After last week’s decision from China’s central bank prohibited the country’s financial institutions from dealing in the currency, it would appear that Bitcoin took another hit this week with Norway announcing that the virtual currency doesn’t qualify as real money.
After assessing the “right and sound way to handle this,” Hans Christian Holte, director general of taxation in Norway, told Bloomberg Technology that “Bitcoins don’t fall under the usual definition of money or currency.”
Norway announces that Bitcoin does not qualify as real money. Image: George Frey/Getty Images
Instead, Norway will treat Bitcoins as an asset, meaning profits will fall under the wealth tax, losses can be deducted and businesses will incur a 25 percent sales tax.
While Holte said he plans to work with other countries to hammer out the legal aspects of bitcoins, not everyone agrees with Norway’s current position. Paul Ehling, associate professor in the department of financial economics at the BI Norwegian Business School, believes his government’s definition of money may be too narrow. In an interview with Saleha Mohsin of Bloomberg Technology, Ehling insisted “currency is any agreed upon means of exchanges of goods and services.”
“It’s sustainable if people use it more and more, and if they trust it. People start with buying small things, but if they start to make bigger and bigger transactions, it could begin to challenge other currencies.” Bitcoins’ ultimate survival, he added, “will depend on whether consumers and vendors decide they can trust it as a legitimate payment form.”
Other countries, including the U.S., have echoed Ehling’s sentiments, agreeing that if concerns about safety, privacy, and preventing illicit activities are properly handled, Bitcoin has both the legitimacy and the ability to gain a sustainable hold.
