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What Impact is Virtual Money Going to Have on the Financial World?

Virtual currency for your business

Even if at the present time you have no personal interest in virtual money, it doesn’t mean that it has stirred up your curiosity somewhat.  Some are speculating that it is just a trend, while others say it could take up an important role in the financial world in the future.

When Bitcoins which is one of the names for virtual money first came on the scene it created some excitement, which many thought would be short lived. Yet it appeared to be a concept that was well received and seems to be growing so much in its momentum that many countries are now scrambling to set monetary rules in place.

Canada decided that the first regulatory step had to be to ensure that rules under the Income tax were set in place.  They first began by making sure that trades of the virtual money would be covered under the bartering regulations.   This money is subject to the goods and services as well as capital gains tax regulation.

Then the Canadian government took the stance that Bitcoins are not considered legal tender in Canada.   The government also appears to think that this type of virtual money doesn’t pose much of a risk to the financial sector either.

France it seems has also taken this stance, and this country feels that those who are holding this type of currency are doing so at a financial risk.   China on the other hand disallows use of the currency by third party payment providers.

If you think that seeing any real use of the virtual money is way off in the future, then you will be surprised if you happen to come across the newly installed ATM Bitcoin machine.   It allows for the exchange of Bitcoins into Canadian currency, or Canadian currency into Bitcoins.   There is also a machine in Vancouver as well.  In Canada right now there is around 100 businesses that are accepting Bitcoins as a form of payment.

Another area of concern that always arises with currency is the risk of money laundering and infusing terrorism.  Canada has indicated that regulations will be considered by the government in respect to the Bitcoins and these activities.

The future of virtual money is going to be an interesting one.   If you are currently utilizing this in your business at any level be sure to bring it to the attention of your accountant when viewing the business finances so he can account for it accordingly.

 

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Sam Seidman, CPA, CA, LPA
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