In a recent ruling, the Italian Tax Authority clarifies that Bitcoins (and more in general cryptocurrencies) are to be considered foreign currencies. As it happens to anything relating to cryptocurrencies, such clarification gave rise to a significant interest and was shared by most media. Unfortunately, the Tax Authority’s intervention is far from providing a definitive definition on cryptocurrencies nature.

The definition of digital currencies as foreign currency is nothing but a further attempt in the path of providing a legal classification of the phenomenon. It is the last in time, but certainly not the only one. Accordingly, cryptocurrencies were previously defined as payment methods by the Bank of Italy. At a later time, they were defined as financial products in a seizure order rendered by the court of Rome. Instead, according to the ruling at hand, digital currencies have to be considered foreign currencies.

If the limited scope of the aforementioned interventions increases the uncertainty existing around the phenomenon, the real source of the matter is to be found in the general lack of a legal regulation for digital currencies. It is to mention that under the Italian jurisdiction a legal definition of digital currencies exists from May 2017. According to art. 1 (2) (qq) of Legislative Decree N. 90 of 2017, cryptocurrencies are: “the digital representation of a value, which is neither issued by a  central bank nor by any other public authorities; that is not necessarily bound to any coin or banknote having legal status and that can be used in the purchasing of good or services; and that can be transferred, stored and negotiated by electronic means.”

It is noticeable, how the aforementioned definition does not provide any useful hint for the understanding of the legal nature of digital currencies. In fact, part from making applicable the anti-money laundering law to the exchangers, nothing more is said about the rules applicable to digital currencies. However, far from being an exclusive feature of the Italian jurisdiction, the aforementioned lack of rules represents an issue shared by most legal systems.

Even in the US a comprehensive set of rules on cryptocurrencies is lacking even though trading is somehow regulated. In fact, in July 2017 the U.S. Commodity Futures Trading Commission authorized Ledger X platform to perform trading in digital currencies. Moreover, after the DAO case, financial regulatory rules may become applicable to tokens offered within Initial Coin Offerings (i.e. ICO) on a case by case assessment.

In Europe, also in reason of the Institutions’ mistrust, there is no regulation at a Union level except for the ECJ decision rendered over the Skatteverket v. Hedqvist case (C-264/14), a comprehensive set of rules on the phenomenon is lacking. At a national level, Member States’ approaches to the recently introduced currencies are only partial. Apart from the above-described Italian scenario, a certain interest for the tax implication of cryptocurrencies exists in Spain and Sweden. On the one hand, the rules on gambling taxation are considered to be applicable in the former country while on the other hand, an interpretative intervention of the Scandinavian country’ tax authorities cryptocurrencies do not have the legal status of currencies at all and consequently, they are to be treated like assets. Instead, according to recent news, Malta is enforcing a comprehensive set of rules on blockchain and cryptocurrencies.

Apart from the aforementioned examples, in most countries a general regulation of the phenomenon of digital currencies is completely lacking. The reasons behind that seem to be found in the Institution belief that digital currencies may determine increases in money laundering and terrorism funding. But except for the ones that are considered to be inner risks of cryptocurrencies, a major risk is perhaps to be found in the fact that, the lack of regulation at hand, put together with the relating uncertainty may represent a significant obstacle to all the potential applicative solutions of blockchain technology.

If one of the main field of interest of blockchain is nowadays represented by smart contracts, it is not to be ignored that such instrument is intimately bound with cryptocurrencies. Furthermore, is is to mention that the aforementioned instruments are both essential to the ICOs phenomenon.

Thus, it is surprising that in spite of the positive feedback of the Institution for most of blockchain implications and potential application, a substantial distrust exists for cryptocurrencies. In fact, most of blockchain potentialities cannot exists without making use of digital currencies. As a consequence, the lack of regulation of the latter phenomenon may well represent an obstacle standing in the way of the development of blockchain applications.

To conclude, in reason of blockchain attitude to cross national borders, a regulation at a supranational level may perhaps result more effective in preventing the risk of potential obstacles represented by the diverse countries’ interpretations and positions on the phenomenon. Such approach is suggested also in consideration of the innate aptitude to circulation of cryptocurrencies.