Norway says Bitcoins aren't real money

By Nicel Jane Avellana

Dec 12, 2013 10:49 PM EST

The Government of Norway has said that Bitcoins are not real money, dealing a blow to the virtual currency, Bloomberg reported. In an interview with the news outlet, Norway's Director General of Taxation Hans Christian Holte said, "Bitcoins don't fall under the usual definition of money or currency. We've done some assessments on what's the right and sound way to handle this in the tax system."

In Scandinavia's richest nation, Bitcoins will be looked upon as an asset and as such, the digital currency will be subject to a capital gains tax. The move follows Germany which said in August that it would charge a levy on Bitcoins, the report said.

As the digital money gains popularity, more and more nations are already taking an official stand on Bitcoins. In November, the value of Bitcoins surged after it was described as a "legal means of exchange" by an official from the US Justice Department. Last week, however, the digital currency fell after the central bank of China issued a ban to financial institutions from using it.

BI Norwegian Business School Associate Professor in the Department of Financial Economics Paul Ehling told Bloomberg that the Norwegian's definition of money could be too constricted. He said, "Currency is any agreed upon means of exchanges of goods and services, so you could have some small stones, as used in history, and if it's accepted by a sufficiently large population, then that's enough. These days we do mean that a much larger group of people is willing to exchange goods or services for this currency."

Citing Norwegian broadcaster NRK, the report said Norwegians were amazed at the potential carried by Bitcoins when university student Kristoffer Koch purchased $24 worth of the digital money four years ago and forgot about them. When he remembered about his money this year, his investment had already reached $800,000 which enabled him to purchase an apartment.

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