On of the first scrupulous works, attempting to analyze the legal and economic nature of crypto and other currencies circulating withing the decentralized or decentralized environments were the European Central Bank (ECB) that did not reveal any inherent danger to the economic system of virtual currency. Of course, in this legal opinion we will not stop on the analysis of ECB.
The later works of ECB were inevitably subject to evolution and development as of the VC definition. Such, its position of 2014 year where the ECB insisted on payment nature of VC and even in his work of 2016 it states:
- «Second, given that virtual currencies are not in fact currencies, it would be more accurate to regard them as a means of exchange, rather than as a means of payment. Additionally, the proposed directive’s definition of ‘virtual currencies’ as a means of payment does not take into account that in some circumstances virtual currencies can be used for purposes other than that of a means of payment».
- In this stance, it is not had to notice that this position become close to the conclusions that we can trace both in the 5th Anti-Money Laundering Directive and The European Securities and Markets Authority (ESMA) that manifests different nature of VC. What is more, ESMA in its discussion paper of January 9, 2019 distinguishes different types of virtual currency uses.
- Others, so-called ‘payment-type’ cryptoassets, have no tangible value, except for the expectation they may serve as a means of exchange or payment to pay for goods or services…»
But if we have a glance behind, so no less interesting represents a 2015 decision of the European Court of Justice (ECJ), defining that the income in cryptocurrency investments are not subject to value added tax in the European Union Member States.Buying or selling bitcoin is therefore exempt from VAT in all EU Member States.
On July 5, 2016, the European Commission presented a legislative proposal to amend the Fourth Anti-Money Laundering Directive (AMLD). It suggested, inter alia, bringing custodian wallet providers and virtual currency exchange platforms within the scope of the AMLD. As a result the VC is a “digital representation of value that is neither issued by a central bank or a public authority, nor necessarily attached to a fiat currency, but is accepted by natural or legal persons as a means of payment and can be transferred, stored or traded electronically.”
At the same time, on February 12, 2018, ESMA, EBA, and insurance and pensions (EIOPA) warned to consumers on virtual currencies with the following “highly risky and unregulated products and are unsuitable as investment, savings or retirement planning products.»
It seems that, without any doubts, VC are risky instrument and the same echoed the President of the ECB, Mario Draghi, mentioning that bitcoin/ digital currencies are “very risky assets due to their high volatility and speculative prices». “digital currencies are not subject to a specific supervisory approach,” “work is under way in the Single Supervisory Mechanism to identify potential prudential risks that these digital assets could pose to supervised institutions.”