Bitcoin Trading Company in Denmark
Bitcoin Trading Company in Denmark
Bitcoin Company – Denmark Advantages
Suitable Danish Structures for Bitcoin Operations
Background Information about Virtual Currencies
Virtual currencies are a form of unregulated electronic money, as opposed to real money is not issued and guaranteed by a central bank, which in some cases can be used as a method of payment.Virtual currencies have emerged in many different forms, first in connection with on-line gaming and social networking. More recently, virtual currencies developed to be used as an alternative to real currency.Bitcoin is the most popular virtual currency, but also Litecoin, ZeroCoin and Linden Dollars can be mentioned among others the more well known. Bitcoin exchanged today with real currency and is accepted to an increasing extent, both on-line and off-line in the general economy by purchasing goods and services.
Virtual Currencies Product Perfomance
Bitcoin is a technology that can be used to trade with on a closed market. Contrary to usual payment technologies such as credit cards and PayPal, Bitcoin is decentralized which means that no enterprise, state, organization, or country is behind the technology. Virtual currencies are a type of unregulated electronic money, which contrary to real money are not issued and guaranteed by a central bank and which in certain cases can be used as a method of payment. One of the characteristics of the virtual currencies is that a real issuer does not exist, and thus no real obligation for the issuer.Bitcoin is the most widely used virtual currency, but also LiteCoin, ZeroCoin and Linden Dollars can be mentioned as some of the more well-known currencies.
The act on money laundering and guidance on laundering The main objective of the act on money laundering is to control money laundering as well as control for support and sponsoring of terrorism. In the classical sense money laundering is to the effect to pretend, that income from an illegal activity comes from a legal activity – that is to hide the real source of income from the authorities.To the extent that an activity is subject to the act on money laundering, a number of obligations exist, including e.g. that the businessman must be registered, just as the enterprise must know its customer (KYC) and thus have identification of the customer in relation to a transaction, just like the purpose of the transaction must be known.
The scope of application of the act on money laundering is specified in the act section 1, and as related to this note it is only section 1 (1) 7 which is relevant, as no decision has been made on agents or foreign enterprises’ activities in Denmark, as it as stated above is provided that it is a Danish enterprise. Section 1 (7) reads as follows:
This act shall apply to the following enterprises and individuals: (7) Providers of payment services and issuers of electronic money. In the case of (7) issuers of electronic money are regarded as an electronically or magnetically stored monetary value, which
- represents a claim on the issuer,
- is issued upon receipt of payment of funds in order to carry out payment transactions, and
- is accepted as means of payment by others than the issuer of electronic money.
Furthermore, electronic money can be in the form of issue of gift vouchers, card issuing with the right to do business at the card issuer, etc.
What is crucial in relation to the provision is that an obligation against the issuer of the electronic money exists, as the issuer is liable for the electronic money and/or the gift voucher can be used and the issue of card gives the right to do business. In the absence hereof, there is a number of consequences, as the businessman can lose his/her permission, just like the wronged party – typically a consumer – can make claims against the businessman or get help from the well-established systems.Characteristics and preconditions of virtual currency, and in particular Bitcoin, are that no actual issuer exists just as claim against the issuer cannot be made. Furthermore, the currency is not established or found on a regulated market such as the Copenhagen Stock Exchange, why there is every probability that the activity at present is not covered by the rules of the act on money laundering. Therefore, there are no requirements that enterprises engaged in virtual currencies must be registered or have obligations such as ‘know your customer’. The new fourth money laundering directive of May 2015 (5933/4/15 REV 4), which is still to be implemented into Danish law, has not included the virtual currencies, why it is still required that enterprises involved in virtual currencies are covered by the act on money laundering and thus also exempted from the registration requirement.
Further to support this, it can be stated that the Danish Financial Supervisory Authority has estimated that the activity from a virtual currency cannot be regarded as the issuing of electronic money, provision of payment services, currency exchange, acceptance of deposits, or stockbroker activities.It is noted that the existing currency activities, which today are trading in ordinary currency, must restrain from changing the virtual currencies, as the European Community have recommended this.In relation to the implementation of money laundering in Danish law, it is at present uncertain to conclude a definitive statement on whether Denmark will go further and thus include the virtual currencies even though the directive does not include the virtual currencies. Immediately it is estimated that the probability at present is low, as it would violate basic rights in respect of a directive. It cannot be dismissed that certain specific transactions can fall within the act on money laundering, just as it cannot be dismissed that the activities in general can fall within the act depending on the development of virtual currency products and services as well as amendment of the law. The Financial Action Task Force (FATF) has issued a general statement to the effect that trade in virtual currencies is associated with risk and can be involved in money laundering.
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COIstrongly recommends that each potential user of its services seek tax and legal advice before deciding on implementing a solution employing international financial structures. COI will not be liable for any damages, costs and expenses resulting from or incurred as a result of any action taken or omitted based upon any such information provided by COI.