Germany first to recognise Bitcoin

Germany first to recognise Bitcoin

Germany has officially recognised Bitcoin as a currency, making it the first country to do so and open the possibility of attempts to tax it.

The digital currency, which has been treated with suspicion by governments and banking regulators, allows users to set up accounts online and make payments and trade in Bitcoin.

Supporters of the “borderless currency” praise the innovation because it is free from government control, but critics claim because it is unregulated and can be used anonymously it can be exploited by criminals.

The German government however has now acknowledged it as a “currency unit” and “private money”.

Frank Schaeffler, a German member of parliament on the Finance Committee, said: “For the first time, the federal government recognizes Bitcoins as private money.”

Duncan Arthur, an independent payments, mobile and African banking expert, told HumanIPO the move must be aimed at tackling people using the digital currency to avoid tax.

Arthur said: “Germany has always had a problem with tax evasion and I can imagine as they clamp down on the more traditional ways of doing it, some enterprising tax dodgers started looking elsewhere.

“The problem with recognising is that you legitimise it and inadvertently encourage and endorse its use.”

Bitcoin’s popularity and usage soared in April this year, during the Euro crisis in Cyprus, with many people withdrawing all their cash and purchasing Bitcoins instead.

Arthur added: “I bet you they [German government] looked at how Cypriots piled into bitcoins as the austerity measures bit and the government there started effectively seizing savings.

“If they’re funding Europe’s recovery, I’m sure they want to close every loop.”

While Bitcoin take-up has been slow in Africa so far, there are some who believe the continent could be an ideal place for the digital currency to grow.

In May HumanIPO spoke to South Africans Nicholas Pilkington and Timothy Stranex, who had set up the first rand-to-Bitcoin exchange platform, while in Kenya, the Kipochi Bitcoin wallet has been integrated with the M-Pesa mobile money platform.

HumanIPO reported in April, South Africa was one of five African countries which had companies expressing an interest in hosting the new Bitcoin ATM machine.

Posted in: InternetPolicy

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