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Republic of Georgia Exempts Cryptocurrencies From Value-Added Tax

Republic of Georgia rules to exempt cryptocurrencies from value-added tax.

Republic of Georgia has exempted cryptocurrencies from value-added tax (VAT), as reported on July 13.

Per the report, Georgia’s finance minister Nodar Khaduri recently signed a bill aimed at regulating the taxation of entities that trade or mine cryptocurrencies. The bill entered into force at the end of June. The definition of decentralized currency that the bill puts forward is reportedly the following:

“Cryptocurrencies are digital assets that are exchanged electronically and based on a decentralized network. Their exchange does not require a reliable intermediary and they are managed using distributed ledger technology.”

With the introduction of the bill, residents of the country can exchange cryptocurrencies for fiat currency without the transaction being subjected to VAT. Still, Khaduri pointed out that the Georgian lari will remain the legal tender in Georgia and that — just like foreign fiat currencies — the country will not allow using cryptos for payments.

The article goes on to specify that mining companies will still have to pay VAT unless they are registered abroad. This may well result in local mining businesses relocating.

As Cointelegraph reported in October 2015, the EU Court of Justice ruled that Bitcoin exchange was exempt from VAT in a landmark verdict. The following month, in a guest post on Cointelegraph, Italian lawyer specializing in gold and cryptocurrencies Stefano Capaccioli commented on the ruling:

“The Decision is of historic importance: it clarifies all doubts and removes the confusion on the applicability of consumption taxes to bitcoin, considering cryptocurrencies as a simple means of payment and, under a VAT perspective, similar to a foreign currency. […] The Judgment is the practical demonstration that bitcoin needs no specific regulation, but only the interpretation of existing legislation because bitcoin does not fall in any legal vacuum.”

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Real Estate Registry on Blockchain: Promise Land or Wishful Thinking?

Researcher from RMIT explains why startups will fail to fulfil their promises to disrupt real estate with blockchain.

Why have blockchain pilots in real estate abated somewhat? Those projects bump up against the fundamental inconsistency of blockchain and existing state system, and it seems they cannot confessed to this.

First, there is no such thing as the use of blockchain for real estate. There are plenty of different concepts and ideas, and as you will find below, some of them are useless. And when you consider probably the most ultimate idea — i.e., a title token — you understand that none of the existing projects could offer a complex solution to address issues with inheritance, lost private keys, co-ownership, delegation of rights and a bunch of legal issues that arise from blockchain immutability. The only scenario you can find is permissioned decentralized ledger technology (DLT), which is just yet another centralized technology — or blockchain with “smart” applications on top but which are centralized in their core design. These issues remain unnoticed in blockchainization buzz. Let’s go through known projects and bust their myths.


The first news of the use of blockchain for cadastral registry proliferated as a gospel in 2015 from Honduras with the help of Epigraph and Factom Inc. Being referred to by many enthusiasts for a long time, the project itself was never kicked off. And here we find the first fundamental constraint, though not a technological one:

Highly corrupt countries could significantly benefit from blockchain — a temper-proof, transparent, public and decentralized database; but they won’t until kleptocratic regimes run their countries.


Chromaway was founded in Sweden in 2014, giving hope of disrupting the old-fashioned centralized and bureaucratized real estate cadastre. In a YouTube demonstration in 2019, the team showed their centralized DLT platform, “Chromopolis” (which is not a blockchain like any other permissioned DLT platform), and revealed a lab prototype app for title deeds. The app requires government clerks and brokers to “bless” transactions between counterparties. And here is unveiled the second most significant misconception. In general, the problem of the architecture of such systems is that records have legal force only when they are stored in the closed governmental database, all peer-to-peer transactions on the blockchain between parties make no sense, as far the last word is on the side of the one who controls the central registry:

A centralized system is an antipode to uncensored distributed public technology of blockchain. Any attempts to make friends with these two, in which centralization reserves a leading role, are doomed to failure because the blockchain loses all benefits.

Without shifting from centralized to distributed architecture, any attempts of disruption turn into mimicking the existing system. In fact, nothing more happens than digitizing bureaucracy and middlemen. However, Chromaway teaches us another lesson: Over five years, the project did not succeed in introducing a working system at the state level but announces, from time to time, new phases of its development. The problem here is:

Prosperous and highly developed societies often fail to find reasons to change the existing system. What for, if it works, though imperfect?

