The IRS has gotten it all wrong. All their statement will do is push onshore people to offshore services and companies where they cannot be taxed. I live and work in an offshore country where there are no capital gains taxes and cryptos aren't taxed in any shape or form. I'm already seeing a rise in what can best be described as "offshore crypto farms" where instead of you mining and manufacturing your own cryptos, you simply rent mining capacity or buy them cheaply. Either method means that you haven't technically manufactured them yourselves, rather you're buying a pre-manufactured product, which is tax exempt on purchase. Added to this, if the contract is written well, then the cryptos could be held in offshore "trust" wallets and only withdrawn as and when needed, thus obviating any reporting of them. You've simply paid for a service/product combination and the very existence of the mined cryptos isn't a taxable event. You could almost create a futures and options market that way, but that's another story...

Since the USA has introduced FATCA that is seeing US citizens and residents caught in a wider reporting/taxation net, the simple separation of an asset you own and enjoy overseas versus a product and service that you've bought and paid for could see cryptos becoming the "flee" asset of choice.

The upside of the statement is that the USA government has effectively rubber-stamped cryptos as viable and recognisable assets, hence they have a real value. Nothing like stimulating the very economy you're opposed to!

There's a simple reason why a contract coin simply cannot work: money supply.

Total money supply in the World is approximately USD100trillion. Since most other forms of assets merely have a currency value and aren't currency themselves, then they don't need to be brought into the equation. If you wish to substitute a contract coin for each "unit" of currency, then you'd also have to take into account the pennies and also that cryptos can be up to eight decimal places in size. That being said, if you were to create a contract coin for each "unit" of transferable currency, then the supply would be staggering. Basically, 10,000,000,000,000,000 contract units would be needed. 21million Bitcoins equals 2,100,000,000,000,000 (with just over 12.5million integer units mined so far). As you can see, there's a dilution effect already. One contract coin couldn't ever equal one fiat penny - i.e. they could never rank pari passu to each other.

Added to this problem, and assuming that you created a crypto with exactly the right number of units, in order to mine enough to get the system working would take a phenomenal length of time. In that time the fiat pool would have most likely increased and global inflation would make a mockery of the expected contract coin supply. You'd simply never be able to keep up, which is a shame.

Another issue (of many that would take ages to discuss), and perhaps the most pertinent one, is that since a contract coin mimics a fiat currency that it too is effectively being used as a fiat equivalent - i.e. it's a money derivative of a money derivative. A crypto pegged to a fiat is no different to the fiat itself, and so goes against the entire crypto ethos and philosophy. All you'd be doing is creating an alternative transfer and payment system, nothing more, albeit it would be a lot simpler, cheaper and transparent. Low margins would scare bankers off, but not entice them or governments to integrate it into their systems. If the fiat doesn't follow the contract coin, then how do you transfer the real value? May as well just wire the fiat in the first place...

This is my first post on these forums, so apologies if it's in the wrong place.

Anyhow, since this the legal section...

Some websites, trading platforms and "experts" prance around pretending and claiming to be something they're not. Those amongst you who know a thing or two about legalese will spot the inherent flaws in the claims made on sites such as Bitcoin Exchange Ltd (https://bitexltd.com/index.php#). Whilst you might not realise it, these sorts of sites will only act to cripple genuine attempts to get Bitcoins into the mainstream psyche. Look at Mt. Gox...trusted with hundreds of millions of fiat currency and the trusty Bitcoins as well. Poof! All gone in a matter of days and the World looked on and laughed.

Bitcoin Exchange Ltd makes three legal claims that are utter nonsense (I'm a financial and legal professional, so qualified enough to state this), but that the normal reader won't notice. Due to these "claims" being central to their status as "the most reliable, fast and secured Bitcoin exchanger in the UK" that "Bitcoin Exchange Ltd is government registered" and "licensed under Company House, England" it won't be long until they're found out and put to the sword. This will undoubtedly cause pain to some traders and frustration to others wanting Bitcoins to thrive. Another nail in the coffin to real progress.

Even though a major foundation of cryptocurrencies is the lack of centralised regulation, perhaps some form of community regulation might prove a worthwhile thing to consider? The UK government has it in its power to shutdown Bitcoin Exchange Ltd for its false representations (irrespective of the crypto link), which incidentally are illegal under the laws of England and Wales, and will only serve to empower them to push for regulation by "lawmakers" (*cough, cough*).

It would be a wise thing for the community itself to put into place (self-)regulation that would protect cryptocurrencies (and their users) from politicians, unethical trading entities and ensure that the very principles of their creation are defended and kept unchanged. Otherwise, sooner rather than later, it will happen, so surely it's better to be proactive instead of reactive?

Thoughts?