As Bitcoin Transaction Volume Triples Since October, Europe Prepares To Regulate, Tax The Digital Currency

Tyler Durden's picture

Representing numbers that would put the adoption curve of Obamacare to shame, the Bitcoin equivalents of Paypal, BitPay, announced last week that it has now processed over $100 million in BTC transactions in 2013, has increased its merchant base to over 15,500 approved merchants in over 200 countries, but most importantly, has seen a surge in the number of merchants using its BTC payment pricing plan, by 50% since October while the volume of transactions has tripled. While the surge in the currency adoption has matched the explosive rise in the USD-value of the currency, the news should comfort any lingering doubts whether Bitcoin is a credible payment system.

From the BitPay press release:

BitPay Inc, the world leader in business solutions for virtual currencies, announces it has processed over $100 million in transactions this year, and has increased its merchant base to over 15,500 approved merchants in 200 countries. Since the announcement of the new All Inclusive Pricing Plan in October, along with the integration with Shopify in November, the number of new merchants has increased over 50% and the transaction volume has tripled.


"This year, the 2013 holiday season was Adafruit's biggest ever. We are delighted to offer bitcoin payments via BitPay to our community and customers. It was fast and easy, hundreds of orders and happy customers getting educational electronics, using bitcoin!" shared Limor Fried, Founder and Engineer with Adafruit.


Bitcoin has "clear potential for growth and could become a major means of payment for online transactions” a Bank of America analyst told CNBC. As the number of Bitcoin users continues to increase, merchants such as Adafruit, BTCTrip, Alliance Virtual Offices, and Clearly Canadian, see the value of working with BitPay to help expand their business.

Which explains why Europe, which over a year was the first entity to cry foul about Bitcoin (recall from November 2012: "The ECB Explains What A Ponzi Scheme Is; Awkward Silence Follows") when the USD-price of one BTC was still in the double digits, is doubling down in its fight against the fiat alternative, this time as the European Union's top banking regulator is preparing to actively supervise the virtual currency. From Bloomberg:

Trading Bitcoins could bleed you dry, the European Union’s top banking regulator said as it weighs whether to regulate virtual currencies. Thefts from digital wallets have exceeded $1 million in some cases and traders aren’t protected against losses if their virtual exchange collapses, the European Banking Authority said today in a report warning consumers about the risks of cybermoney.


Virtual currencies such as Bitcoin have come under increased scrutiny from regulators and prosecutors around the globe. China’s central bank barred financial institutions from handling Bitcoin transactions last week and German police arrested two suspects in a fraud probe into illegally generated Bitcoins worth 700,000 euros ($963,000).


“The technology is still relatively immature and lacks the infrastructure, regulation and understanding of the risks that are taken for granted in conventional financial systems,” Matt Rees, assistant director at Ernst & Young LLP, said in an e-mail. “It is not surprising then that thefts, frauds and other deceptions are currently commonplace.”


Since Bitcoins exist as software, the virtual currency isn’t controlled by any government or central bank. The digital money emerged in 2008, designed by a programmer or group of programmers going under the name of Satoshi Nakamoto, whose real identity remains unknown.


The virtual currency gained credibility last month after law enforcement and securities agencies said in U.S. Senate hearings that it could be a legitimate means of exchange. The price of Bitcoins topped $1,000 as speculators anticipated broader use of digital money.

Because, you see, it is the possibility of theft that has regulators worried, not that alternative currencies could undermine the fiat system (especially in Europe where the artificially common currency is not exactly the world's most admired construct) the world is so hooked on.

So what does Europe propose? Simple: do more of what it truly excels at: tax stuff.

People holding virtual currencies may be subject to value-added or capital gains taxes, the EBA said.


The government of Norway, Scandinavia’s richest nation, said it would treat Bitcoins as an asset and levy capital gains tax on them.


“Bitcoins don’t fall under the usual definition of money or currency,” Hans Christian Holte, director general of taxation in Norway, said in an interview.


For virtual currencies to be regulated in the EU, the EBA would have to get approval from the European Commission, the 28-nation bloc’s executive arm.


We “support the EBA warning to consumers on the risks associated with virtual currencies,” Michel Barnier, the EU’s financial services commissioner, said in an e-mail.

In other words, it is only a matter of time before Europe does all it can to make the use of Bitcoin even more prohibitive, which in a Europe that is flooded with bad debt, with a banking sector whose credibility is non-existent resulting in loan "creation" plunging at a record pace, and a banking union "resolution mechanism" that is as improbable now as it has ever been, means more deposit bail-ins in a form that "fall under the usual definition of money" are just a matter of time.

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VD's picture

taxes will surely make BTC more robust and safer.. FUCK OFF GOV.

Clint Liquor's picture

Ronald Reagan described how Central Planners deal with new business:

If it is moving, tax it.

