British authorities have plans to scrap a 20% “value-added tax” on Bitcoins, bringing regulation of the controversial crypto-currency in line with the way it treats other currencies. “The UK’s welcoming approach to Bitcoin contrasts with the approach of other countries, amid concerns about its use for tax evasion and money laundering as well as its notoriety for wide fluctuations in value,” reports The Financial Times.
The Bitcoin news blog Coindesk further explains that the rule is “expected to be formally announced this week,” continuing, “the ruling would find HM Revenue and Customs (HMRC), the UK’s customs and tax department, classifying virtual currencies as assets or private money, not as vouchers that required a tax on the value of the coins.” Bitcoin will still be subject to other taxes, such as the corporation tax.
Many other countries have gone in the opposite direction as Britain. The currency’s troubles with theft, wild swings in value, and facilitation of the black market have made it a target of some governments, including Russia, which has banned Bitcoin.
The United States is still figuring out it’s own approach. While at least one senator has called for heavy regulation, the Treasury Department has said that it will not regulate those who mine Bitcoin. New York officials plan to regulate Bitcoin in the near future.
Governments have a delicate role to play in the still uncertain crypto-currency market. They have a vested interest in protecting businesses that want to take early advantage of a potentially lucrative opportunity, but governments also want to protect vulnerable consumers.
Further details about Britain’s decision are expected this week.
[Image Credit: Flickr User anatanacoins]
