Whenever the International Monetary Fund decides to release a whitepaper on Bitcoin and other digital currencies, there is plenty of reason for excitement. As one would come to expect, the paper touches upon subjects such as how distributed ledgers work, and how taxation of digital currency should be handled. But the future of Bitcoin is also discussed, and VC’s are the center of focus for the IMF.
IMF Focuses on VC Investment in Bitcoin
It was only a matter of time until regulatory action was taken in the field of Bitcoin VC investment. Up until this point, these investors have been left alone regarding taxation and regulation, despite them being able to invest in companies all over the world. Now that Bitcoin has seen its most stable year in 2015, institutions such as IMF have taken notice of the funds flowing into this ecosystem.
While there are multiple benefits to VC investment – such as deepening financial inclusion and speeding up the payment process – the IMF has some questions regarding the underlying distributed ledger technology. After all, the blockchain makes VC schemes more beneficial to users, transcending the traditional offerings by quite a margin.
Playing devil’s advocate for a minute, a VC poses a financial risk as well. Regarding tax evasion and effective financial regulation, any investor involved in the Bitcoin ecosystem is of concern to the IMF. Effective regulatory responses will have to be created at some point, although there is still a lot of work to be done in the near future.
As we have seen in the past, Bitcoin and regulation do not always mix all that well. Looking at the BitLicense regulation, for example, shows how easy it is for officials to hamper Bitcoin growth by requiring specific licenses at a hefty cost. In the VC world, proper regulation will depend on how official take the novel business models into account.
Similar to how regulatory efforts works all over the world, the IMF stresses how international efforts will be needed to make this a success. The concept of VC’s is not declared properly on an international level, and coming up with regulation for a concept that hardly anyone can describe will be a challenge. Especially where Bitcoin is concerned, a lot of educational efforts are needed.
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