If it keeps moving, regulate it.

When (due to taxation and regulation) it quits moving, subsidize it.

BaBaBouy's picture

Interesting Chit...

Translated: what the SA signer was really saying

Translation: "I'm just a random chancer! Shhh! Don't let on!"
Translation: "Look, I'm not *completely* talentless. I can pat my head and rub my tummy at the same time."
Translation: "Blimey, this speech isn't half dragging on. Anyone got a fag?"
Translation: "Come on, let's get this party started! Big fish, little fish, cardboard box!"
 Translation: "Still, at least I didn't take a selfie"

BaBaBouy's picture

Bye Bye Electronic Binary Bitcoin...

Harlequin001's picture

My guess is people are finding it so difficult to find anyone to transact with they're having to go through an exchange.

Talk about shot in the foot. It's a bit like bragging about having an ATM somewhere in Canada. WTF.

Yeah, fat lot of use that is. Not

markmotive's picture
Smart people can't agree on the value of why should anyone be so confident in its utility? Mickey Malka, Jim Rickards Argue Over Bitcoin Utility, Longevity

Manthong's picture

I am a bit (coin?) conflicted..

On one hand the digital precious number is an attractive concept but now that the .gov’s and banks are all over it, it has much less appeal.

If I want precious numbers controlled by banker or government criminals I will buy some GLD, SLV or some Comex GS.

Or maybe I will float a boat that will sink in some erstwhile lake.

My two lips will kiss the boat goodbye.

fonestar's picture

It seems that every article posted here is interpreted as "Oh no!  This is the end of Bitcoin!".  In reality it is hard enough to proove that you run a Bitcoin client, that you own any Bitcoin or that you purchased any Bitcoin using cash or bank-transfer.

So the governments can tax to their hearts content.  I am not in the least bit concerned as anyone with a brain can easily thwart their best efforts.  Bitcoin is a regulator's hell.

Manthong's picture

Cool.. I hope it puts much sand in their KY.

..and I might want to trade a little Ag or Au for some digits if it breaks through the banker/gov syndicate.

DoChenRollingBearing's picture

Come to Papa my precious Au...!  When I see that it is easy & secure to get Au for BTC that is one good thing.

The BIG THING will be once one (or more) or our bearing suppliers accepts BTC.  Then the game has changed.

DoChenRollingBearing's picture

Check out the humble childhood (at 10 - 11 yrs old anyway) of the Humble Bearing.  Near Bethune, SC, in 1967 or so.



I just closed the link at chumbawamba's suggestion until I get it copyrighted.  Can't be too careful...



This a little better:

Harlequin001's picture

'In reality it is hard enough to proove that you run a Bitcoin client, that you own any Bitcoin or that you purchased any Bitcoin using cash or bank-transfer.'

So where do all these hard facts you keep referring to come from then?

Is someone just making this shit up?

fonestar's picture

Okay, so explain how a government is going to tie your download of the Bitcoin client to your computer to your person?  Then explain how they are going to tie Bitcoin purchased with cash on the street being sent to your newly generated Bitcoin address?  Now explain why a person wishing to hide their Bitcoin couldn't just put it inside an encrypted volume?

Facts?  Yes indeed.

fxrxexexdxoxmx's picture

LEO's never,ever,take computer when they arrest someone for a digital crime. Once in custody with chains on your feet most will rat or comply.


fonestar's picture

There's no reason for an astute Bitcoiner to wind up in that position in the first place is my point.

Manthong's picture

..keep digging

sooner or later somebody is going to hit the vein.

SolarSystem1932's picture

Yes, I was confident in my ~astutefulness~ at my first wedding also...

threeputting's picture

This is BS and you know it. Bitcoin is the least anonymous currency ever conceived of!

The blockchain is a record of every bitcoin transaction ever made. If you've ever bought on an exchange, your personal info is tied to your wallet. If you've ever accessed your wallet and made transactions on your computer, your IP address is tied to it. Every address you ever sent or received from is on permanent display for everyone to see. Taxing bitcoin would be the most lucrative thing ever for a government, because they could verify 100% of your taxable income. 


There are ways to create an anonymous wallet, but 99.9% of the population is not tech savvy enough to pull it off.

Duke of Earl's picture

This is mostly correct for most people as you summarized.   Anonymous wallets are achievable and much more approachable with the latest software.    Modern wallets are deterministic and make use of new accounts each time.   As long as people get out of the comfortable habit of aggregating all coins into a single account and get used to the idea of one time accounts, privacy is preserved.

I can confirm that this change of thinking is not easy and takes practice, but the newer software is making this process more transparent.   The IP address can also be tracked as you mention, but one may broadcast the transactions from any IP address in addition to using SSL to the hub node of choice to conceal the data that was sent.  This does require a tech savvy user, but is being improved although more slowly.   

threeputting's picture

I was reading about 'Dark Wallet' a while back, maybe it will make a difference.

