Digital Currency Weekly Recap 10-25-2015
European Court Exempts Bitcoin Exchange from VAT
On Thursday, the European Court of Justice ruled that Bitcoin must be treated in the same manner as more traditional currencies for the purpose of tax law enforcement. This decision now means digital currency transactions will receive the same exemption from the consumption tax which euros enjoy. In the ruling, the Court declared that it could identify no reason why these currencies should be treated any differently for tax purposes, since Bitcoins “have no purpose other than to be a means of payment.”
This decision should help to provide greater clarity for the digital currency industry in Europe, and stands in stark contrast to the somewhat confusing situation that currently exists on the other side of the Atlantic. Government agencies within the United States have taken differing stances on cryptocurrency over the last year, with the Commodity Futures Trading Commission declaring them to be commodities similar to precious metals, even as the Internal Revenue Service argued that they are a form of property.
21 Inc Seeks Mining Circuitry Patent
The US Patent and Trademark Office (USPTO) recently published a patent submission from 21 Inc related to its mining circuitry. Included within the patent application is the cryptocurrency mining circuitry itself, as well as various systems and methods for verifying transactions, profit-sharing, and other devices and methods related to the circuitry and its operations. The news comes on the heels of last month’s revelation that Coinbase has filed a total of nine cryptocurrency-related patent applications.
It’s worth noting that all of these patents could take years to achieve approval, since the patent process must first determine whether any of these inventions can even be patented. Meanwhile, the public will have its opportunity to weigh in on the process as well, and those who may want to oppose approval can formally do so.
Jersey Moves Toward 2016 Digital Currency Standards
While the United States and many other countries continue to struggle with issues related to digital currency, other governments are pressing ahead with plans to provide the regulatory clarification many believe necessary for continued innovation and growth. The government of the island of Jersey - a self-governing Crown dependency in the English Channel - has recently announced its intent to work next year to establish a legal framework to better govern digital currency business activity in its territory.
In a policy statement released by Senator Philip Ozouf, Jersey’s Assistant Chief Minister, the government stressed the potential economic benefits the island could enjoy due to its continued embrace of FinTech, noting that “Ultimately, the technologies being developed today will revolutionize the way we bank, the way we invest, the way companies raise money. It will lead to new products, new services, new lenders and many new opportunities.” That succinct observation serves as the foundation for the island’s policy regarding digital currency, which will strive to balance the need for a light regulatory touch that “encourages confidence and innovation in the digital sector” - while at the same time providing enough regulation to protect Jersey from the risk that digital currency could be used to finance terror or facilitate money laundering schemes.
Barcelona Preparing to Launch Local Cryptocurrency
A Spanish newspaper is reporting that the city council in Barcelona has announced plans to introduce its own digital currency sometime before the summer of 2016. While the proposal has been met with skepticism by officials in the nation’s central bank, it has sparked interest elsewhere. Few details are known at this point, since the proposal remains in the development phase. However, the details that have been released indicate a level of innovation and experimentation that is far in excess of what citizens typically see from government at any level.
As of now, the plan is to provide local residents with their own mobile wallets, and the ability to exchange their digital currency for euros. The city’s mayor, Ada Colau, had promised to introduce some type of local cryptocurrency when she ran for the office, and during the campaign expressed her belief that it could help to spark new commerce within the city. If it succeeds in encouraging more spending within the city by adding additional benefits for its usage, it could help to ensure that more of Barcelona’s wealth remains with its own citizens.
All of this is taking place even as Catalonia continues to toy with the idea of separating from Spain within the next year and a half - a move that the Spanish constitution forbids, and which the central government of the nation is sure to strongly resist. Just last November, more than 2 million residents in Catalonia voted in a nonbinding, symbolic referendum for secession. 81 Percent voted in favor of forming their own nation, but less than half of the area’s eligible voters actually showed up to the polls.
Still, the desire for independence is strong in the region, and dates back to the middle of the 19th Century, and gained intensity during the Spanish Civil War and the years afterward when the region suffered under the dictatorship of Francisco Franco. Despite the return of autonomy in 1977, there has been a steady increase in support for independence and the region’s parliament now has a 60% majority of representatives in favor of separating from Spain.