Former MP Predicts Tonga Will Make Bitcoin Legal Tender By November
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Making something legal tender just means it can be used to legally settle debts. That’s not really very important. For example, in the UK only coins issued by the Royal Mint are legal tender across the entire UK. Bank of England issued banknotes are also legal tender but only in England and Wales not Scotland or Northern Ireland.
However, the private digitial money provided by commercial banks that makes up the majority of the money supply (95%) and is used in the majority of transactions (77%) has never been legal tender.
Presumably, the more important change would be the following from El Salvador’s bitcoin bill:
> Art. 7. Every economic agent must accept bitcoin as payment when offered to him by whoever acquires a good or service.
This is separate to the concept of legal tender as in the UK there is no requirement for retailers to accept anything specific when selling goods and services. They are under no obligation to accept legal tender or any form of government issued money. Retailers can already refuse government or bank money and only accept bitcoin if they wish.
Of course, capital gains tax renders something fairly useless as a currency so the following article from the bill is also important:
> Art. 5. Exchanges in bitcoin will not be subject to capital gains tax, just like any legal tender.
For reference, in the UK since 2012 foreign currency in bank accounts only has been exempt from capital gains tax. Cryptocurrencies are not considered to be currencies though and even if they were they’d still be liable for capital gains tax unless they were in a bank account.
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