The French government has moved to limit the anonymity of bitcoin users through rules that require ‘distributors’ of the virtual currency to verify the identity of account holders.
The French Ministry for the Economy and Finance has outlined regulatory measures to be put in place by the year’s end for financial institutions and users of bitcoin and other digital currencies.
The new regulations require bitcoin “distributors” to identify and verify their users to limit the level of anonymity. As well, regulators will have to clarify the treatment of bitcoin and other digital currencies in France’s tax system. The digital currency will also become subject to capital gains taxes.
The document read:
“We have proposed […] a threshold on the margin tax of €5,000. We believe that France should let people try, invest and develop business with bitcoin before we tax it.”
Ultimately, the regulations are presented as a means to promote greater transparency in France’s bitcoin market. Due to the pseudonymous means of bitcoin, the document also calls on regulators to discuss and present a spending cap for digital currency transactions, in keeping with the current rules for cash payments.
Finally, at the European level, the French government is now increasing regulation of bitcoin exchanges that handle fiat currencies. Specifically, exchanges are required to report on every transaction and verify the identity of the parties involved in any bitcoin activity.
Speaking for the Association Bitcoin France, President Philippe Rodriguez told CoinDesk that it disagrees with the key points of the new guidance. However, he acknowledged the positive aspects of the new regulation, saying:
“Yes, this is going in the right direction. Although we disagree on the verification on ‘every transaction’ of identity, we understand the principles.”
Imposing taxes on bitcoin is a controversial issue in the country – as well as throughout the world – because of the uncertain legal definition of the digital currency. Earlier this year, the French government said that although it does not officially recognize bitcoin as a currency, it can still impose income taxes, according to coindesk.
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