G20 Nearing Consensus on Bitcoin Not Being Currency

March 21, 2018

The G20 is increasingly moving toward the conclusion that cryptocurrencies cannot be classified as money, which might have consequences with regard to how some countries tax them in the future.

As the G20 meeting in Buenos Aires continues, various finance ministers have aired their opinions on the status of Bitcoin and other cryptocurrencies as means of exchange.

So far, the prevalent attitude is that Bitcoin is not real money although it can be classified as an asset. Because of this, authorities would be highly likely to consider a capital gains tax on any profits made from Bitcoin, Bloomberg reports.

These kinds of taxes do not often apply when someone holds onto euros and cashes out at a certain peak.

“Whether you call it crypto assets, crypto tokens—definitely not cryptocurrencies—let that be a clear message as far as I’m concerned. I don’t think any of these cryptos satisfy the three roles money plays in an economy,” according to Klass Knot, president of De Nederlandsche Bank.

The roles Knot refers to are the three traditional functions that money plays: a medium of exchange, a store of value, and a unit of account.

Ahmed Alkholifey, governor of Saudi Arabia’s Monetary Authority, said something along the same lines at the IIF Conference, which took place on the periphery of the G20 meeting.

“The first function of a currency is to serve as a stable medium of exchange, and experience today with various crypto assets in circulation are not at all satisfactory in this regard,” he said.

Bank of England governor Mark Carney, who also heads the Financial Stability Board (FSB), addressed the G20 on Sunday with a letter explaining his own views on cryptocurrencies.

He said the market was too small at the moment to pose any threat to global financial stability – a statement that may have caused cryptocurrencies to rally on the same day.

Along with his assessment, Carney added that the FSB would not be looking to draft new regulations after the G20 meeting, opting instead for a review of current rules to see if there are areas for improvement.

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