Norway argues bitcoin is not money, capital gains tax can be charged

Governments and central banks are attempting to solidify their positions on bitcoin, a cryptocurrency that has soared in value in the past year. Over the past few months, a number of governments have issued statements or passed legislation, such as China, which prohibited financial institutions from facilitating bitcoin transactions, and Thailand, which declared that the digital currency is illegal.

It was reported during the weekend that Norway has confirmed that bitcoin is an illegal currency but that it could be subjected to a capital gains tax. Hans Christian Holte, director general of taxation of the richest Scandinavian nation, made the remarks Friday, according to Bloomberg News.

“Bitcoins don’t fall under the usual definition of money or currency,” stated Holte. “We’ve done some assessments on what’s the right and sound way to handle this in the tax system.”

Meanwhile, bitcoins will be treated as an asset and fall under the wealth tax in which losses can be deducted.

Despite the growing acceptance of bitcoin, governments and central banks appear to be clamping down on the virtual currency. The European Banking Authority (EBA) issued a statement Friday warning consumers about the dangers of bitcoin and noted that it is investigating whether or not it should be regulated.

Although bitcoiners can pay for an array of goods and services with their cryptocurrency, some vendors are beginning to scale back their bitcoin method of payment, predominantly in China. There are currently 12 million bitcoins in circulation.

It is trading at around $800 (at the time of this writing).

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