How do national rules affect a company's Bitcoin holdings? A simple explanation for beginners!
Hello, I'm John, your next-door neighbor blockchain commentator!
Recently, you've been hearing the word "Bitcoin" more and more often in the news. In fact, it's not just us individuals who are starting to hold Bitcoin; large companies are also starting to hold Bitcoin. Have you ever wondered, "What, a company is holding Bitcoin? For what purpose?"
However, it's not that simple for a company to own Bitcoin. The "strategies" that can be used vary greatly depending on which country the company is located in. In today's article, I'll briefly explain how the laws and rules of each country (sometimes called "jurisdictions") affect when a company holds Bitcoin as a corporate asset (similar to putting it on a "balance sheet" in technical terms), and how a company must take these differences in "jurisdictions" into account when formulating a Bitcoin strategy!
First of all, what is "Bitcoin"?
First, let's review the basics! Bitcoin is, in a word, "digital money that can be used on the Internet." Unlike yen or dollars, it is not managed by a country or bank, but is managed by computer networks around the world. It's a bit like futuristic money.
- Point 1:Individuals can transact directly with each other without going through banks or the government.
- Point 2:Since there is a limit to the number that can be issued, they are sometimes said to have a rare value like gold.
You might be thinking, "Hmm, that seems difficult...", but for now, just think of it as "it's a new type of money" and you'll be fine!
Why are companies turning their attention to Bitcoin?
So why would a company want Bitcoin? Here are some of the main reasons:
- As company assets:Companies also have money (assets). The idea is to convert some of that into Bitcoin, which may increase in value in the future. It may be a similar feeling to investing in stocks or real estate.Balance SheetWe are now in an era where Bitcoin will be listed on a company's financial statements (which is like a health certificate that lists a company's assets and liabilities).
- To hedge against inflation:Sometimes the prices of things in the world rise and the value of money falls (inflation). Since the amount of Bitcoin issued is fixed, some companies believe that its value is less likely to fall than traditional money.
- As a new payment method:In the future, new businesses and payment methods using Bitcoin may emerge. Some companies are preparing for this by getting hold of Bitcoin now.
The management and operation of the company's money is called "Corporate finance” (referring to the management and operation planning of a company's money), and there is gradually a movement to incorporate Bitcoin as part of corporate finances.
How do national "rules" affect you? Here are the key points!
Now, here is the main topic of today. Even if a company holds Bitcoin, it cannot do so in the same way in every country in the world. Each country has its own laws and rules, right? In technical terms, this is called "Jurisdiction" These differences in rules between jurisdictions have a big impact on how companies handle Bitcoin.
For example, when you travel abroad, the things you can bring in vary depending on the country, and you may need a visa. In a similar way, when a company deals with a "new asset" like Bitcoin, they must strictly adhere to the "rules" of each country.
What specific rules do they affect?
According to the original article, there are three main points that differ significantly from country to country:
- Tax treatment (technical term: "tax wrapper")
When a company makes a profit from Bitcoin, it needs to pay taxes. However, the calculation method and tax rate of that tax vary greatly from country to country!
For example, in some countries Bitcoin profits may be treated the same as profits from a normal company, while in other countries they may be subject to special taxes or even slightly lower taxes.Tax wrapper” (It feels like a special system or method to reduce the tax burden.)
This difference in tax rules is a huge factor when a company is considering whether or not to hold Bitcoin. - Usable financial tools (technically called "capital tools")
In order for a company to buy and manage Bitcoin, various "Capital Tools” (tools and financial services used to raise or increase funds).
For example, there are various tools that could be considered, such as ways to safely store Bitcoin, ways to borrow money using Bitcoin as collateral, and Bitcoin-related financial products.
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