European court proposes VAT exemption for Bitcoin transactions

Recently, the People's Bank of China and ten other ministries and commissions jointly issued the "Guiding Opinions on Promoting the Healthy Development of Internet Finance" (hereinafter referred to as the "Opinions"), which gave the first official definition of Internet finance and pointed out that the main forms of Internet finance include Internet payment, online lending, equity crowdfunding, Internet fund sales, Internet insurance, Internet trust and Internet consumer finance. This is the first time that the official has given a clear definition of "Internet finance" and its seven aspects.

The entire text of the Opinion does not mention digital currency or virtual currency. Previously, relevant domestic research institutions have defined virtual currency as part of Internet finance. Abroad, the status of virtual currencies, including Bitcoin, is also gradually becoming clear. Just one day before the release of the Opinion, European judicial officials proposed to exempt Bitcoin transactions from VAT. In April this year, the first Bitcoin Investment Trust was born in the United States, which can be traded in the U.S. over-the-counter market.

It is not surprising that Bitcoin is not mentioned in this Opinion. On December 5, 2013, the central bank and five other ministries and commissions issued the Notice on Preventing Bitcoin Risks, which defined virtual currency as a virtual commodity. It stipulates that Bitcoin is not a real currency; financial institutions and payment institutions are not allowed to conduct Bitcoin-related business; Bitcoin websites that are the main Bitcoin trading platforms should be registered with the telecommunications management agency in accordance with the law.

However, most of the domestic Bitcoin platforms have introduced the concept of Internet finance. At present, a series of financial products have appeared in the Bitcoin market, including Bitcoin wallets, futures, regular financial management, Yubibao (similar to Yu'ebao), etc.

Huobi founder and CEO Li Lin said that the Bitcoin industry is still small in size and highly innovative, and poses great challenges to regulation. Global regulation is still under exploration. Financial regulatory authorities have not provided window guidance on Bitcoin in the short term, and the Bitcoin industry can actively explore how to do a good job of industry self-discipline.

The guidance on the third-party custody system for customer funds, information disclosure, risk warnings, qualified investor system, consumer rights protection, network information security, anti-money laundering and prevention of financial crimes, industry self-discipline, etc. mentioned in the guidelines are also of great guiding value to the Bitcoin industry.