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EconomyG7 publishes principles for the operation of central banks with digital currencies

G7 publishes principles for the operation of central banks with digital currencies

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G7 financial officials today published Central Bank Digital Currencies CBDCs, stressing that “digital currencies must not compromise financial and monetary stability; they must coexist, complement existing forms of money and promote innovation and payment efficiency. “

 Recalling that the upward trend in the use of digital currencies accelerated during the pandemic, a joint report by the G7 countries entitled “Principles of public policy on digital retail currencies” said that the CBDC should be in digital form. of central bank money.

The statement stressed that central banks’ digital currencies are not crypto assets that are highly volatile and are not put into circulation by central banks.

It is emphasized that digital currencies can be an important tool for central banks in the future and must be designed to meet future payment needs.

“The international use of CBDC, including for cross-border payments, can bring important benefits, but if the CBDC design is not carefully calibrated, it can also have unintended consequences,” the document said.

The principles of the G-7 were divided into two categories. The first category includes key issues, legal and governance frameworks, data confidentiality, competition, operational sustainability and cybersecurity, illicit financing, surplus and energy and the environment.

The second category includes opportunities, financial inclusion, payments to and from the public sector, cross-border functionality and international development.

The decentralized cryptocurrency bitcoin appeared in 2009, marking the beginning of a new digital era. While taxpayers, regulators and central banks around the world are still debating exactly how to enforce control over virtual currencies, one question remains – is bitcoin legal or not?

The answer depends on the country in which the users are located, it is clear from data posted on the portal Investopedia.com.

Bitcoin is not issued, regulated or protected by a central bank. Instead, the cryptocurrency relies on a network of interconnected computers that perform a process called “digging.” Perhaps the most important quality of bitcoin is related to its decentralization. In other words, it is an alternative payment system that is not regulated by governments around the world or by central or private banks. This allows the transfer of value across borders without conventional remittance fees, and the participants in the transaction remain anonymous.

Consumers can pay with bitcoin when buying goods or services, through digital wallets. Cryptocurrency is traded on many exchanges around the world, and the issuance of a new digital currency, a process called ICO, serves as an alternative to the initial public offering (IPO). Against this background, the question of where bitcoin is legal and where it is not seems more logical than ever.

Countries that said “yes” to bitcoin

Bitcoin can be used anonymously for transactions between two accounts anywhere in the world, making it attractive for criminal activity or corruption. However, there are opportunities to identify transactions, which means that cryptocurrencies are not the ideal means of concealing illegal cash flows.

Most countries around the world have not determined the legal status of bitcoin, preferring to wait for the evolution of the market. Some countries have indirect rules on the use of bitcoin. In June this year, for the first time, a state designated bitcoin as an official legal tender.

USA

The United States generally has a positive approach to bitcoin, with several government agencies working to reduce the role of cryptocurrency in illegal transactions. Businesses such as Dish Network, Microsoft, Subway and Overstock welcome bitcoin payments. In addition, the virtual currency found its way into US derivatives markets, which contributed to the legitimacy of the digital asset.

The US Treasury Department issued guidelines for the use of bitcoin in 2013. The ministry does not recognize bitcoin as a currency, but as a monetary services business. This puts the cryptocurrency under regulation, which obliges stock exchanges and payment companies to report and register activities in this field. In addition, bitcoin has the status of a taxable property.

Canada

Like its US neighbors, Canada as a whole does not hinder bitcoin. The country has not recognized the asset as a real currency, taking care not to use it for money laundering. Canada determines the status of the virtual currency of a “commodity”.

This means that bitcoin transactions are considered as barter transactions, and the income from them is considered business income. Taxation depends on whether consumers simply invest in the cryptocurrency or do business through it.

Canada defines bitcoin exchanges as money services businesses. This puts them under regulation against laundry. Exchanges must be registered and report to the authorities any suspicious transactions. Some major Canadian banks have banned the use of their debit and credit cards for bitcoin transactions.

Australia

Like Canada, Australia does not consider bitcoin to be either a foreign currency or an official means of payment. According to the country’s tax legislation, bitcoin is an asset for capital income.

European Union

In October 2015, the European Court of Justice ruled that the buying and selling of digital currencies is considered a supply of services, which excludes it from the scope of VAT in all EU member states. At the same time, some EU countries have their own approach to bitcoin.

In Finland, bitcoin is excluded from the VAT rule and is designated as a financial service. Virtual currency is considered a commodity and not a currency in Finland. Belgium also does not tax bitcoin, and Cyprus has no regulation at all. The UK has a positive approach to bitcoin, with the virtual currency subject to taxation. Bitcoin taxes are also due in Bulgaria.

 Germany is open to virtual currency, imposing a different tax depending on whether it deals with dealers, stock exchanges, miners, businesses or consumers.

El Salvador

El Salvador is the only country in the world that defines bitcoin as a legal tender. In June 2021, the country’s congress approved the president’s proposal to accept the digital asset as a legal tender.

Countries that said no to bitcoin

Although bitcoin has been welcomed in most parts of the world, several countries have officially said no to cryptocurrency, mainly because of its volatility, decentralization, the risk it poses to the monetary system and its links to illegal activities such as drug trafficking and laundering. of money.

Some countries have directly banned cryptocurrencies, while others are trying to separate them from the financial system, making trade and payments quite difficult.

China

Bitcoin is banned in China. All banks and financial institutions, such as payment service companies, are prohibited from conducting bitcoin transactions. Trading exchanges have been banned, and Beijing has recently begun banning the extraction of virtual currencies in the country.

Russia

Bitcoin is not regulated in Russia, but nevertheless, its use for the purchase of goods or services is illegal.

Vietnam

The government of Vietnam and the country’s central bank maintain that bitcoin is not a legitimate method of payment.

Bolivia, Colombia and Ecuador

Bolivia has banned the use of cryptocurrencies. Colombia does not allow bitcoin to be used for payments and investments, and Ecuador has banned all virtual currencies after a vote in the local parliament.

Conclusion

Although bitcoin has been around for more than 10 years, many countries still do not have systems in place to completely restrict, regulate or ban cryptocurrencies. The decentralized nature of bitcoin, along with anonymity, make it a great challenge for governments, especially when it comes to illegal activities. Many countries are still considering ways to regulate virtual currencies in the future. For now, bitcoin remains in the gray regulatory zone in most of the world.

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