchanges that hadn’t yet registered with it. This is also largely the approach taken in Hong Kong, where the Securities and Futures Commission (SFC) clarified in February that it regards cryptocurrencies as securities, requiring ICOs and exchanges to apply for licensing. It has gone on to shut down certain ICOs as a result of existing securities laws, while it continued to remind the public that cryptocurrencies aren’t legal tender.

Unique identity

Again, what such stances underline is that most developed nations are cautiously open to cryptocurrencies as a new financial instrument, as a new means of generating income and raising capital and as the basis of a new technology — i.e., blockchain. However, it’s clear that few currently want to recognize Bitcoin or any other decentralized coin as money, especially if their governments happen to be more authoritarian. This reluctance is particularly evident in certain examples we’ve skipped over: In Russia, cryptocurrencies are “not a legal method of payment” but rather property, while the government in Turkey has previously stated that Bitcoin is “not considered as electronic money” under current law and isn’t compatible with Islam.

Because most governments are still unsure of how cryptocurrencies will develop in the future, and possibly because they don’t want to recognize the radical implications of decentralized money, they’ve shied away from establishing a distinct legal identity for cryptos. Instead, many have attempted to apply whatever relevant pre-existing laws they can, in the hope that this will curb those effects of cryptocurrencies that may be undesirable from the perspective of a national government. This is why, on an international level, cryptocurrencies have been swamped by a flood of miscellaneous categorizations, from private money to property and ‘transferable value.’

On the other hand, the variation in classifications is also a product of the versatility of cryptocurrencies. Because they generally aren’t issued and control by a central body, there are few restraints on how they can be used. Some holders may therefore use them as a means of payment, others may treat them as a speculative financial instrument or as property, while the future could bring yet even more functions. This adjustability to the needs of holders is one of crypto’s defining characteristics, which is why the U.K. government was probably right to say in 2014 that cryptocurrencies have a “unique identity.” And it’s also why, when the world’s governments finally get around to introducing specific legislation for cryptocurrencies, they’d be well advised not to attempt to subsume them entirely under existing legal categories.

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New Extradition Request Complicates Case of Bitcoin Fraud Suspect Alexander Vinnik

A Greek court has accepted a Russian request to extradite Bitcoin (BTC) fraud suspect Alexander Vinnik, complicating subsequent international litigation, the Associated Press reported July 30.

A panel of senior judges in the city of Thessaloniki ruled in favor of a new extradition request from Russia for the accused computer expert. At a hearing on Monday, Vinnik reportedly denied allegations of fraudulent activity and said that he was fighting U.S. dominance in the global financial system. The court’s decision complicates the case as the U.S. and France seek his extradition as well.

Vinnik, who is a former owner of crypto exchange BTC-e, was arrested by Greek police in July 2017 under the order of the U.S. Department of Justice. Authorities accused him of fraud and laundering as much as $4 billion in Bitcoin over the course of six years.

On July 13, a Greek court “granted France’s request for Vinnik’s extradition,” which could lead to further extradition to the U.S. However, Vinnik’s lawyer said that he was planning to appeal against the court’s decision in the Greek Supreme Court.

French authorities have accused Vinnik of “defraud[ing] over 100 people in six French cities between 2016 and 2018.” The BTC-e owner denied the allegations, claiming that he was “transferring e-money through a platform,” which he considered “legitimate personal transactions.”

While the Russian Ministry of Foreign Affairs has previously insisted that Russia’s request for Vinnik’s extradition should be given priority over France’s, the decision over which country will eventually apprehend Vinnik is up to Greece’s justice minister.