Bercy wants to cap the use of bitcoins and tax capital gains

by bold-lichterman

Last week, the Gendarmerie de Midi-Pyrénées dismantled bitcoin traffic in the form of a virtual casino in the South of France, a first in Europe. In addition to this news, the protocol Bitcoin and related cryptocurrency continue to be of concern to authorities.

So a working group chaired by Tracfin bringing together the General Directorate of the Treasury (DGT), the General Directorate of Customs and Indirect Rights (DGDDI), the General Directorate of Public Finances (DGFiP), the General Directorate of Competition, Consumption and Law Enforcement fraud (DGCCRF), the Directorate of Criminal Affairs and Pardons (DACG), the Central Directorate of the Judicial Police (DCPJ), the General Directorate of the Gendarmerie (DGGN), the Financial Markets Authority (AMF), the He Prudential Control and Resolution Authority (ACPR), the Banque de France as well as departments representing the Ministry of Defense and the Ministry of the Interior, were trained and worked on this subject between December 2013 and June 2014. His report was officially handed over to Minister of Finance Michel Sapin on Friday 11 July.

On this occasion, the ministry underlines that “the existing volumes of virtual currencies are not likely to destabilize the financial system” but nevertheless that they “present risks of illicit or fraudulent uses”. It thus proposes three types of changes in the legislation on the subject:

  • Limit the amount of payments: the ministry intends to work for “a cap on payments in virtual currencies (…) in line with the current regulations concerning payments in cash”, and this “after discussion with professionals in the sector”.
  • Restrict anonymity: the ministry wants to set up “an identity check when a professional opens a virtual currency account for a third party, and an identity check for withdrawals and deposits to bitcoin” distributors “. It also wants to “regulate at European level the platforms that exchange virtual currencies for official currencies, by requiring them to verify, for each transaction, the identity of the author and the beneficiary, as well as the origin of the funds ( to the anti-money laundering directive currently under negotiation) ”. As such, the report underlines the risks associated with zerocoin and darkcoin, which appeared in early 2014.
  • Tax capital gains: “The capital gains will be taxable under industrial and commercial profits (BIC) or non-commercial profits (BNC), depending on whether the activity of purchase and resale is carried out in the usual way or not” announces Michel’s firm Fir. In addition, virtual currencies must be declared under the ISF. However, they will not be subject to VAT.

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Table taken from the official report on “the framework of virtual currencies” submitted to Mr. Sapin on July 11, 2014

On July 4, the Autorité des Marchés Financier (AMF) had already castigated bitcoin, as had done at the end of December the Bank of France and the European Central Bank (ECB). The French central authorities in general tend to take a dim view of virtual currencies, and for good reason: they escape the traditional financial system and therefore their control. This is precisely the philosophy of the Bitcoin protocol: to secure transactions without having to have a central regulatory authority.

Others, like Ben Bernancke, the former chairman of the US Federal Reserve (Fed) have been more open to these virtual currencies. In a letter to the US Homeland Security Committee on November 18, 2013, he endorsed the new stateless currency, presenting Bitcoin as a good alternative to the current worldwide transfer of money. The United States Department of Justice, (DoJ) ruled bitcoin legitimate »Last November. Some small businesses even offer payment in bitcoins.

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