But who would want to bid for them.  Any thoughts of privacy would be gone since the bidder would fully identify themselves to the FBI.  Only some sort of arbitrage but that means selling them right after buying them.

To run a proper Bitcoin exchange in the US, you need to register with the SEC as a broker/dealer. That lets you accept trading transactions for anything tradeable. A "broker", under US law, is "any person engaged in the business of effecting transactions in securities for the account of others." It includes "persons that operate or control electronic or other platforms to trade securities". There's some argument over whether Bitcoin is a "security", but if you're registered as a broker/dealer, that takes care of that problem. Every brokerage in the US, big or small, has been through this process.

This isn't just filling out a form. A broker-dealer may not begin business until:

    1. it has properly filed Form BD, and the SEC has granted its registration;
    2. it has become a member of an SRO;
    3. it has become a member of SIPC, the Securities Investor Protection Corporation;
    4. it complies with all applicable state requirements; and
    5. its "associated persons" have satisfied applicable qualification requirements.

These requirements are to prevent brokers from stealing customer's assets. First, there's form BD, which covers who's behind the business, who's really behind the business, and the criminal history of everyone involved.

Then there's becoming a member of a Self Regulatory Organization. This would be FINRA or NASDAQ. FINRA can and does fine its members for rules violations; $102 million in fines in 2012 alone, and 692 cases referred for criminal prosecution. (That's why brokers are so heavily regulated.)

Then there's becoming a member of the Securities Investor Protection Corporation. This is an insurance company. Each customer is insured for up to $500,000 if the broker goes bust or steals their money. (Something the Bitcoin world is all too familiar with.)  Brokers pay premiums to SIPC.

Then there are qualification requirements for the people involved. There are exams. The principals of the business have to pass at least the FINRA Series 24 (General Securities Principal) exam, which covers things like "Supervision of Brokerage Operations" and "Compliance and Financial Responsibility".  And FINRA Series 27 (Financial and Operations Principal), which covers "Customer Protection Rules" and "Net Capital Requirements". Probably some others, too. The standard exam for a "stockbroker" is FINRA Series 7, and if there are people involved who actually sell, they have to pass that exam. There are exams for lower-level people, such as FINRA Series 11 (Assistant Representative - Order Processing). That's right, there's an exam for the people who do phone support.

One way to do this is to buy an existing small broker/dealer. Here's a list of broker/dealers for sale. For $105,000 someone could buy an inactive broker/dealer registered in 19 states. That takes care of most of the registration problems. All the registration info will have to be updated, but that's easier than doing this from a cold start. The name of the company can be changed at this point if desired.

Then you hire some people who've already passed the tests. It's not hard to hire people who have passed these tests, since Wall Street has downsized somewhat in recent years. The principals have to study up and pass their tests, but it's mostly memorization and knowing the rules. They'll need a law firm, an accounting firm, and an auditor.

Then they can start up a Bitcoin exchange without regulatory problems. Their customers will have the confidence that their assets are insured and outside auditors and regulators are watching.

Bitcoin needs an exchange like this.

This has lots of advantages.  You can take orders through other brokers. Banks will deal with regulated brokers. You can get hooked into SWIFT, ACH, and the credit card systems.

Makes no sense. How can you treat a barter exchange as income? If $600 worth of sex between two individuals took place, that logic leads to a total of $1,200 dollars taxed. What happens in case of a threesome, or an orgy? One orgy.
By the same token, if I am selling potatoes for US dollars, those dollars are my taxable income, but so are the buyer's potatoes. Does the buyer pay income tax on the value of potatoes? It's an exchange.

Favors, like sex, are also a means of exchange. What is legally the difference between taxing virtual currency and taxing sex?

That's irrelevant as it never went to court therefore it's not case law like the Texas ruling is.

Seriously, fuck the US and the State of New York. I hear there are other countries in the world, and some of them actually welcome entrepreneurs.

You're referring, I think, to the doctrine of the "Dormant Commerce Clause," (the "DCC") also known as the "Negative Commerce Clause."  It's taught in law school through Gibbons v Ogden, where the doctrine was first enunciated in the 19th Century.  Generally, the doctrine is that, since Congress  *could* pass a law regulating some particular instance of interstate commerce, that states *can't* pass such a law.

The DCC is typically applied when a state tries to tax or regulate something in a discriminatory or protectionist manner that might lead to the balkanization of the states.  For example, a state law that prohibits the export of shrimp unless the shrimp are first processed in that state would be held unconstitutional under the DCC.  The law clearly seeks to protect in-state businesses at the cost of out-of-state businesses.

There is a well-established exception to the DCC: where a law seeks to protect the public health or safety of the citizens of the state.  State money transmission laws clearly seek to protect the state's citizens from the harm of undercapitalized or fly-by-night money transmitters.  Money transmission laws fall under this exception.  It might also be the case that there is a federal statute out there that explicitly authorizes these laws, in which case they would fall under the "congressional authorization" exception as well.

This is naive. Of course they would not do the obvious. But for a group of knowledgable persons it is easy to implement some "errors" that go unnoticed long enough to inflict serious damage.

Only a tiny fraction of all bitcoin users is able to understand the source code. And of this tiny fraction only few do actually verify it.

Isn't that a part of the attraction of bitcoin? You can AVOID tax?

Fiat in, fiat out. There is your simple answer..

When did FinCEN state that bitcoin is stored value?  Since 2011, FinCEN regulations have referred to "prepaid access" rather than "stored value", and they have never claimed that bitcoin is prepaid access either.

In a letter to Tangible Cryptography LLC, the State of Virginia did claim that bitcoin was stored value.  However, the definition of stored value in the Virginia law is somewhat different than the California law and the former federal regulations.

BitCoin is NOT a currency. Any business is rolling the dice accepting BitCoin with how volatile the price is. With how rapid the price swings (mostly down), no logical business would/should accept BitCoin. No different than gambling. To my knowledge my dollar last week is still a dollar today, not true with BitCoin, you would have taken a hefty loss this week only!