It must make extraordinary sense for changes, especially at the scale of a whole country. And it is clear that the Swedish government has no incentive to let go of its monopoly on political power over centralized cadastral registry. To add, Chromaway, during its initial coin offering (ICO) in August 2018, wrote in its white paper that it is going to develop the DLT network and will keep centralized control over it and promised to decentralize it in the future. It was also revealing that its white paper articulated no direct plans in real estate and cadastral registry. Therefore, it leaves little hope that the real estate revolution is coming from Chromaway.

Dhana, Bitfury and others

Bitland has been in Ghana since 2014, and the project has never delivered its objectives to “register land and real property ownership and use rights” using blockchain. Propy Inc., during its ICO in 2017, stated that its far-reaching plans were to disrupt the industry by eliminating third parties with a global real estate supermarket on the blockchain driven by smart contracts. However, its supermarket, at this stage, looks like yet another real estate broker’s platform that has no relation to any land title registry. And this is very convenient, as it can always say that it had never promised disruption at this phase. The demo of the project gives some hope for the future, though it is not accessible for public online registration.

REX, founded in the United States in 2016, promised a new multiple listing system (MLS) standard for real estate brokers, ending up with the Imbrex online ad listing protocol for brokers and landlords — and, if we forget about the high-level idea to get rid of the enormous amount of middlemen in real estate, it looks like a success. demonstrated in Cook County, Chicago how hashing on a blockchain could imitate a real cadastral entry but ceased its activities in this direction. Bitfury launched its centralized DLT based on the Exomun DLT framework in the Republic of Georgia and Ukraine. The project purposed to hash records of the real estate database on Exomun. Some professionals suppose that its impact at the security level of the government-owned land registry is inconspicuous. Notwithstanding, we need to give credit to Bitfury because it has never aimed to de-bureaucratize the domain and reduce middlemen.

Related: Wine, Mountains, and Mining Rigs: Georgia as a Crypto Powerhouse

How did the revolution come tumbling down?

To explain why the mentioned projects failed to revolutionize real estate (some did not even promise that, but many believed in it because they used the magic word “blockchain”), we should clarify the most important conceptual inconsistency of the blockchain and traditional legal system.

The problem is the immutability of blockchain records. One may say this is an advantage, but the current paradigm stands on the centralized hierarchical model.

The last 2,000 years since Roman law appeared, people developed lots of legal doctrines to protect property rights. All of them have been based on an imperfect nature of people’s relationships and the need to fix problems when they arise. Blockchain appeared ill-prepared to deal with the theory of law and state — and actually, nobody designed the technology with these prerequisites. Or perhaps we should change the theory to fit the blockchain? Tough question, isn’t it?

High-level ideas recently discussed in the industry and academia do not answer the main question: How exactly can blockchain technology be applied? When these scenarios are analyzed, it becomes clear that there is no single use of blockchain for real estate but an array of bold ideas.

Anyway, in general, blockchain beyond cryptocurrency can be used to: 

  • Insert arbitrary user’s data (for example, hashes).
  • Create tokens.
  • Manage tokens with smart contract.
  • Develop so-called decentralized applications (DApps).

Related: Blockchain-for-Land: What We Are Getting Wrong and How to Fix It

Hashing cadastral records

First of all, this is not about disrupting bureaucracy but about information technology security. And the use of studied pilots in Georgia and Ukraine with Bitfury is questionable. The real estate registries in both countries remained centralized and closed. If the cadastral database with title records is not open — and whatever hash value thereof is inserted in the blockchain/DLT — then it does not secure the record itself. The reason why is that the record can still be tampered with while it stays in someone’s hands. When the record is tampered with, the hash from such a fake record can also be published on the blockchain as well — and then revealed as legitimate. Moreover, in these pilots, so-called “blockchains” appeared not to be a blockchain but a centralized and closed DLT, known as Exonum.

Even if we consider here the use of a real public blockchain, we will have another problem: How do we know which record is authorized? Transactions on the blockchain are pseudonymous and uncensored — so, anyone can make any records, including fake ones. We need a layer of authentication. Someone centrally will identify and authorize state-owned blockchain addresses, from which records are published. And then, another centralized, off-chain system will track the blockchain to filter and collect a white list of correct hashes, which are considered to be made by authorized clerks. Having such a level of centralization, this approach can barely compete in terms of security with existing governmental databases.

