The Asian economies have been far more accepting of Bitcoin than have been their counterparts in the Western world. Nations such as China, Hong Kong, and Singapore continue to outpace the US or Great Britain in inculcating Bitcoin in daily routine.
In a recent discussion with BraveNewCoin, the Chief Operating Officer and co-founder of Tembusu Systems Jarrod Luo stated that the regulatory authorities in Singapore have been fairly lenient. He says,
“From what we can see it is aimed at trying to include crypto-currency-based instruments into the existing financial and taxation system,” says Luo. “I think that this sends a message that there is potentially a ‘mainstream’ role for crypto-currencies. It shows that the government has a deeper understanding of the true potential for the technology and a sense of the early stage it is in,” says Luo. “It is very rational and well-informed.”
Luo founded the Tembusu Systems as an early Bitcoin ATM provider in 2013 and turned it into a complete service provider in 2014. Tembusu Systems now provides cryptocurrency based solutions to corporations through its TRUST system. The TRUST systems allows the corporations to implement the Bitcoin technology as an asset tracking system, a new cryptocurrency, loyalty points, or even facilitate payments.
Accepting that the growth in the Bitcoin system has been swifter than earlier conceived, the Inland Revenue Authority of Singapore (IRAS) announced a new tax regime for businesses accepting Bitcoin and other cryptocurrencies. The revenue authority made it amply clear that businesses earning profits while trading digital currencies, including mining operations as well exchanges will come under the tax net.
“Businesses that choose to accept virtual currencies such as Bitcoins for their remuneration or revenue are subject to normal income tax rules,” states the IRAS. “They will be taxed on the income derived from or received in Singapore. Tax deductions will be allowed, where permissible, under our tax laws.”
But since IRAS applies no capital gains tax in Singapore, those businesses that buy the digital currencies with long-term horizons will be exempt from paying taxes. The authority takes into consideration the purpose, the frequency of transactions, and the holding period when determining if the gains should be taxed.
Luo believes that this is a very thoughtful approach from the government. He adds that the government with its actions has shown that it has a clear idea of the true potential of the blockchain technology.
Luo also cited the lack of knowledge as the main reason that many governments have not yet adopted Bitcoins. More education in this domain will lead to fewer people losing their hard-earned money to scams and ponzi schemes.
Regulation is another key aspect that the COO touched upon. He believes that regulation is necessary to integrate this technology into the traditional financial system and help manage the risks involved in cryptocurrency transactions.
Lou, like the entire Bitcoin community is waiting with bated breath, to see how this pans out for the innovation climate in different countries. But, Singapore has definitely made it to the list of countries which can see a Bitcoin boom in the future.