The Government of Jersey has asked public to provide its opinion on whether it should regulate decentralized virtual currencies such as Bitcoin or not.
In its just-released consultation paper, prepared under the watch of Jersey Financial Services Commission (the “JFSC”), the Joint Financial Crimes Unit of the States of Jersey Police, the Law Officers’ Department, Jersey Finance Limited (“JFL”) and Digital Jersey (“DJ”), the self-governing democracy has outlined its own opinions on Bitcoin, explaining how it sees it as a great “economy-boosting” technology to adapt.
However, it has also raised concerns related to its misuse in nefarious crimes such as money laundering and terrorism. They are, therefore, seeking strong opinions to draw out ideal measures to regulate the use of virtual currencies, mainly to handicap its applicability in financing illicit activities. The paper reads:
“Should virtual currencies [such as Bitcoin and Ripple] accomplish the necessary levels of user acceptance and market penetration in the future, both legitimate and nefarious users may achieve full independence in acquiring, transferring and spending of their virtual assets within the virtual economy. This will reinforce the need for governments to tackle virtual economy-based ML/FT.”
On Bitcoin Taxation
A special section of the paper was also devoted to the current taxation standards for virtual currency businesses in Jersey. It reminded users about the JFSC’s previous takes on Bitcoin industry, where commercial scale businesses such as miners and fiat-based exchanges were taxed.
The paper also discussed how the JFSC has excused a certain virtual currency activities from falling under the taxation purview. They include a decision of not charging GST on the sale and purchase of goods and services using Bitcoin. The aforesaid services however remain to be unregulated, especially in times when the Jersey regulators are receiving constant requests to permit various Bitcoin businesses as these.
“Activities relating to the exchange of or sale of Bitcoins are currently not regulated,” the consolidation paper reads. “They are not considered to be money service business (defined in Article 2(9) of the Financial Services Law because Bitcoins are not a currency or money as ordinarily understood).”
The Jersey Government has indeed taken an ideal stand to understand the dynamics of a new payment technology such as Bitcoin. It’s approach is applaudable by every means, something that will provide experts an opportunities to present their case for a better and balanced regulatory framework for virtual currencies.
As noted in the announcement of the regulators, they are seeking consultations from individuals and businesses. They can all submit their opinions by August 7th this year. The government is further conduct a public meeting on Monday, August 3rd, to discuss the pros and cons further.