Hashing records of deeds

Let’s say a buyer and seller came to an agreement expressed in an electronic file, its hash was published on the blockchain, and we consider it as a deed.

The first issue is the authentication of the parties: How do we know that it was Alice and Bob who hashed this record in the blockchain? We can use here something that we know as Public Key Infrastructure (PKI) with trust ID services. This means they will deal with a trusted third party that creates and manages digital identities: Certificate Authorities (CA) or Trust Service Providers (TSP) in the U.S. and European Union respectively (other counties replicate these models). For example, in the EU, this system is well-developed (see, for example, Estonian e-Residency) and allows remote authentication of users; however, this is very regulated and bureaucratized.

One may ask: What if Alice and Bob identify themselves without trusted third parties? Yes, they can deal remotely if they trust their remote identities. The problem is that the government does not trust them. No government will allow anonymous and fake IDs because of two main reasons: money laundering and terrorism financing.

But if conventional PKI is used, then why do we need blockchain at all? The parties will remotely sign the e-deed with their digital signatures, issued by CA/TSP. If you trust the cryptography of blockchain, then there is no reason not to trust PKI, which is based on the same.

Besides technological discussion, here appears a legal issue: How is it possible to acknowledge an e-deed? A town clerk (a notary, a registrar, a title company or whoever is responsible for that in a certain state) must also apply its digital signature. For many countries, such a deed would be so innovative that it would require new regulations. Therefore, when startups promise to disrupt real estate and forget to mention that they need to change the legislation, they are cheating or are just premature. 

Even though we legitimized electronic contracts, there is still the system of a state-owned database. So, you end up with the registration of this deed that is made by a town clerk (notary, title company, etc.). So where is the advantage of the blockchain? Therefore, not shallow but significant changes are required in the whole paradigm. 

Smart contracts with title tokens

While the idea is very broad, let’s shrink it to a typical, possible scenario. One party has a token that represents a land title, and another party has some cryptocurrency. 

The smart contract is designed to perform an atomic transaction — i.e., to exchange the token for an agreed amount of cryptocurrency. In this scenario, a notary is excluded (or who is meant to acknowledge the deed in any particular jurisdiction) and the deed, therefore, is not legitimate. 

The second, while titles/deeds live in the central state database this transaction has no legal meaning. This token, as per law, represents nothing, even if the parties want it to be a title. It is clear that new regulations are required to legitimize these relations.

If we assume the government recognized title tokens and such transactions, then what must happen when the landlord dies and does not leave the private key to anyone? Or, if the owner simply loses the key? What if the transaction is disputed by someone whose rights were violated? What if the private key was taken as a result of a crime? How will custody represent rights of a disabled person? Or, how can a judge split the land between divorced spouses? And this is just a small list of possible legal issues that will bump up against the immutability of records and strong cryptography, which won’t allow anyone but the owner of the private key to have access.

Should we consider all transactions always valid, no matter what happens? Then, the landlord and the successors lose their property when the key is lost, and the court ruling to reinstate someone’s title will be useless, as it cannot be enforced.

Reissue a new token? Then, what if the lost key is found or the defeated party in a lawsuit still uses its private key, actuating a transaction with the old token? We will have two tokens that represent one title. Collision with double spending of the same real estate is inevitable. Then what?

Okay, let’s allow anything to happen on the blockchain but treat all these transactions only as evidence, as a source of facts whether they are lawful or not. We will then develop a separate title/deed registry in which we will write a consummation and strike out thereof when something goes wrong.

But don’t we already have such a registry in each country, with regulations and instructions on any possible situation — what we call bureaucracy? Didn’t we want to get rid of that?

It’s clear that people do not like tedious legal procedures, as they cause high transactional costs. We see that disrupting projects should entail legislative changes and true reforms, but for that to happen, a mature concept is required. We will talk about a possible scenario in upcoming publications.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.

