Bitcoin as legal tender has huge legal implications for Bitcoin in the U.S.

[suzanne5223]

According to FinCEN guidance, if Bitcoin becomes legal tender in El Salvador and is used as a medium of exchange, it would no longer be classified as a "convertible virtual currency" or even "virtual currency". It would become a "real" currency.

I'm starting to understand why the world bank and some political leader don't support the El Salvador move about Bitcoin legalization but to be clear about what the FinCen said. If Bitcoin won't be see or classified as convertible virtual currency if it become legal tender in El Salvador why does it remain as a convertible virtual currency after Belarus legalization then or I'm missing something?

[CryptoSites]

Chiming in a little late but happy to try to clarify a few issues here

1) El Salvador law may in fact enable US taxpayers to claim bitcoin is a foreign currency.

2) Some of the law cited about what foreign currency is is irrelevant. For tax law we have to stay within Title 26.

3) Section 988 would exempt $200 of personal use gain from taxation. BUT if you go that route then all bitcoin gains above that amount would be ordinary income and NOT capital gain. Big tax rate difference there. so be careful what you wish for.