Duke of Earl's picture

I hadn't heard of it until your comment.  Checked it out briefly, seems they are already behind.  I could be wrong.  Currently, I'd recommend The Armory.  Electrum also has deterministic wallets.   An example of the use is that one may generate addresses on the fly that you know you will have access to.  A whole sequence of them that have never been used before for which you can access whenever you want in the future.

boogerbently's picture

"Europe prepares to regulate it".

If they can find it, to regulate it, it isn't secure/obscure enough. They're missing the point.

ncdirtdigger's picture

In no time short, you and your bitcrappers will be sitting in a cell next to a pothead, lamenting how the 'man' is keeping you down.

bentaxle's picture

...and him replying...pot Bitchez!

Emergency Ward's picture

That will only happen if the bitcoiners turn as stupid as that neanderthalish subset of pot smokers who begged for the government to "Tax our Pot" --  which will get them (potheads) punished for growing their own or possessing "non-regulated" stuff with the end result being the hemp industry under the control of Monsanto FDA Big FarmaPharma and Company.

Kirk2NCC1701's picture

You mean Free Room & Board & Healthcare?
Plus free internet(s)?
This may actualy become a Feature (untaxable benefit) for an ever growing number of people, the way things are going.

daxtonbrown's picture

The gov can collect my Bitcoin tax the same time it collects my obamacare tax. About when hell freezes over and the sun goes cold.

chemystical's picture

"In reality it is hard enough to proove that you run a Bitcoin client, that you own any Bitcoin or that you purchased any Bitcoin using cash or bank-transfer"

Are you suggesting that there are intermediaries who will defy the laws of the country's in which they operate?  Or that they they will emerge?  I can bypass these intermediaries, surely, but then am I left relying on the honesty or solvency of the person or business with whom I am exchanging cc or goods/services?


From Bitpay's Terms of Use:

"In order to provide the Services, we may share information about you and your BitPay account with third parties, including but not limited to your bank and purchasers."

"We may require additional information about you (including any person signing below or otherwise agreeing to the Terms on behalf of the merchant) such as, for instance, your date of birth, tax identification number or government-issued identification, and we may also obtain information about you from third parties, such as credit bureaus and identity verification services. We have the right to reject your account registration, or to later close your BitPay account, if you do not provide us with accurate, complete and satisfactory information?"

While you may have a brain and may attempt to thwart their best efforts, do you think that every counterparty in the chain is willing to risk fines and/or prison for the privilege of being your accomplice?  What you're suggesting seems to require the growth of outlaw banks and outlaw merchants and outlaw intermediaries.


warish's picture

fonestar: You seem to be the BTC wizard. Can you answer the scaleability issue ? Blockchain is at 12 Gb and has grown from 4Gb in one year. Eventually it will need to be centrally managed in some way. That destroys the whole P2P angle. BTC is a scaleability nightmare. Also, what will be the incentive for people to maintain the blockchain as it gets harder to mine for BTC ? It also seems to be very environmentally unfriendly in that it takes a lot of storage space and power, why ? Remove all the money making speculation from BTC and you seem to have a good idea, (low or no fee transactions), that is backed up by a flawed technology. Where is the virtual currency that is backed by something of value ? Maybe some sort of peer 2 peer way of securing the backing asset ? I am sure something better will gain traction, it will just take the ultimate BTC crash for it to emerge. 

Svendblaaskaeg's picture

bitcoin is sand in the machine - what's not to like? - the enama of my enemy is my...something something...

CH1's picture

but now that the .gov’s and banks are all over it, it has much less appeal.

Fuck them and their regs!

It's time to take the risk ACT anyway!

fonestar's picture

All they have is threats, these threats may shake out some of the weak hands and non-believers which will present buying opportunities.  Eventually everyone will see that governments are just organized threats and the tide will turn against them.

disabledvet's picture

so far only the USA, Canada and Mexico are expressing confidence in "co-existence" with bitcoin. I think a big reason is no value added alone a totalitarian oligarchy to support....just a "rule by monied interest." bitcoin is clearly not a threat...indeed is it's exact opposite. I agree...I would oppose "the bit coin" with great care. this is the answer to Schrodinger's Cat Thesis presented here and here only...that money can/cannot exist in this way. This is now proven false by bitcoin as it simulatanuosly exists/does not exist in the form of a "peer to peer networking effect" and in spite of this is indeed deal. keep it coming fonestar...your up arrows are growing.

chemystical's picture

We are in agreement.  However, they have never been anything other than organized and codified threats, (albeit a few with benign intent at the origin). 

You are suggesting then that this will be the straw that breaks the camel's back, and that the previously duped public with ally with the previously aware (but aquiescent) public to forge revolutions worldwide?