Oleksii Konashevych is a Ph.D. fellow in an international program funded by the EU government, Erasmus Mundus Joint International Doctoral Fellow in Law, Science and Technology. Currently, Oleksii is visiting RMIT and collaborates with the Blockchain Innovation Hub, doing his research in the field of the use of blockchain technologies for e-governance and e-democracy. Oleksii works on tokenization of real estate titles, digital IDs, public registries and e-voting on blockchain. Oleksii earned a master degree in law in 2005 and a master degree in economics in 2010. Before academic work, he practiced law in Ukraine for 10 years, holding senior positions. He participated in an initiative that worked on e-democracy reforms and became a co-author of the law on e-petitions, collaborating with the Presidential Administration of Ukraine as a manager of the e-Democracy Group.

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Georgian Gov’t, IOHK Partner to Develop Blockchain in Education, Ministry Services

Georgia’s government has signed an MoU with blockchain technology firm IOHK to implement blockchain-enabled projects.

The government of Georgia has signed a memorandum of understanding (MoU) with blockchain technology firm Input Output Hong Kong (IOHK) to implement blockchain-enabled projects across business, education and government services. The news was revealed in a press release shared with Cointelegraph on June 17.

The MoU has been signed between the Georgian Ministry of Education and Science and IOHK, and will see the two entities collaborate on developing the technical, commercial and operational capacities to foster blockchain projects and support fintech businesses in the blockchain and digital asset sector.

IOHK — the firm that developed the cryptocurrency cardano (ADA) — was founded by crypto entrepreneur Charles Hoskinson, who also serves as IOHK’s CEO. Hoskinson is a co-founder of the Ethereum (ETH) blockchain, although IOHK now works with the altcoin’s younger iteration, ethereum classic (ETC).

In particular, the Georgian government has reportedly identified higher education as an area of importance in which blockchain solutions can be used to ensure the secure verification of national university qualifications, as well to ensure their comparability with European ones. 

The Ministry and IOHK will reportedly further implement blockchain in order to bolster the security of confidential data and to integrate smart contract functionality into Ministry services.

As the press release notes, the MoU forms part of the country’s bid to become more conducive to business development.

In a statement, Mikheil Batiashvili, Minister of Education, Science, Culture and Sport, has drawn attention to Georgia’s progress in the World Bank’s “Ease of Doing Business” index — rising from its 112th ranking to 6th as of 2018.

As previously reported, Georgia’s government has tended to pursue a blockchain-friendly, low-regulation stance. In 2017, Georgia ostensibly became the first nation to implement distributed ledger technology for securing and validating government records.

The country is also reported the fastest-growing electricity consumption per capita in all of Eastern Europe and Central Asia since 2009, with 10-15% of electricity devoted specifically to crypto mining, as per a World Bank report cited by Cointelegraph earlier this month.

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Wine, Mountains, and Mining Rigs: Georgia as a Crypto Powerhouse

If crypto mining is similar to oil extraction, should nations worry about the resource curse?

The former Soviet republic of Georgia, which occupies picturesque mountain valleys and rugged ridges of the Southern Caucasus, has roughly the same population as the state of Connecticut. It is renowned as the birthplace of Joseph Stalin, as well as for being one of the oldest wine regions in the world, its rich and eclectic cuisine, and, more recently, for hosting the world’s third-largest cryptocurrency mining operation.

Additionally, an estimated 5% of the nation’s households are engaged in mining crypto or invested in it. Back in 2016, the Georgian government was the first to create an operational blockchain-powered system for property rights registration, which by mid-2018 had hosted more than 1.3 million electronic documents. State officials are now looking to move all government registries to distributed ledgers.

Sounds like crypto-buff’s dream, doesn’t it? For a small nation, though, the place in the front row of fintech pioneers comes at a cost. A single entity, the US-based blockchain software and hardware provider Bitfury, is responsible for much of Georgia’s current crypto momentum. Cheap electricity and lax regulation were the selling points that attracted the mining giant to the Alazani valley; being able to negotiate tax exemptions and secure favorable loan terms made it stick around. Critics surmise that it took Bitfury striking a backroom deal with some of the most powerful people in the country to win these privileges, and now the arrangement benefits a very narrow circle of stakeholders while threatening the nation’s energy security.

The warm welcome

Bitfury Group was founded in 2011 by a Latvian entrepreneur Valery Vavilov, whose bio on the company’s website mentions his first-hand experience with the “challenges resulting from the collapse of the Soviet Union.” Although the company is incorporated in San Francisco, the natives of the post-Soviet space are heavily represented among its leadership. Apparently, Bitfury’s С-suite were quite familiar with both challenges and opportunities that the region presents, as well as with ins and outs of doing business in the area.

