Friday, January 17, 2014

Bitcoin news January 17 , 2014 - Bitcoin is Not Legal Tender, Says Canada Government Official ........ Has the US Government just made Bitcoin legit ?US Government Announces it Will Sell $25m Worth of Silk Road Bitcoins .......... eBay UK to Allow Sale of Virtual Currency from 10th February ..... UK examining how to treat Bitcoin - might the UK Tax Authority reclassify Bitcoin as private currency ? UK’s Official Financial Compensation Fund ‘Doesn’t Cover Digital Currencies’ ...... Indonesia's Central Bank and Belgian Regulators issue Bitcoin warnings ........ China can't seem to make up its mind regarding Bitcoin....

Bitcoin is Not Legal Tender, Says Canada Government Official

 (@southtopia) | Published on January 17, 2014 at 18:10 GMT | LawNewsRegulationUS & Canada
A Canadian government official has said bitcoin is not considered legal tender in the country, according to a report in the Wall Street Journal.
“Only Canadian bank notes and coins are recognized as legal tender in Canada. Bitcoin digital ‘currency’ is not legal tender in Canada,” the official reportedly wrote in an email.
The official from the Department of Finance, who was not named in the article, went on to say the federal government and Canadian regulators would “continue to monitor developments involving virtual currencies” but would not say whether the government would officially license fiat-to-digital currency exchanges in future.
While we’ve seen plenty of comments recently from governments around the world that bitcoin is not a “currency”, this remark stands out in its use of the term “legal tender.” However, recognition that a currency is not legal tender does not make bitcoin or any other payment method “illegal” as such.
Some Canadian businesses, especially those in tourist locations and near the US border, accept US dollars. Additionally, businesses are generally free to choose for themselves which payment types they will accept, so long as the income is reported for taxation purposes.
The WSJ report also quoted a Bank of Canada official as saying regulators would take a greater interest in bitcoin if it became large enough to pose a risk to the stability of the Canadian financial system, but would be less concerned if it remained a smaller, stand-alone payment system.

Bitcoin haven?

what a suprise it's a bitcoin
Canada has so far appeared to present a more permissive environment for bitcoin startups than the US, where businesses often need to register as money transmitters in each state separately.
Vancouver, British Columbia, was the site of the world’s first two-way bitcoin ATMinstallation, which has been an enormous success for its US manufacturer Robocoin and Canadian partner Bitcoiniacs. A second machine opened for business in Toronto just this week. Further east, in Montreal, is the world’s first and only Bitcoin Embassy and information center.
In late 2013, there was even some hope that the Canadian government would bestow some kind of legal recognition on bitcoin. A November fact sheetpublished by the Canada Revenue Agency (CRA), Canada’s taxation agency, referred to bitcoin as “virtual money” and “digital currency.”
The paper did, however, point out that bitcoin should be considered distinct from “traditional currency.”

Money semantics

World government and central bank statements in the months since then have stressed that bitcoin is not a “currency” by any official definition, which usually includes only state-issued payment systems.
They have also shown a preference for the word “virtual” over “digital.” While similar in meaning, especially in the technology world, the former term carries a subtle nuance of unreality.
The UK Royal Mint says of the term “legal tender”:
“Legal tender has a very narrow and technical meaning in the settlement of debts. It means that a debtor cannot successfully be sued for non-payment if he pays into court in legal tender.”
“It does not mean that any ordinary transaction has to take place in legal tender or only within the amount denominated by the legislation. Both parties are free to agree to accept any form of payment whether legal tender or otherwise according to their wishes.”

