Bitcoin: France Outlines New Rules For Bitcoin Businesses

The French Ministry for the Economy and Finance has outlined regulatory measures to be put in place by the year’s end for financial institutions and users of bitcoin and other digital currencies. Earlier this year, the French government said that although it does not officially recognize bitcoin as a currency, it can still impose income taxes.

The 11th July communiqué, which came from the office of Budget and Public Accounts Minister Michel Sapin, emerged in response to a report by Tracfin, a unit that targets money laundering and illicit finance operations. Imposing taxes and other measures on Bitcoin is a controversial issue in France – as well as throughout the world – because of the uncertain legal definition of the digital currency.

The new regulations require bitcoin “distributors” to identify and verify their users to limit the level of anonymity. As well, regulators will have to clarify the treatment of bitcoin and other digital currencies in France’s tax system. The digital currency will also become subject to capital gains taxes.

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Budget and Public Accounts Minister Michel Sapin said in a statement that “This report shows that even if the existing volumes of virtual currencies are not likely to destabilize the financial system, these unofficial currencies are developing and have risks of illegal or fraudulent use.”

He presented four regulatory actions with the aim of “securing” users of “these currencies that offer particular opportunities for transactions lower than traditional payment services costs”. The document further read, “We have proposed […] a threshold on the margin tax of €5,000. We believe that France should let people try, invest and develop business with bitcoin before we tax it.”

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Ultimately, the regulations are presented as a means to promote greater transparency in France’s Bitcoin market. Due to the pseudonymous means of bitcoin, the document also calls on regulators to discuss and present a spending cap for digital currency transactions, in keeping with the current rules for cash payments.

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