Bitcoin has been classified as a commodity in Finland after the Scandinavian country’s central bank declared that it did not meet the definition of a currency.
concluded that bitcoin simply doesn't meet the legal conditions required to be considered a form of electronic payment, either.
Paeivi Heikkinen, head of oversight at the bank, told Bloomberg that bitcoin was more comparable to a commodity at this point.
“Considering the definition of an official currency as set out in law, it’s not that. It’s also not a payment instrument, because the law stipulates that a payment instrument must have an issuer responsible for its operation,” Heikkinen said.
Finland open to digital currency
Unlike some countries, Finland has so far embraced a more liberal attitude towards digital currencies. In addition, these currencies are remarkably popular in certain circles.
A recent survey carried out by Nordnet AB found that one in ten Finns is interested in investing in digital currencies. Among men interest was a bit higher, with 17.2% of those questioned saying they would consider investing in bitcoin. The country is also home to one of Europe's first permanently installed bitcoin ATMs.
This latest statement is unlikely to change very much. Finns will still be able to exchange bitcoins and make investments. However, Heikkinen warns that nobody guarantees the value of bitcoin and huge fluctuations are commonplace. He notes: “It’s at your own risk.”
Regulation may prove necessary
Despite Finland’s liberal attitude, Heikkenen believes more should be done to supervise digital currencies.
“The changes in value are totally unregulated and very vulnerable to news, speculation and hoaxes. If the phenomenon grows and begins to cause side effects, officials will then have to consider whether to regulate it and how,” he said.
Heikkenen raises an interesting point. For the time being there is simply not a lot of need for regulation, as the bitcoin economy is relatively small. Some regulators like the Chinese central bank have clearly stated that bitcoin does not pose a threat to fiscal or monetary stability.
However, with greater adoption it is only logical to expect more calls for some form of regulation. While speculators might not like it, a sound regulatory framework that would eliminate many ambiguities related to digital currencies could actually boost bitcoin adoption worldwide.
Helsinki Image via Shutterstock