Once again, Bitcoin was a central topic of last week’s World Economic Forum in Davos, Switzerland.
The strength in the cryptoeconomy growth shows just how important it is, but its concept is still far from unanimous. Supporters, critics and skeptics drew attention to one particular point: the importance of ensuring that digital currencies won’t be used for illicit activities.
“The anonymity and lack of transparency and the way in which it conceals and protects money laundering and financing of terrorism, is just unacceptable. It needs to be taken into account but then there will be innovations coming out of these movements”, said Christine Lagarde, managing director of the International Monetary Fund (IMF), according to Reuters news agency.
Under that reasoning, French President Emmanuel Macron proposed a joint regulation for the currency, a plan supported by the European Central Bank. That way, the issue should be discussed during the G20 summit in Argentina next March.
The trend is that 2018 provides a framework for cryptoeconomy regulation. Some countries had already discussed the issue and look for a joint solution, in what is perceived as another step towards a better understanding of this universe. This is because there is a real interest from large financial corporations to use the Blockchain technology. For example, for banks its use would be ideal to minimize costs and time of international wires.
Concerns about the use of digital currencies for illicit activities made South Korea reinforce the rules for cryptocurrency use. But, instead of banning Bitcoin like China did, South Korea enforced rules to put an end to anonymous transactions. Immediately, Exchanges were forced to identify the users in all their operations, and send all the information related to digital currencies investments and revenue to the National Tax Service of South Korea.
Obviously, South Korea and other countries are interested in monitoring all the user activities to avoid tax evasion. However, the biggest problem here is how hard it is to enforce all that control in a digital economy world with multiple options available for those who wish to evade the system.
It's obvious that governments from around the world are interested in establishing a taxing system for all the operations surrounding digital currencies; that’s why the debate will continue at the G20 summit.
There are many aspects of this ecosystem that must be addressed, such as the taxation of Exchanges and miners, as well as the excessive energy consumption of the mining activity. Just as important, regulation of the economic blocks and the international cooperation for the monitoring of Exchanges, among other things, should be discussed as well.
By Thiago Barbosa