I might be ok with the outcome but I'll for damn sure short the likelihood of it happening in the near term - much less its happening due to "Btc".

Manthong's picture

um.. it is not about cowing..

it is about maneuvering.

CH1's picture

Fair enough.


Pseudonymous's picture

There is a world of difference between "controlled by" and being "all over it", or, to be more thorough, flooding media with hype, scorn, misquotations, mistranslations, white propaganda, black propaganda, grey propaganda, any-color-of-the-rainbow propaganda, rants, threats, sycophancy and a few sincere words here and there that you can't help but being skeptical about after all the lies and thoughtlessness before them. So acting on what such people say is not rational. Acting on what they do might be, but there is little knowledge (meaning facts, with evidence) of any action, except for the US government holding a bunch of Silk Road's and Dread Pirate Roberts' seized bitcoins and the harassment and refusal of services to some businesses and individuals dealing with bitcoins.

And that is not to say that you should be scared of anything. On the contrary, be smart and don't let them touch your money!

willwork4food's picture

Exactly! Stupid governments farting in the wind.

And where is the proof that Germany arrested a person that was conterfeiting thousands of Bitcoins? I call bullshit to that dismal .gov attempt to imply they give a rat's ass about anything over and above their monopoly of money creation.

tmosley's picture

Are you talking about bitcoin or gold?

Or for that matter, any foreign currency?

PeakOil's picture

Possibly, perhaps not. This is a very disruptive technology.

fonestar's picture

It's pretty obvious from the commentary that the majority of posters on this site spent the 2000's living in a closet.  They totally missed out on the P2P revolution (probably don't even know what that means) while the rest of us were stealing "premium content" and bypassing CSS and DRM.

The battle of Napster was lost.  But in that loss it created better, stronger systems.  More determined hackers and the rise of political pirates in Europe.  This is a beautiful turning point in history where we see people rise up to take back their sense of personal empowerment from the corporations.

PeakOil's picture

Well there is a strong PM community at ZH, I consider myself among them. And a not unnatural initial reaction I suppose is the perception that bitcoin is a threat to PMs. It siphons "money" (fiat!) away. My reaction after taking the time to seriously look into bitcoin earlier this year is, ok yeah - so what? Bitcoin "thows sand in the gears" of the ponzi fiat system. In the long run fiat is dead. Bitcoin and PMs complement and highlight each others attributes nicely!

stacking12321's picture


buckets and buckets of bitcoin!

liberty blitzkreig just posted a link with a handy dandy reference chart chock full of bitcoin sites, some of them are very cool:



Duke of Earl's picture

Agree, Bitcoiners are a subset of stackers.  Another subset of stacker are those who scream "Ponzi!" at every new financial instrument.   Frankly, they are usually right.


fonestar's picture

"Bye Bye Electronic Binary Bitcoin..."


How does this hurt Bitcoin at all?  Maybe it scares two or three grey-hairs out of purchasing BTC?

Harlequin001's picture

So, from 3 to 9 transactions in what, 3 months...

TheFourthStooge-ing's picture


Because, you see, it is the possibility of theft that has regulators worried

That's true, and you can absolutely believe the European Banking Authority when they say this. They simply want to extend to Bitcoin all of the protections provided by European financial institutions to their customers (e.g., Cypriot bank depositors).

dasein211's picture

And the EU would NEVER steal your money! Just ask Cypress!! That was billions compared to what.... 10 million in theft!

falak pema's picture

you can walk straight and you can chew gum but can you walk straight and chew gum?

The public ledger has been raped by the banks; to balance the books something needs to be done; thats learning to walk straight. 

Bail ins is the only way to curb banks who participated in the previous scam leading to bail outs; thats like chewing gum.

 Bail in banking whom you bailed out five years ago is walking straight and chewing gum. They were warned they did shit all to stop the scam. They made it FOUR times worse in the interim.

Time out team scammers. 

I know this is not fair but scamming the public was not fair and those crony congressmen did nothing. At least EU is doing something to right the wrong. Its not enuff but its better than NOTHING or status quo. 

There should be no free lunch for the cheaters as there will be no free lunch for the food stampers when that stops. 

czardas's picture

What would be remarkable is if the EU did NOT tax the bitcoin.   This was so predictable it barely registers on the Yawn Scale.   Europe has tried everything to keep afloat- taking 50% of income, cutting defense spending to nil, slashing R&D, borrowing to the hilt, denying medical coverage over 75, etc.    

I propose "Hunger Games -  EU" where folks over 70 "volunteer" to be euthanized.  A Grand Winner would receive $10M Euros for his family or charity.  Benefits would be enormous and it could even be organized into competitive matches - Holland vs Hungary or Greece vs Bulgaria.  Citizens would be berated for not doing their patriotic duty, etc and the NPR tyoes could speak lovingly about social cohesion, sacrifice and collective will.  It's almost perfect.