Australia Introduces New Digital Currency Rules
Bitcoin appears to be gaining increasing regulatory acceptance in some parts of the world. In Australia, for example, the Government recently introduced legislation to ensure that virtual currencies operate on an even tax playing field with “physical” money. Treasurer Scott Morrison hopes that the legislation will make it easier for new innovative digital currency businesses to operate in Australia, and some offshore financial centers are already vying to become leading jurisdictions in FinTech expertise.
On the other hand, regulators and tax authorities in other parts of the world seem deeply suspicious of virtual currencies, given the anonymity they provide to users. A notable example is the United States, where the Internal Revenue Service obtained a court order in December 2016 compelling bitcoin exchange Coinbase to produce records identifying US taxpayers who have used its services.
Indeed, there are some who believe that sooner or later, the whole Bitcoin architecture will come crashing down (virtually speaking of course), leaving owners of bitcoins with little more than worthless pieces of computer code. One of them is JP Morgan CEO Jamie Dimon, who was widely reported recently to have predicted the eventual demise of the virtual currency, likening it to the Dutch tulip bubble of the 17th century. But the banks, whose business very much remains currency of the “real” – as opposed to the virtual – variety, would say that, wouldn’t they.
For more information on this, and other topical international tax matters, please visit: https://www.cchgroup.com/roles/corporations/international-solutions/research/global-tax-weekly-a-closer-look