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Treasury designated Bitcoins as "private money"

Updated on January 13, 2015

Bitcoin Currency

Federal Ministry of Finance

The Federal Ministry of Finance has the digital currency Bitcoin media reports recognized in important respects. The virtual coins are legal and tax approved and recognized as "units of account", according to world wide recognized media institutions. Referring to a request from the FDP Members Frank Schaeffler and the response of the Federal Ministry of Finance - Bitcoins are a kind of "private money".

The Bitcoins moved a few months ago in the spotlight, as speculators sent the price of virtual currency on a roller coaster ride. Since April, the price plummeted as important trading platforms continue to deal with this highly volitile resource.

Digital Currency Circulation

The amount of Bitcoin units is limited to 21 million. The course results from supply and demand in different trading platforms. Currently the price is around 110 dollars (82 euros).

The Internet money is not controlled by a state or central bank, but "mined" by Internet users in complex arithmetic operations. Bitcoins can for example be used for purchases on the internet.

Previously, the Federal Ministry of Finance had FAZ according to the report already made it clear that speculative profits in buying and selling of Bitcoins after a holding period of one year are exempt. Unlike equity or interest rate transactions where no withholding tax becoming due.

How To Buy or Sell Bitcoin

Texas Investigation Into Bitcoin

The circumstances are unpleasant: a trial before a Texas district court in which a man must answer charges of a fraudulent pyramid scheme. The defendant Trendon Shavers had the hedge fund BTCST ( Bitcoin Savings and Trust) operated, which was based on the virtual currency Bitcoin.The judge explained well, it was stated that Bitcoins to "a currency or a form of money." Bitcoin is a virtual cash that is based on complex cryptographic operations.

In BTCST fraudulent intentions were for some time been suggested in August 2012, the service has been closed. The US Securities and Exchange Commission had declared Shavers had taken at least 700,000 bitcoins in the course of its financial activities, which on the basis of the average Bitcoin exchange rate for 2011 and 2012 correspond to more than $ 4.5 million dollars.

The judge's decision is significant because Shavers had argued that it was in Bitcoins not about money or securities. So therefore were subject related transactions also not regulated by US authorities. The SEC had expressed the opposite view. This opinion joined Judge Amos Mazzant the Eastern District of Texas, and wrote in a memorandum (PDF) . "It is obvious that Bitcoins can be used as a money order goods or services paid for and also individual living costs will be met, such as Shavers explained. " For this reason, the BTCST activities would fall within the jurisdiction of the court.

That the US Treasury Financial Crimes Enforcement Network related (FinCEN) had published earlier, new guidelines for dealing with Bitcoin-related transactions. The Money Laundering fighters presented in March clear that many aspects within the Bitcoin economy would be subject to non-financial services to American law .

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