Bitcoin has suffered a lot of setbacks since its initial heyday a few years back. But as it racks up more European wins, it may be on a bit of a comeback.

Last fall came Bitcoin’s first break: In October the European Court of Justice (ECJ) decided to exempt bitcoin transactions from Value Added Tax (VAT). In doing so, the court effectively recognized bitcoin as a legitimate means of payment in their member states—a bit of respectability Bitcoin and its supporters have found a bit elusive.

“This Court decision is a nod in the direction of the primary functions of the virtual currency: payments,” Filip Godecki, COO at Poland-based Bitcurex said at the time. “The decision may become an impetus for the development of crypto payments in the EU, and thus the Bitcoin ecosystem as such.”

And where the Bitcoin economy was (and remains) a work in progress, the ECJ’s decision cemented an important degree of certainty, and as Chris Bates, Sean Murphy and Judy Harrison noted for Financial Services: Regulation tomorrow last November, it opened doors all over the EU:

VAT is imposed across the European Union Member States. To date, there has been no consistency of approach within the EU. In some places Bitcoin is subject to VAT; in others it is exempt. In some states, there is no clarity as to how Bitcoin should be taxed. This decision changes that – it requires the Member States to exempt Bitcoin supplies from VAT.

…It is key to the economics of running a Bitcoin exchange that sales taxes are minimised. As a result, where a Bitcoin exchange expects to transact with a significant number of non-businesses, this decision makes Europe look an attractive location to establish a Bitcoin exchange. Consideration will also need to be given to the expected location of the counterparties to consider the best way to manage any irrecoverable VAT costs resulting from supplies made to the Bitcoin exchange. 

Which is exactly what happened.

Photo Credit: cc
Photo Credit: cc

On Monday, Bitstamp announced that Luxembourg had granted it a payment institution license, making the company the first nationally licensed Bitcoin exchange in the world. Additionally, under the EU’s “passport” program, Bitstamp becomes the first Bitcoin exchange to be licensed across all 28 EU countries.

The approval comes only fifteen months after a hacker lifted more than $5 million from Bitsmap; something that worried users but paled in comparison to the hack of Mt. Gox, sending the Japan-based exchange spiraling into bankruptcy. Those security issues, coupled with its unbacked and untested format, have given Bitcoin quite the perception problem. Not to mention the fact that its volatility has thus far made approval of the cyber-currency a state-by-state endeavor.

Bitstamp’s victory marks out a broader terrain, giving Bitcoin supporters a chance to make their case and put their cyber-money where their mouth is.

“This is an industry first,” said Bitstamp cofounder and chief executive Nejc Kodric. “We are entering a new era where [being a licensed exchange] is becoming an industry standard.”

And indeed, it’s a big get. It’s going to remove a lot of the fear and uncertainty that banks have had with Bitcoins, paving the way for bigger players in the financial industry to dip their toes in the bustling world of cyber-currency. It could be the new way money is sent across the world. With the EU in a state of flux and individual countries like Greece going through their own crisis, Bitcoin seems to be becoming less of a solution without a problem, and more of an increasingly accessible solution.