Germany: Bitcoin Is "Private Money" 223
hypnosec writes "Germany has declared Bitcoin as a 'unit of account', which makes the virtual currency a kind of 'private money' and the process of Bitcoin mining has been deemed 'private money creation.' The recognition as 'unit of account' makes Bitcoin eligible for use in "multilateral clearing circles" and because of this citizens are liable to pay capital gains tax, if they profit from the crypto-currency by sale or purchase within a period of one year – the same as they would have to in case they profit by selling stock, bonds or other form of security. The question here is how the finance ministry would come to know of a person's Bitcoin holding as it is a decentralized currency with no governing body to keep count on the number of Bitcoins a person has. The German government expects that citizens declare their Bitcoin while filing their annual tax return."
Comment removed (Score:3, Interesting)
Law too slow to adap to technology? (Score:2, Interesting)
When a new story comes out about how the government has adapt the law because of some technology advancement, we can all see how slow they are achieveing anything at all. We can see this clearly with patents, copyrights, sexting and any other number of subjects.
But how about when it has to do with money and taxes? Oh boy, so now they understand perfectly?
I actually never thought governments would move this fast to regulate BitCoins. How I wish they would move this fast to address other more important things...
It's all cats (Score:4, Interesting)
These are the US rules today, bitcoin changes nothing.
Re:Same as any other potential fraud. (Score:5, Interesting)
Honor system, but if you do anything to get on their shitlist they'll eventually find it out when you try and get it converted into salable assets.
And bitcoin's design matchess the 'well, we don't really have any way of knowing; but you are in serious trouble if we find out' enforcement model pretty well. Watching the block chain [blockexplorer.com] is already a thing in suitably interested hobbyist circles, and doing so doesn't require any blackhat wizard-fu, it's a protocol feature. For the moment, the transaction history is also relatively small.
None of that helps them connect a person to one or more wallet addresses; but if they do, by other means (probably if you try to cash out, possibly by surveillance of improperly anonymized use), they get a full transaction history automatically.
Re:Same as any other potential fraud. (Score:3, Interesting)
"You do not have a moral or legal right to do absolutely anything you want."
Yes, you do... as long as you aren't harming others in the process.
But, now they're watching you (Score:4, Interesting)
Of course, now that the NSA and Germany's equivalent can reach deep into your private online data, perhaps they *will* know exactly how much Bitcoin you have, and exactly how much you sold.
Re:Same as any other potential fraud. (Score:5, Interesting)
Yes, you do... as long as you aren't harming others in the process.
Where it gets sticky is in the definition of what constitutes "harming others". For example, some argue that self-abuse (e.g. chronic drug use, or suicide) counts as harming others, in that by removing yourself from society, the other people in the society lose the benefits of your productivity/friendship/support/expertise/etc.
Re:I'm out. Thank God (Score:4, Interesting)
Here in Europe thanks to the Euro crisis there is a big crackdown on tax evasion. This includes the German government doing grey area stuff like buying leaked confidential lists of clients of Swiss banks. So it stands to reason that they strike deals to help others catch free loading scum as well.
Personally I am proud that I pay my fair share to improve the society that I live in and have no time for people who don't. It also helps me feel that righteous anger when I suspect that "my" money is wasted which is a favourite pastime of many internet commenters including me.
Re:Law too slow to adap to technology? (Score:3, Interesting)
I suspect it helps that, while they depend on a novel mechanism for preventing duplication and double spending, BitCoins aren't really conceptually much different...
There's your difference. According to Basel III, banks may spend each coin 19 times. With traceable money, a customer could ask his bank to show which coins were his. The entire Ponzi Scheme that our currency system is today could crumble if banks could all of a sudden be monitored and held responsible.
Re:Same as any other potential fraud. (Score:2, Interesting)
Since BitCoin is entirely Open Source, it indeed doesn't matter who created it. All the information you need to judge its technical trustworthiness is on the table. Trust in the creator is only needed if you are not able or not willing to either check the code yourself, or have a third party you trust check the code.
Besides the trust in the BitCoin technology, there's the trust in the BitCoin value. But that's even less dependent on the creator, because whether you can or cannot trust the value entirely depends on the other participants.
And finally, there's the trust in the legality of the system. Which is completely independent of the creator, unless it turns out the creator and the legislator are one and the same. What we are talking about is essentially the German government declaring BitCoin legal. Which means as long as you deal with BitCoins only in Germany (and other countries who explicitly declared them legal), correctly declare them for your tax, and don't use them for illegal purposes, you know you've got nothing to fear from the legal side.