Bitcoin Forum

I know these are in a legal grey area, so answering what you believe would be the "most likely scenario" would be greatly appreciated.

1) Is Bitcoin-Denominated Debt Enforceable?
In other words, say I lend someone X BTC (unsecured), and get them to sign a promissory note for the X BTC loan, etc... etc... Now, assume they didn't pay me back. Could I theoretically pursue them for this debt, and potentially take them to court? If so, would I receive only the USD value of BTC lent, or is there a way of writing a contract such that they would be obligated to provide me with the actual X BTC, no matter how much it is worth in USD terms, now?

2) Do normal usury laws apply to BTC?
Self explanatory.

3) Do I have to report income tax on interest earned from BTC loans?
Or do I only have to pay such tax when/if I exchange that newly earned BTC into USD?

Yes, there is. I've dealt with these agreements before.  It's not as simple as just substituting BTC for USD in the text of the agreement, but it isn't impossible either.


It would depend heavily upon the state. Usury is a question of state law in the US.


I honestly don't know the answer to this one.  The tax professionals I work with typically reason by analogy when dealing with Bitcoin income.  If there is some other in-kind investment out there that pays dividends in-kind, then they would probably use its tax treatment as precedent.

Also check your state's maximum personal loan interest rate.

So if this sort of agreement is not in place, depending again on local law, legal tender laws may apply to debt repayment and you get the local fiat?  
I may also seek a drafting, when it becomes a concern that warrants this.


Yes and this is a changing target in many of them.

You know that's really nice, I'm frankly surprised that there isn't any more widespread use of such an instrument. How would one go about doing it? Some websites would greatly benefit from it.

How about the nationwide 36% cap for military? Probably most state caps function in a similar way.
To be honest, I really don't care about paying the taxes, they'd likely be minute (unless it was something insane, like I was realizing a profit for the entire lent sum, not just the interest). I just don't want to get in trouble. How exactly would I go about doing the 'safe' thing?