A governing council member of the European Central Bank is calling for bitcoin’s regulation and tax.
Ewald Nowotny, the head of the Oesterreichische Nationalbank, Austria’s central bank, said in a report that anyone who dabbles in a financial transaction involving bitcoin should be clearly identified.
That is on top of paying value-added tax (VAT).
The banker also made known concerns about possible uses in money laundering.
He said:
“It can’t be allowed that we’ve just decided to stop printing 500-euro notes to fight money laundering, that we’ve slapped strict rules on every tiny savings club, and then have to watch people blithely laundering money around the globe with bitcoin.”
While bashing the cryptocurrency’s bubble-like characteristics, Nowotny admitted that the subject had “reached the heart of society.”
He says people are now asking him whether they should buy bitcoin, rather than gold as in the past.
But “the central bank would only have to intervene if (bitcoin) were to change people’s behaviour. There are no signs of that yet,” Nowotny said.
He also noted that wild gyrations in bitcoin’s value and slow transaction speeds made it hard to use for everyday payments.
Nowotny’s remarks come a few days after ECB executive board member Benoît Cœuré said that bitcoin is in a bubble.
Like his Austrian colleague, Cœuré said one of the main issues surrounding bitcoin relates to tax evasion and money laundering.
Cœuré went on to say that bitcoin was backed mainly by speculation and “there is a risk of large capital losses which investors should be aware of.”
Both bankers said that cryptocurrency is not a currency, with Cœuré saying that investors would not be able to use it as a means of payment.
However, he did say that distributed ledger technology (DLT) is promising for wholesale and retail applications.
He noted the ECB’s recent joint venture with the Bank of Japan to research use cases for the tech.
While central banks worldwide are looking into how to use DLT to update or replace existing financial systems, the technology is still too young for any meaningful implementation, he said.
