Germany’s Ministry of Finance considers Bitcoins a ‘unit of account’ — meaning BaFin licensing required, Bitcoin transactions subject to VAT…
Monday was a seminal day in the life of Bitcoin, with the release of a formal statement by Germany’s Ministry of Finance. The statement indicated that Germany formally designated Bitcoin as a ‘Rechnungseinheiten als Finanzinstrument’, or unit of account. That legally makes Bitcoin not quite ‘real’ money as far as Germany is concerned, but enough like money that its use is regulated and subject to the rules of money. For those of you from Canada, think Canadian Tire dollars.
So what does this mean? A few things.
1) Regulation of Bitcoin use. Entities involved in the selling or trading of Bitcoins will require to be licensed by Germany’s financial regulator BaFin — and have the required minimum €730,000 of capital, anti-money laundering procedures in place, regular filings with BaFin, etc.
2) Taxation of Bitcoins. Commercial transactions will be subject to Germany’s 19% VAT tax. (Some items such as food, books, medical supplies get a reduces 7% rate). Private Bitcoin transactions between individuals should be exempt.
3) Opening up Bitcoin use across Europe. Thanks to MiFID, those companies which do want to be recognized as ‘regulated Bitcoin dealers’ and set up shop in Germany can be formally recognized as regulated across the EU / EEA.
And what does this mean for Bitcoiners, and bitoin brokers? Well, we view this as a major step forward in the legitimization of Bitcoin as a ‘good’ currency, opening up the door for merchants of all kinds — online and offline — to accept Bitcoin as payment. And that will only increase awareness of Bitcoin, and the trading of Bitcoins. Currencies which aren’t really used much in the real world (outside of their home countries, that is) don’t really result in much trading activity.
Germany’s approach seems a lot more healthy, useful and productive than in the US, where several arms of the US Government are continually investigating Bitcoin, as opposed to constructively try to increase its use in a safe way.