Vavilov first arrived in Georgia to talk business in 2013; in July 2014, Bitfury’s first 20 megawatt data center emerged in the eastern Georgian city of Gori. In December of the following year, a major expansion nearly tripled the company’s mining capacity in the country, as Bitfury deployed its 16 nm ASIC chips at a new facility in the area called Gldani, within the capital Tbilisi city limits. This outpost became the first resident of the newly developed Free Industrial Zone, which was designed to attract technology companies by perks such as an exemption from the 18% VAT. The company purchased 18 hectares of land for a symbolic price of 1 lari, which amounts to a fraction of 1 USD. The new data center’s featured a new proprietary cooling technology: its computers were submerged in tanks of non-conductive fluid while racing to seal the block.

As Bitfury arrived in 2014, the Georgian Co-Investment Fund, linked to the country’s wealthiest person and former Prime Minister Bidzina Ivanishvili, provided the firm with a $10 million installation allowance. Although both Bitfury and Ivanishvili’s representatives have repeatedly stated that the loan has been repaid even before the Gldani facility opened, the rumors of the billionaire remaining one of the main beneficiaries of the project never subsided. At any rate, the two entities still maintain at least an interlocking directorate connection, as Bitfury’s board member George Kikvadze holds a senior office with the Co-Investment fund.

The relationship between the government and the mining behemoth briskly progressed, and in April 2016 Valery Vavilov and the Chairman of the National Agency of Public Registry made public their plan to create a blockchain-powered land registry system. The following year, Georgia made history in becoming the first nation to implement distributed ledger technology for securing and validating government records.

In February 2018, Bitfury announced that it was selling the Gldani data center to Chong Sing Holdings, a Hong-Kong based fintech company, citing the need to continue its “successful expansion in the Asian market of both hardware and software solutions.” However, in just a few months the facility went back under the original proprietor’s control: amid plunging prices and increasing regulatory pressures in China, Chong Sing found itself rushing to hedge the risks and cut down exposure to crypto assets. Bitfury was able to get the Gldani facility back at a discount. Despite the lingering bear market, the company still reports profit and remains bullish on Bitcoin in the long run.

The Bitcoin dream

Whether it was due to Bitfury raising the profile of the mining enterprise or people being able to figure it out regardless, the ordinary Georgians have had their fair share of the crypto craze. Hundreds of thousands of rigs joined the race before the market went steeply downhill, driving the share of mining in Georgia’s electricity bill to a staggering range between 10 and 15 percent. Despite the government’s general blockchain-friendly, low-regulation stance, toward the end of 2017 financial authorities grew concerned with the scale of the gold rush and had to remind Georgians that Bitcoin was still not a legal tender, and recommend to exercise caution when staking their livelihood on crypto.

The nation’s Bitcoin exuberance at the peak of the Great Bull Run was understandable: it seemed that the combination of the state’s openness to crypto and cheap electricity available across the board was going to bring about prosperity. The industrious folk rushed to the remote highland areas where state-subsidized electricity was available for free. A political party emerged that proclaimed its ambition to push ahead with the idea of creating a national cryptocurrency, which would allow every citizen to benefit from the country’s pool of unused resources.

Yet, with the crypto prices in free-fall, the future of rank-and-file miners looks a lot bleaker. Where Bitfury can still reap the fruits of massive economies of scale, cutting-edge technology, and tax exemptions, Bitcoin hunters with rigs in their garages are increasingly likely to find themselves unable to turn any profit. And as the crypto dream gives way to tough reality, the question looms large again: Is the model of blockchain development that Georgian leadership is pursuing sustainable in the long run?

Decentralizing the field

Georgia is small and not particularly wealthy, so offering lavish concessions to a major player in the industry that has a big promise is a defensible strategy. The choice here is not between welcoming one large firm and hosting a vibrant diverse fintech sector – it is more likely between the former and not being on the blockchain map at all. This could be “high-tech gambling,” as Gocha Tutberidze, a professor at the European University in Tbilisi, told NPR, yet this could be the only possible entry point.

Strategically, mining might not be the most rewarding of the crypto-related industries to host. This business is built on extracting resources without necessarily building lasting infrastructure, relationships, or technology that will benefit the territory when all is said and done. Energy consumption is a serious consideration, too: while electricity supply and demand must be calculated in plenty of time, crypto prices’ volatility introduces a lot of uncertainty on the demand side.

