Bitcoins have many people confounded, and none more than governments. They are trying to figure out where legislation should be put to quantify its use within its country and how tax laws apply to the use thereof. Chinese regulators banned financial institutions from using Bitcoin earlier this month, while in July, Thailand’s government declared the virtual currency’s use illegal due to a lack of applicable laws. Now Bitcoin has taken another hit to its legitimacy: Norway “” Scandinavia’s richest nation “” has said that the currency doesn’t qualify as real money.
According to Norway‘s general of taxation, Hans Christian Holte, the currency “doesn’t fall under the usual definition of money.” The Norwegian government said that it is an asset (like any commodity) and must therefore be liable of a capital gains tax. Profits from Bitcoin will fall under the wealth tax, and that losses can be deducted.
Interesting to note, this is of great interest to one Norwegian resident. Kristoffer Koch made an investment worth $27 in Bitcoins in 2009 and that is now worth more than $800,000. Holte is reportedly planning to work with other nations to work out the legalities of the new currency.
This is another blow to Bitcoins and it is surely to affect its value. It does lend to the notion that we have been making for months, that Bitcoin may not be a valid online currency for the future, but is merely a commodity as any other that needs to be mined.
What are your thoughts on the currency? Let us know below.
Follow Theunis on Twitter: @Theunis_BWB