Belgian Government To Step Up Measures To Combat Bitcoin Money Laundering

The Belgian government is concerned about Bitcoin being used for money laundering purposes with rise in the number of stores that accept the digital currency, Belgian newspaper De Morgen reported. The tax authorities have started investigating fraud cases involving bitcoin.

“The tax department is considering the bitcoin”, the report said. “There will be a battle plan to combat fraud.”

It further noted that in Ghent alone there are over 25 shops using the virtual currency, and that across the country the number exceeds 70. People are using Bitcoin to pay for doctors' surgeries, websites, pizza and much more.

"More and more ordinary shops including restaurants, retailers and even car salesmen accept bitcoin. In October last year the European Court of Justice ruled also that no VAT is payable on bitcoin transactions. This was made ​​clear that bitcoins are accepted here," says Francis Adyns, spokesman of the Ministry of Finance.

Last year, the government seized bitoins in the course of a judicial inquiry and today it has 1100 bitcoin in its possession.

The Library of Congress states that there are no specific laws or regulations regarding Bitcoin in Belgium. In July 2013, the Belgian Finance Minister, in response to a question by a Belgian senator, said that while the Bitcoin system appears to be “somewhat problematic” as a potential tool for money laundering and other illegal activities, such problems should not be overstated.  He also said that on the basis of studies from the Belgian central bank (Banque nationale de Belgique) and the ECB, the digital currency does not present any significant risks to price stability, financial system, or to its individual users given their size and limited value. He also added that government intervention in the Bitcoin system does not appear necessary (at that time).

However, with rising popularity of bitcoin and its growing use, the government seems to be changing its stance.

Recently, at a financial innovation event held by the European Securities and Markets Authority (ESMA), Jean-Paul Servais of Belgium’s Financial Services and Markets Authority (FSMA), in his opening remarks pointed to both the risks and opportunities of bitcoin’s underlying blockchain technology, The Merkle reported.

“More recently, we have seen a growing interest for the distributed ledger technology, which underpins the virtual currencies, as an alternative mechanism to issue, trade and record ownership of securities. There could be opportunities here, but clearly also risks while these mechanisms are not well understood and generally operating outside regulation.”

In mid-2014, the FSMA enacted a ban on marketing of certain financial products, including “products that consist essentially of derivatives based on virtual currencies such as Bitcoin".