In late December 2018, Abkhazia, a contested state that UN recognizes as part of Georgia but which is de-facto independent from the government in Tbilisi, instituted a blanket ban on cryptocurrency mining. The move was motivated by the officials’ fear of possible electricity shortages if temperatures fall too low.

As Hans Timmer, World Bank Chief Economist for Europe and Central Asia, pointed out in an interview to Forbes Georgia, creating a level playing field for all fintech players will eventually require a more structured regulatory framework. This is a necessary condition for the next step on the path of blockchain leadership that the country aspires to take. It is now incumbent upon the nation’s policymakers and industry leaders to make sure that Georgia grows from being a mining hub to a dynamic center of fintech innovation, where a host of smaller firms compete do deliver consumer-oriented technologies and solutions.

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US Senator Reports to Jail Pending Verdict in Cryptocurrency Fraud Case

Prosecutors allege Senator Michael Williams lied about the disappearance of crypto mining equipment worth $300,000.

A Georgia state senator has reported to jail over allegedly lying about the theft of cryptocurrency mining equipment worth $300,000, The Guardian reported Dec. 27.

Republican Michael Williams, who originally reported the alleged theft in May, made a false police report and gave a false statement, court documents claim.

Williams had said servers with a value of $300,000, which had been used to mine unnamed cryptocurrencies, had disappeared from his office premises, local daily news outlet Atlanta Journal-Constitution reported Dec. 20.

Prosecutors are considering the possibility that the theft never took place, and last month Williams was indicted by grand jury on three counts and subsequently handed himself in to custody.

A full verdict has yet to surface, however, with the accused and his attorney waiting on prosecutors’ evidence.

“Right now, our position is Mr. Williams did not do this,” the attorney, A.J. Richman, said Dec. 26 quoted by another local outlet Gainesville Times. Richman added:

“We’re not really apprised of their evidence yet. They haven’t disclosed that. I’m sure they will soon, but at this point, we don’t know what it is they’re saying other than what the indictment says.”

Williams had previously co-sponsored a cryptocurrency payments bill for the Georgian Senate, while his campaigns were marked by a pronounced anti-immigrant policy featuring a “deportation bus” referring to Mexican immigrants that drew considerable condemnation.

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Germany’s BaFin Visits National Bank of Georgia to Discuss Crypto Regulations

One of the largest financial supervisors in Europe met with the National Bank of Georgia (NBG) and other members of the finance sector to discuss cryptocurrency regulation, according to a post on the NBG’s site May 18.

According to the post, a representative from Germany’s Federal Financial Supervisory Authority (BaFin) met with members of the NBG, the international financial institutions (IFI), private sector, commercial banks, brokers, audit, and legal companies to increase awareness of crypto in the country. At the meeting, the participants had a chance to receive detailed information on the crypto industry from the leading financial supervisory authority of Europe.

In December 2017, Georgia’s NBG took a sceptical stance towards cryptocurrencies, urging citizens to be cautious. The bank told the public that cryptocurrencies do not constitute a legal means of payment, any crypto-related activity is not regulated, and that the NBG bears no responsibility for the subject:

“National Bank of Georgia would like to warn citizens on this matter. Cryptocurrencies do not represent means of legal payment in Georgia. Any sort of activity conducted within this sector is not regulated by legislature and therefore is not a sphere of influence of NBG.”

Georgia is ranked second in the world after China in the number of known crypto mining facilities, according to Global Cryptocurrency Benchmarking Study issued by Cambridge Centre for Alternative Finance in 2017.

In April 2016, the Georgian government and leading Bitcoin (BTC) mining hardware manufacturer BitFury launched a project to record land titles on blockchain. By April 2017, the parties had managed to register more than 100,000 titles.

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'Lack of Understanding' Derails Georgia's Bitcoin Tax Bill

A proposal to allow residents in the U.S. state of Georgia to pay their taxes in cryptocurrency has stalled – at least for now.

Put forward in February, Senate Bill 464 would, if passed, mandate that the state’s revenue office accept bitcoin and other cryptocurrencies as a form of payment. Yet according to Senator Mike Williams, one of the bill’s sponsors, never got a committee hearing before the Georgia Senate adjourned for its recess on March 29.