UK’s Official Financial Compensation Fund ‘Doesn’t Cover Digital Currencies’

 (@emilyspaven) | Published on January 17, 2014 at 17:29 GMT | EuropeNewsRegulation
The UK’s Financial Services Compensation Scheme (FSCS) has warned it won’t provide compensation for lost digital currencies such as bitcoin and litecoin.
The FSCS pays compensation of up to £85,000 per account holder if their bank, building society or credit union is unable to pay claims against it.
This usually happens if the financial services firm in question has stopped trading. Mark Oakes, head of communications at FSCS said: 
“FSCS protects up to £85,000 of depositors’ money in savings and current accounts with UK authorised banks, building societies and credit unions. However, virtual currencies are not regulated by the UK regulators, so FSCS does not provide protection in the event of any losses suffered by consumers.”
The FSCS highlighted the European Banking Authority’s (EBA) recent warning to consumers, which detailed the potential risks people are exposed to by using digital currency.
The warning largely focused on the possibility of fraud and theft.
“Consumers should be aware that exchange platforms tend to be unregulated and are not banks that hold their virtual currency as a deposit. Currently, no specific regulatory protections exist in the EU that would protect consumers from financial losses if a platform that exchanges or holds virtual currencies fails or goes out of business,” the EBA said in a statement.
The UK government is yet to reveal its official stance on bitcoin, but HM Revenue and Customs (HMRC – the UK customs and tax department) last month backtracked on its previous classification of bitcoins as vouchers.
Richard Asquith, head of tax at professional services firm TMF Global, recently voiced his belief that HMRC will reclassify bitcoin as a ‘private currency’, but the department avoided addressing these comments.

US Government Announces it Will Sell $25m Worth of Silk Road Bitcoins

 (@pete_rizzo_) | Published on January 17, 2014 at 07:02 GMT | CrimeNewsRegulationUS & Canada

The 29,655 bitcoins seized by US law enforcement agents from defunct online black market Silk Road will be liquidated by the US government, a 16th January press release from the US Attorney’s Office of the Southern District of New York confirmed.
US District Judge J. Paul Oetkensigned off on the forfeiture order on Thursday, clearing the government to sell the assets, which as of press time are worth more than $25m.
While no timetable for the sale was issued, the development brings the government one step closer to unloading its Silk Road holdings, estimated to be 1.5 percent of all bitcoins, onto the general market. The US Attorney’s Office also estimated the value of the stash a little higher.
Screen Shot 2014-01-16 at 9.03.23 PM
Manhattan US Attorney Preet Bharara, whose agency is prosecuting the case against alleged Silk Road mastermind Ross Ulbricht, said:
“With today’s forfeiture of $28 million worth of bitcoins from the Silk Road website, a global cyber business designed to broker criminal transactions, we continue our efforts to take the profit out of crime and signal to those who would turn to the dark web for illicit activity that they have chosen the wrong path. These Bitcoins were forfeited not because they are Bitcoins, but because they were, as the court found, the proceeds of crimes.”

Ulbricht’s Stash Remains

Video thumbnail for youtube video Alleged Silk Road Owner Ross Ulbricht Denied Bail but Supporters Aim to Raise $500k for Legal Defence Fund - CoinDeskNotably, the sale will not include the more than 144,000 bitcoins (worth $122m as of press time) seized from the personal wallet of Ross Ulbricht, the alleged ‘Dread Pirate Roberts’ who operated Silk Road. The release indicated Ulbricht and his legal team have formally moved to block the larger forfeiture, asserting that he is the owner of the bitcoins.
His filing halts, at least temporarily, efforts by the government to sell the contested coins and could help guard against the consequent price drop many market observers fear.
The 29-year-old was arrested this past October for “intentionally and knowingly” violating US narcotics law. The Pennsylvania State University graduate was also charged with possessing controlled substances and committing or conspiring to commit computer hacking offenses, among other charges.
Since the arrest, Silk Road’s notoriety has only grown. A copycat organizationcalled Silk Road 2.0 went live soon after its demise, and an as-yet-unscripted movie is in the works about Ulbricht and the murders-for-hire he is alleged to have plotted in the course of his business.

