Estonian governmental authorities can't decide whether the Bitcoin cryptocurrency is a service, alternative method of payment or something else, and this sows uncertainty for entrepreneurs, said a bank project leader.
LHV, the only larger locally owned financial institution, was recently in the news for signing a service agreement with the US company Coinbase. The bank offers Bitcoin conversion services for consumers and merchants in 13 countries, but not in LHV's home country Estonia, where one other trader was even ordered to shut down his pilot trading site.
Asse Sauga, the cryptocurrency manager at LHV, told uudised.err.ee that the problem is that Estonia's various authorities haven't agreed what Bitcoin is.
"The Tax Board says it is a service but not a financial service. It thus assesses value-added tax on all supply. Drawing the parallel with currency exchange, we see how this would exert a slowing effect on any operation. The Financial Intelligence Unit says it is an alternative method of payment and immediately applies punitive measures. The Financial Supervision Authority says it is not money and thus they don't get involved. The Ministry of Finance is waiting for an European Commission decision. To sum up, it's a real mess and it has a bad effect on enterprise," he says, adding that entrepreneurs in the field have pulled out of Estonia in favor of the Netherlands, the UK or the US.
"Broadly put," said Sauga, "Estonia's innovativeness in cryptocurrency is being hampered by the attitude of the regulators in the field to legal matters. First they ban everything and see what they are actually banning. Liberal countries like the US, UK and the Netherlands developed a favorable environment as fast as possible and only later did the legalistic approach begin with official positions and guidelines put in place"
But he has a positive outlook toward Bitcoin's future. "This is a revolutionary technology and it isn't a good idea to ignore it. We have to be in the right boat as early as possible and keep up with the times," Sauga said.