As a result, he said, the bill will need to be reintroduced during the next legislative session, which starts next January.

Williams attributed the bill’s lack of progress to misconceptions about the technology among lawmakers, telling CoinDesk:

“There was a lack of understanding on what cryptocurrency is, and when I was talking to senators there was that old-school ‘isn’t that what was used to buy drugs?’ [Passing the bill is] going to take educating decision-makers and government regulators on what cryptocurrencies are.”

Williams suggested that holding hearings and other educational events could help lawmakers better understand cryptocurrencies, praising similar events that have taken place at both the state and federal level.

“The more we can talk to legislators and the general public, the more we can educate on the beneficial aspects of blockchain,” he said.

Williams – who is running for governor in Georgia, which holds its vote this November – similarly praised the “cautious” approach being taken by federal regulators, citing recent actions from the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission in particular.

“We do need regulation in the [initial coin offering] space but we don’t need too much. We don’t want the regulators to come in and clamp down on the innovation, but at the same time we do need to protect the public from the bad apples,” said Williams. “From what I’ve seen so far, I think they’re taking a very cautious approach [and] I think they’re doing well.”

Michael Williams image via Wikimedia Commons

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Cryptocurrency Accepted as Tax Payments – Georgia Next

Following up Arizona, Georgia is the next state in the row to possibly accept digital currencies as a form of state tax-payments, based on a bill that was introduced on Feb 21.

Joshua McKoon and Michael Williams – Republican state senators, introduced the Senate Bill 464 which proposes that:

“the commissioner shall accept as valid payment for taxes and license fees any cryptocurrency, including but not limited to Bitcoin, that uses an electronic peer-to-peer  system.”

The introduced bill specifies that the moment when the payments will come in, the commissioner would be converting the digital currencies to US Dollars within no more than a day – 24 hours.

The move is very similar to that of the Senate of Arizona which did just run a bill which would validate cryptocurrencies to be used as a tax-paying method with 13 votes against, 16 in and on abstaining:

“A taxpayer may pay their income tax liability using a payment gateway such as bitcoin, litecoin or any other cryptocurrency recognized by the department, using electronic peer to peer systems,” the bill says before further adding:

“The department shall convert cryptocurrency payments to United States dollars at the prevailing rate after receipt and shall credit the taxpayer’s account with the converted dollar amount actually received less any fees or costs incurred by the department for conversion.”

If all goes well [meaning that the final round – The House accepts the bill to become law] Arizona will be the first to declare such legislation in the western side of the globe.

Despite the fact that the announcement might sound at first as a positive development, according to Robert Wood – tax law expert, paying taxes the cryptocurrencies might lead the way to paying more of mentioned above, as the increases in cryptos used for tax payments could themselves be subject to capital gains tax and investment income tax.

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Georgia Becomes Latest State to Consider Bitcoin for Tax Payments

Two state senators in Georgia have proposed a bill that would allow citizens to pay their tax obligations in bitcoin, marking the second such legislative effort of its kind to emerge this year.

Public records show that the measure submitted on Feb. 21 by senators Michael Williams and Joshua McKoon would tweak the rules governing the state’s Department of Revenue, letting it accept both bitcoin and other as-yet-to-be-defined cryptocurrencies.

“The commissioner shall accept as valid payment for taxes and license fees any cryptocurrency, including but not limited to bitcoin, that uses an electronic peer-to-peer system,” the bill states.

The proposed law largely tracks with one that is currently moving through the Arizona legislature. That measure, filed in January, has thus far attracted support by lawmakers in the state, setting up the possibility that Arizona could become the first U.S. state to accept bitcoin for tax payments.

Like Arizona’s bill, the one submitted in Georgia also mandates that tax officials convert those payments into U.S. dollars within a day of receiving them.

“The commissioner shall convert payments made in cryptocurrency to United States dollars at the prevailing rate within 24 hours of his or her receipt of such a payment and shall credit the payor’s account with such converted dollar amount,” it explains.

Despite the encouraging signs out of Arizona, there’s no guarantee that the measure in Georgia will succeed given past opposition to such proposals in other states. As CoinDesk previously reported, a New Hampshire lawmaker advanced a bill that would allow cryptocurrency payments, but the state’s House of Representatives ultimately shot it down in a January 2016 vote.

Bitcoin and dollars image via Shutterstock

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