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A call for a clear regulatory framework regarding Bitcoin

Bullionstar presents its stance on Bitcoin and make a call for a more homogenous regulatory framework

Published: 25-06-2014 00:00

A call for a clear regulatory framework regarding Bitcoin

BullionStar was setup in the fall of 2012 in the light of a GST exemption coming in to place in Singapore. Offering a wide range of precious metal products, and the ability to store the purchased products in one of the safest jurisdictions in the world, we have seen substantial growth in a very short period of time.

We believe in making it as easy as possible for our customers to buy and store almost any amount of gold and silver whether your a small saver or large investor. We have achieved this by offering a one-stop end-to-end solution for purchasing and storing gold, silver and platinum at very competitive prices. We offer a wide assortment of physical bullion products including our unique Vault Gram® solution which offers a low threshold for anyone that wishes to start saving in physical precious metals.

All of this has been made possible because of the business friendly environment offered by the government of Singapore.

Bitcoin as a payment option and currency

We already before had four different payment options as we offered our customers to settle via bank transfer, NETS, check or by paying cash. Based on pent up demand from existing customers, we have now also enabled Bitcoin as a payment option for purchasing and storing precious metals with us in Singapore.  

Bitcoin, the quite well known crypto currency created in 2009, has since inception gained reasonably widespread use and has from time to time achieved far-reaching mainstream media attention. Many of its proponents have hailed Bitcoin as the next coming in the world of currencies, proclaiming that it will change how people and companies do business with one another, proliferating free trade on a scale never before witnessed.

Others have embarked on a quest to slander the use of Bitcoin as risky, nefarious and nothing but a pyramid scheme. Not seldom does the negative voices stem from many in the precious metals community. Prominent figures within the movement have pointed out that crypto currencies such as Bitcoin does not fulfill the requirements of the regression theorem put forth by the Austrian economist Ludwig Von Mises. In short, the regression theorem states that money has to have a history of prior use and a market price derived from a barter economy, preceding the monetary economy.

Bullionstar isn't making judgment of Bitcoin. We take a neutral standpoint where we see advantages with Bitcoins low transaction fees, semi-anonymous features, and relative ease of use which offers a competitive option for clearing transactions electronically in our increasingly interconnected world. 

In line with what Bitcoin proponents advocate, BullionStar has taken Bitcoin one step further than other Bitcoin merchants in offering customers to view precious metals spot prices, precious metal charts, product prices and portfolio values denominated in Bitcoins 'as a currency'. 

Unrivaled stability vs high volatility 

There is no doubt that the intergenerational value preserving properties of precious metals are unrivaled. Gold and silver have proven its ability to retain value throughout the millennia. Empires have risen and perished, and its paper currencies with them, but the purchasing power of precious metals has proven persistent, even in modern days. 

Bitcoin on the other hand has shown substantial volatility ever since the protocol was first released in 2009. And its future is still somewhat uncertain. While it’s long term fixed amount with a predispositioned curve of issuance vouches for some stability, its inception phase has shown that a currency with such a low market cap and with less intrinsic value than precious metal is are prone to fluctuate substantially. At Bullionstar, we offer our customers the option of using Bitcoin payments to quickly and effectively settle payments as well as offer Bitcoin holders the ability to buy into the intergenerational wealth preserving properties of precious metals.  

The need for clear guidance    

Singapore has recently been hailed as one of the most Bitcoin friendly jurisdictions in the world. In the beginning of 2014 Singapore’s tax authority, the IRAS, laid out clear guidelines on how Bitcoin should be taxed. If Bitcoins are sold locally in Singapore, they are be taxed with GST as Bitcoins is not regarded as a currency. However, when buying precious metals with Bitcoin at Bullionstar, there are no taxes involved since investment grade precious metals are exempt from GST in Singapore and as BullionStar exports the Bitcoins. 

Bitcoin owners in other nations risk clampdowns from the tax authorities due to the capital gains tax that are levied in many other countries. If you thus buy goods and services with Bitcoins that have been bought at a lower value, you might be liable to pay a capital gains tax on the increased value of your Bitcoins. This is not the case in Singapore since there is no capital gains tax levied here. This is something that is positive for those who choose to invest and transact in Bitcoins.

Except for the GST on locals sales of Bitcoins, IRAS has been quite clear on its stance that Singapore will not impose any harsh restrictions on Bitcoin transactions. The guidance has been reasonably rational and well thought out so that business owners that choose to transact in Bitcoins can clearly account for their earnings. 

In early January this year, Singapore based Bitcoin vendor Coin Republic published guidance received from the IRAS stating that Bitcoin does not fall within the definition of ‘money’ or ‘currency’ under the GST Act. The same guidelines can now be found directly on the IRAS homepage, clearly stating that Bitcoins are not considered ‘money’, ‘currency’ or ‘goods’ for GST purposes. Instead, the supply of virtual currency is treated as a supply of services.

However, it seems that the Singaporean government has since backtracked, saying that it will now impose harsher regulation for the purpose of safeguarding against so called ”money laundering and terrorist finance risks”. In a statement issued on the 13th of March, The Monetary Authority of Singapore, the MAS, said it will introduce regulations that require virtual currency intermediaries that buy, sell or facilitate the exchange of virtual currencies for real currencies to verify the identities of their customers and report suspicious transactions to the Suspicious Transaction Reporting Office.

MAS’ statement contradicts the guidance issued by the IRAS saying that Bitcoin should not be viewed as a currency. If Bitcoin is not a currency, how can it be subject to currency money laundering laws?

Easy, competitive and safe

Bullionstar is in the early stages of a venture that offers an immense potential to further develop products that will make it easy, affordable and safe for customers to invest in precious metals whether they settle their purchase in Bitcoin or any other way. A homogenous regulatory framework will make this process easier, allowing us to focus more on developing and growing our business.

As mentioned from the outset in this article, Bullionstar’s decision to setup a bullion dealership in Singapore was taken after Singapore announced its move to exempt precious metals from GST. The ability to offer globally competitive pricing in one of the world’s safest jurisdictions, as well as setting up our company under a government that is being very responsive to businesses needs, has laid the ground for much of Bullionstar’s success.

We believe that regulatory certainty is important for businesses and would therefore propose that a GST exemption, similar to what was instigated for investment precious metals, could be a way forward to offer businesses confidence in accepting Bitcoin payments. 

Offering a clear and straightforward framework would greatly benefit companies that have chosen to offer Bitcoin as a payment option for their customers.