Venezuela’s government with its own ICO

12.03.2018 Publikacje

Venezuela is about to become the first country to offer government-issued cryptocurrency. The government of Venezuelan President Nicolas Maduro is looking for a loophole in the economic sanctions imposed on Venezuela by the EU and the USA and, hopefully, to somehow ameliorate the country’s economic crisis.

The “petro” cryptocurrency issued by the Venezuelan state has already been offered in a pre-sale on 20 February According to the issuer, pre-sale purchases have reached a total of USD 735 million. The amount expected to be raised in the ICO planned for 20 March is estimated by Venezuelan officials at USD 6 billion.

Interestingly enough, unlike in the case of other cryptocurrencies, the price of the “petro” will not be based on demand. Instead, the “petro” has been pegged to the price of a barrel of Venezuelan oil. The Venezuelan government maintains that this is aimed at ensuring stability of the price (although, of course, the price of oil is also subject to fluctuation). The price also includes a discount, the level of which is to be determined by the Venezuelan government.

The Venezuelan authorities hope that, apart from raising capital for the country, the “petro” might prove itself as an official trading currency, substituting for the bolivar, which is currently struggling with hyperinflation.

Predictably enough, issue of the “petro” met with wide criticism as a none-too-subtle attempt to circumvent economic sanctions imposed on Venezuela by the US and the EU. Critics also decry the government’s control of the “petro” price.

On the other hand, this experiment clearly shows that cryptocurrencies and the technology underlying them may be of great interest not only to individuals and companies, but also to sate actors. State use of cryptocurrencies should be closely observed, since it means complete control and traceability.

US: Securities law applies to cryptocurrencies

On 7 March, the American Securities and Exchange Commission (SEC) issued a warning against exchanges trading cryptocurrencies. Although informative in manner, this move is seen as the next step towards subsuming cryptocurrencies under the existing regulations.

The warning concentrates on Initial Coin Offerings and exchanges trading tokens issued in this way. The SEC adopts the position that such instruments constitute securities within the meaning of the 1936 Commodity Exchange Act and that, as such, they can only be distributed by platforms registered with the SEC. Now the Commission is expected to investigate platforms and to initiate proceedings against at least some of them.

This falls in line with yet another potential landmark decision – a preliminary injunction granted by Judge Jack B. Weinstein, the legendary judge who has served in New York’s Eastern District since the late 1960s. The injunction sought before Weinstein by the U.S. Commodity, Futures, Trading Commission targets a small trading advice firm, but the heart of the CFTC’s reasoning is the fact that, in general, all cryptocurrencies may be regulated by the Commodity Exchange Act, a law governing the trading of commodities and futures. Judge Weinstein agreed.

Not only does this set a precedent for the CFTC to pursue fraud more aggressively, but also the CEA has broad implications for the regulation of exchanges, meaning the various coin-swapping platforms virtual currencies are traded on now, such as Coinbase, may be scrutinised by CFTC in the near future.

Hence, the injunction proceedings should be closely observed as the decision – either way – will have an enormous impact on the whole cryptocurrency market. It is also not unlikely that other jurisdictions will follow the US example, especially given the tendency to agree on crypto-regulations on an international level.

Recent Polish decisions involving cryptocurrencies

Current developments with regard to the Polish tax authorities and court decisions regarding taxation of cryptocurrencies show that, taxation-wise, Poland is an unfavourable jurisdiction for cryptocurrency holders.

Taxation of Crypto->Crypto transactions. Yet another individual interpretation issued by the Polish tax authorities confirmed that crypto->crypto transactions are regarded as generating taxable profit. The authorities maintain that crypto->crypto exchange constitutes an exchange of goods under Polish civil law and that, seeing as those are goods of a certain value, any income stemming from such a transaction should be taxed.

Good news for mining (?). The same individual interpretation also addresses the question of taxation of cryptocurrency-mining. Interestingly, mined tokens were not regarded as “income” and are basically free of tax until they are exchanged.

Why the question mark ?  We believe that this line of reasoning may change due to increased governmental efforts to regulate and tax all aspects of cryptocurrency exchange. We observe an increased tendency to treat cryptocurrencies as monetary rights of a certain value. Hence, receipt of such a right in exchange for provision of services (mining) may conceivably, in the future, come to be regarded as provision of services in exchange for payment.

Taxation of crypto-income. Lastly, the Supreme Administrative Court confirmed the taxation mechanism of cryptocurrency trade. The Supreme Administrative Court agreed with the tax authorities that profits from acquisition and sale of cryptocurrencies are subject to taxation. In this decision, cryptocurrencies were also found to constitute rights of a monetary value. This decision does not come as a shock but, rather, presents, an ongoing fiscal tendency.


Piotr Schramm
+48 22 318 69 34

Marcin Robenek
Managing associate
+48 22 318 69 43

Paweł Kwiatkowski
Senior associate
+48 22 318 69 42

Maciej Trąbski
Senior associate
+48 22 318 69 74

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