Bank of America Managing Director Francisco Blanch thinks that Bitcoin cannot successfully expand around the world without being subjected to some regulatory guidelines.
He also mentioned that the other factors hindering Bitcoin’s rise are some cases of fraud, hacking and limited market acceptance:
"A key step for Bitcoin would be for it to become pledgeable collateral. However, large inherent risks to digital tokens such as fraud, hacking, theft, new protocol adoption, limited acceptance and that it is not legal tender many places in the world make it an unlikely development."
Traditional financial institutions stance on cryptocurrency
Blanch’s position is supported by other financial services industry players like Morgan Stanley. However, the efforts by several governments around the world to regulate the digital currencies have been relatively unsuccessful so far.
The possible reason behind this is that the cryptocurrencies are designed not to be regulated in conventionally.
As of the moment, government bodies such as SEC are determined to regulate the service providers using the cryptocurrencies like the exchanges and wallet services. They can also consider the currencies as a taxable currency, but this could not work either.
As an example, the Japanese government has just stopped the consumption tax imposed on Bitcoin. The users of Bitcoin, themselves, could expect that taxation guidelines will be introduced in the near future.
Banks vs. cryptocurrencies
It is understandable that several banks like Bank of America and Morgan Stanley are against the use of the digital currencies, as the use of cryptocurrencies may leave the banking industry obsolete if the number of people who use them will grow considerably shortly.
Recent developments show us that despite the hesitation, some banks are bound to embrace cryptocurrencies in one way or another.
Sounds like something a scared mega bank would say!
Dinosaurs probably wished the meteor that wiped them out would play by their rules too....
So long big banks, don't let the digital door hit your ass on the way out!
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Yes exactly said
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If you can't beat em, join em... Eventually all banks will be using either the Ripple protocol or something even more useful like IOTA or EOS...
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I belive it will be overturned, cryptocurrency/digital currency is treated as property by the IRS, who is the standing and controlling agency:
IRS Virtual Currency Guidance : Virtual Currency Is Treated as Property for U.S. Federal Tax Purposes; General Rules for Property Transactions Apply
IR-2014-36, March. 25, 2014
WASHINGTON — The Internal Revenue Service today issued a notice providing answers to frequently asked questions (FAQs) on virtual currency, such as bitcoin. These FAQs provide basic information on the U.S. federal tax implications of transactions in, or transactions that use, virtual currency.
In some environments, virtual currency operates like “real” currency -- i.e., the coin and paper money of the United States or of any other country that is designated as legal tender, circulates, and is customarily used and accepted as a medium of exchange in the country of issuance -- but it does not have legal tender status in any jurisdiction.
The notice provides that virtual currency is treated as property for U.S. federal tax purposes. General tax principles that apply to property transactions apply to transactions using virtual currency. Among other things, this means that:
• Wages paid to employees using virtual currency are taxable to the employee, must be reported by an employer on a Form W-2, and are subject to federal income tax withholding and payroll taxes.
• Payments using virtual currency made to independent contractors and other service providers are taxable and self-employment tax rules generally apply. Normally, payers must issue Form 1099.
• The character of gain or loss from the sale or exchange of virtual currency depends on whether the virtual currency is a capital asset in the hands of the taxpayer.
• A payment made using virtual currency is subject to information reporting to the same extent as any other payment made in property.
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