Swiss legislators considering treating bitcoin as a foreign currency

Last week, China prohibited financial institutions from facilitating bitcoin transactions. Since then, Chinese vendors that jumped on the bitcoin bandwagon over the past few months have now ceased accepting bitcoin payments.

These moves caused bitcoin to fall below $600 over the weekend, but it did gain ground during the start of Monday and is now trading around the $950 mark. However, it could fall again if more governments and central banks take similar actions to China, but it seems some nations are accepting it as a legitimate form of currency.

It was reported Monday that the Swiss Parliament is considering a proposal to treat bitcoins as a foreign currency. Introduced by Thomas Weibel, the primary objective of the legislation would be to eradicate ambiguities and enhance legal certainty to the cryptocurrency. On top of this, if passed, it would examine how to install the proposals as well as to evaluate how bitcoin would affect its financial sector.

The bill has gained traction by lawmakers because they feel the digital currency could produce new opportunities in the Swiss financial system and regulations should be implemented in order to apply the VAT and fight against money laundering schemes.

Many bitcoin operators are pleased with the news and feel it could be a groundbreaking move as it would further legitimize bitcoins and hopefully set a precedent for other governments and central banks to follow.

Some are concerned, though, that the United States would eventually see the alternative currency as a threat to the dollar and take action. Former Texas Republican Congressman and three-time presidential candidate Ron Paul recently warned that the cryptocurrency could very well be “the destroyer of the dollar.”

Although Federal Reserve Chairman Ben Bernanke has noted that it does not have the authority to regulate, supervise and take action against a currency like bitcoin, many are not as confident that the Fed and other central banks would permit any threats to take place against the U.S. greenback.

Bitcoin, which used to maintain its anonymity feature, is starting to be no longer the currency of anarchists. It was reported Monday that BTC China, the world’s largest bitcoin exchange, now requires its users to provide identification. The same thing could happen with domestic exchanges.

“In response to a recent policy shift, BTC China now requires users to submit identification or a passport number. Existing users will need to provide this information upon login. We apologise for any inconvenience,” the company said in a statement.

At the time of this writing, bitcoin is trading at $958.

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