Czech Republic to restrict bitcoin use to deter criminal activity
The Czech Republic is introducing a law restricting bitcoin that requires virtual currency exchanges and financial services providers to determine the identity of customers. The anti-money-laundering law is being called a disaster by users but cryptocurrency specialists have said they do not think it is excessive or onerous, or that it will hamper innovation in the technology. The government also plans to apply VAT and is considering licensing both cryptocurrency exchanges and wallet providers. The law has been approved by the lower house of the Czech parliament and is now heading for the Senate.

The Czech Republic has introduced a law restricting bitcoin, according to an article by Elizabeth Vejvodova, editor of Pravni radce (Legal Counselor). The article noted ...

The Czech Republic has introduced a law restricting bitcoin, according to an article by Elizabeth Vejvodova, editor of Pravni radce (Legal Counselor). The article noted that more than 80 locations in Prague accept bitcoin.

The Czech Republic previously had no law regulating cryptocurrency. An anti-money laundering law prepared by the Finance Ministry requires virtual currency exchanges to determine the identity of customers. Bitcoin users will no longer be able to “hide behind fake names or nicknames.”

The Finance Ministry determined that it is possible to disguise links to criminal activity using virtual currency and that virtual currency poses the risk of tax fraud.

The law has been endorsed by the House and now heads to the Senate. Cryptocurrency users have called the law a disaster.

Financial Service Providers Affected

The law only applies to financial service providers. Someone who accepts payments in virtual currency only but does not provide other services like virtual wallets is not obligated.

The government also plans to amend the value-added tax (VAT) section making the purchaser of goods or services liable for VAT. Should a contractor fail to pay the VAT, the tax office could take action.

Bitcoin has been exempt from VAT by the European Union.

Exchanges must pay state income tax. Revenues from transactions must be valued on a daily basis using the official exchange rate of virtual currencies.

Licensing On The Way?

The tax office wants money changers and electronic wallet providers to be licensed and to register with state governments. In the future, merchants that accept bitcoin may need to register and require customers to provide proof of identity when paying with bitcoin.

Cryptocurrency specialists have said the regulation is not excessive and does not needlessly hurt innovation.

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