Numerous important financial authorities around the world are increasingly showing their concerns over the use of cryptocurrency. Some of the powerful vectors countries have already implemented crypto regulations on eliminating the anonymity and tax evasion.
If some banks started to claim their skepticism over digital coins since last week, forbidding the credit card holders from acquiring cryptocurrency, then other banks want to take advantages of this opportunity altogether. But how?
A new change took place in the Merchant Category Code in accordance with Coinbase transactions.
What is a Merchant Category Code?
A Merchant Category Code is a combination of four digits assigned to each trader. Subsequently, this become a modesty after which the companies are classified according to the products they sell. In this way, tax agencies like America’s Internal Revenue Service and Canada Revenue Agency holds the total control over companies.
What has changed?
If you compare the transactions made on Coinbase in December 2017 with those realized this week, you will probably notice a difference. Now, you need to pay additionally a cash equivalent fee per each transaction.
What’s a cash Equivalent Fee?
A Cash Equivalent Fee is a tax introduced when you manage the purchases with a credit card. It’s added when these are realized using a secure financial instrument. This can be “a foreign currency, poker chips lottery tickets, traveler’s cheques and now, cryptocurrency”.
We want to remember you that JPMorgan Chase & Co., Bank of America Corporation and Citigroup Inc have decided to ban customers from purchasing any cryptocurrency using the credit cards as well as Lloys Banking Group from UK.
The main reason is the high risk associated with the depreciation of digital currencies, respectively users will become unable to pay their debts, and financial institutions will lose significantly.
It seems that a competition has started between the centralized and decentralized digital economies.
Do you think that the Cash Equivalent Fee will stop users from buying cryptocurrency using the credit cards?