The European Banking Authority and Norway backlash against Bitcoin


The EBA issues a warning on Bitcoin, while Snoop Dogg jokes with the digital currency and drone deliveries

Regulatory warnings and jokes? Does not seem like a really good week for Bitcoin, but not a bad one either, with volatility subsiding a little despite Friday’s news out of Europe. The day saw a double whamming as a couple of regulators shared some opinions about the digital currency and they were definitely not enthusiastic about it.

The first one came out of London, where the European Banking Authority (EBA) is headquartered. The regulator issued a formal statement on its website that warned consumers about buying, holding and trading “virtual currencies”. We are quoting it exactly as they said it – virtual as in “virtual reality”. Not digital, not crypto, not electronic the word used sounds like a warning in itself.

The statement goes on to emphasize that no official regulators are behind the dealings in digital currencies and all the implications that are coming from that are a responsibility for the consumers. Are regulators preparing on a legal crusade against various dealings with Bitcoin and will follow with “We told you so?” Well no one can say that for sure, but it does sound worrying.

The second blow came out of one of the richest nations in the world – Norway. The taxation Director General said that the currency “does not fall under the usual definition of money”. The government of the Scandinavian country has instead classified Bitcoin as an asset and will treat it as such while it announced that it will charge sales tax of 25% on businesses and will pursue coordination with other countries (namely EU) to define a legal framework.

Meanwhile last Thursday Wired has reported that the popular Bitcoin minting service Casascius run by Mike Caldwell is shutting its operations. Last month he received a letter from from the Financial Crimes Enforcement Network, or FINCEN and despite disagreeing with their position on the matter that his service could be used for money laundering he is shutting down his business.

It all puts into a different perspective last week’s Bitcoin announcement out of Switzerland. The international authorities’ backlash will likely be far from acceptable to the parliamentary majority there. Especially after a weekend report by The Economist on the crackdown of US authorities on Swiss Banks and the ways in which some US citizens dodge taxes. Many small banks are threatened to be forced out of business after drastic fines imposed by US authorities on them.

Speaking of publicity stunts Snoop Dogg has spurred some speculation last week that he will be seeking to accept Bitcoin payments with his new album. It turned out to be a joke. In the context of his tweet that stated “my next record available in bitcoin n delivered in a drone” some media interpreted it literally and the hype was on.

Not the case with “Scary Spice” Mel B and her newest single (which might indeed need a lot of publicity to get the attention of anyone) – she turned out to be for real, just as a Nevada based developer who acknowledged that the reason why he mentioned Bitcoin payments for the $7.85 million Las Vegas mansion was for the publicity of it and the new markets that it opens.

One of the leading forex trading platform providers Leverate has announced that it will be offering a CFD on the crypto-currency, so we expect that there will be more brokerages joining the ranks of Plus 500 and AvaFX to offer Bitcoin trading soon

Until we see some more widespread adoption for real, with prices quoted in Bitcoins, the challenge for the crypto-currency to establish itself as a store of value will remain a big one. Whether it will happen? – Well, only the future will be the judge of that. Stay tuned to LeapRate for the latest news surrounding the digital currency.

For more on the global Forex industry see the LeapRate-Dow Jones Forex Industry Report.

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The European Banking Authority and Norway backlash against Bitcoin

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