Questions Remain

While the US government has announced its intention to sell its seized bitcoins, its path to the sale is less clear.
“We have not yet determined exactly how the bitcoins will be converted and liquidated,” Manhattan US Attorney Office spokesperson Jim Margolin told Forbes.
This hasn’t stopped speculation as to which exchange, if any, could profit from exposure to the high-profile sale. Forbes’ Kashmir Hill suggests the government could also choose to sell its bitcoin assets in a more familiar manner.
“It’s likely that the US Marshals will instead auction off the bitcoins as if they were Bernie Madoff’s penthouse or a drug dealer’s cars. The proceeds will go to the US Treasury,” Hill wrote in a January 26 commentary.

Market Effects

At press time the price of bitcoin remained stable, but previous Silk Road developments have had a significant effect on value. The initial announcement of the Silk Road shutdown in October caused bitcoin values to plummet from about $125 to below the $100 mark, before eventually recovering.
Fears of a large-scale decline in prices is rampant among Reddit users, who worry that a quick sell off would significantly reduce prices. Other observers are more optimistic, predicting a short dip in prices, followed by an influx of capital from investors purchasing undervalued bitcoin.
The Silk Road website was also forfeited, bringing the site’s short and turbulent life to an end.

eBay UK to Allow Sale of Virtual Currency from 10th February

 (@emilyspaven) | Published on January 16, 2014 at 21:36 GMT | CompaniesMerchants,News

eBay is launching a dedicated Virtual Currency category on eBay Classifieds in the UK on 10th February.
The Classified Ads category will allow for the sale of all types of digital currency, including bitcoin and litecoin, eBay representatives have confirmed.
eBay Classifieds, which lists posts throughout the site, serves as the site’s answer to Craigslist. eBay provides the free platform for local buyers and sellers to connect, but does not participate in the transactions.
Ryan Moore, Manager of Business Communications at eBay, said:
“To promote a trustworthy marketplace and ensure compliance with applicable regulations, eBay is currently updating its Currency Policy. The updated policy will clarify that listings for Bitcoin and other similar virtual currencies must be listed in the Virtual Currency Category in the Classified Ad format.
The Virtual Currency category is expected to be available on the UK site on February 10th.”
A Reddit post earlier today sparked rumours of the change in policy. The post included an email from eBay stating that the company does not currently permit listings of digital currencies, but that this will soon change.
The email reads:
“Please know that per our recent policy update, Virtual Currency (i.e. Bitcoin and Litecoin), whether digitally or physically delivered, cannot be listed in Auction-style or Buy-It-Now listing formats. eBay is opening a Virtual Currency category to allow the sale of virtual currency in Classified Ads format on February 10, 2014.
We request that you do not list these items until that date. Please be informed that repeated breach of the policy may further jeopardize your account status. To avoid any inconvenience in future, we’d appreciated it if you go through our help pages or contact us before listing any such items.”
At press time, the policy change only applies to eBay’s UK site. An eBay customer service representative said: “Our policies are different for different country sites, so to know more about other countries, you need to contact the respective eBay sites.”
In December, an eBay user found a loophole that enabled him to sell digital currency via the site. He confirmed via customer service employees from eBay that virtual currencies could be sold on the platform, provided they are housed in physical items (like USB sticks or hard drives).

Bitcoin listing on eBay
A bitcoin “mining contract” listed on eBay.


Both eBay president John Donahoe and David Marcus, president of eBay-owned PayPal, have shared their positive views on bitcoin in recent months, with Donahoe stating that he believes digital currency is going to be a “very powerful thing” in the future.
Marcus has been much more vocal in his support of bitcoin, labelling digital currency “truly fascinating” in one interview and even going as far as to call it the future of money in another.
This week, Marcus pledged his support to bitcoin on Twitter, stating that those at PayPal are “believers in BTC”.
To clarify: we have no policies against using PayPal to sell Bitcoin mining rigs. We don't support any currency txn whether fiat or BTC...