IRS Ruling = Floodgates Open for Wall Street?

[bobdude17]

Isn't this exactly the clarification they needed to make a serious move?

[Rygon]

Link?

[bobdude17]

http://www.bloomberg.com/news/2014-03-25/bitcoin-is-property-not-currency-in-tax-system-irs-says.html

[podyx]

cant get enough of this one  

[dnaleor]

[Zapffe]

http://4.bp.blogspot.com/-pQ1sCOsg-Pg/Tr1J_HsKzsI/AAAAAAAAFow/12Wgk7KpfRQ/s1600/Funny%20Trainline%20(7).jpg

[Ivanhoe]

This is exactly the clarification they needed to not make the move.

Elaborate...

[TERA]

I was under the impression we were waiting on clear regulations to be passed regarding launching exchanges and running businesses, and that a large advancement would likely be made in New York by July in which people could launch exchanges using "bitlicenses". I was not aware that we were waiting on some kind of tax classification.

It it's amusing how bulls think every little event that happens in the world is going to result in a huge price increase and use words like "floodgates". the only thing that increases bitcoin price is more users, more usability, more services, and more exchanges.

[bobdude17]

I was under the impression we were waiting on clear regulations to be passed regarding launching exchanges and running businesses, and that a large advancement would likely be made in New York by July in which people could launch exchanges using "bitlicenses". I was not aware that we were waiting on some kind of tax classification.

It it's amusing how bulls think every little event that happens in the world is going to result in a huge price increase and use words like "floodgates". the only thing that increases bitcoin price is more users, more usability, more services, and more exchanges.

The reason I used a question mark is because I didn't know the answer.

I would think that tax classification would be a huge issue to institutional investors. This classifes "what" they would be buying, and what laws they would have to follow to keep out of prison. Given bitcoin's history and public image of being a drug currency, how could federal guidelines on how to deal with the controversial, yet highly lucrative, bitcoin be grouped into "every little event"?

As for "floodgates", I didn't mean there was a flood of money coming(though I think there is eventually). I was referring to large actual gateway being opened so a flood could come. Would institutional investors touch bitcoin without having this in place?

[chessnut]

yep it's good enough for the institutional investors. not very good for me and you.

but miners will need to report earnings the the IRD? lol, im sure there are easy ways to get around that, but they are barely breaking even as it is most of them.

[meanig]

It's another piece of legitimacy that Wall Street types look for before investing institutional money. Taxation is always an aspect of due diligence that needs to be studied before they can invest so in that respect I think this is important.

[DeathAndTaxes]

The IRS is not FINCEN and I guess one does not care what the other says?

Pretty much.  FinCEN ruling was a stretch to begin with.  They wanted to regulate Bitcoin.  The most appropriate category would be a "dealer in currency" however the law for currency is airtight.  It would states (paraphrased) currency is the physical money of the United States or a foreign government.  A $100 federal reserve note is currency but even $100 of value in your bank account (or on a gift card) is not currency.  To fit Bitcoin there (which IMHO is where it is legally the most consistent) would require Congress amending existing laws and that might have taken years.

So they jumped through a bunch of legal contortions which would break the spine of an olympic gymnast to make the exchange of virtual currency for real currency, "money transmission".   It is important (to grasp the full lunacy) to understand FinCEN is saying the very act of exchange 1 BTC for $600 in value is money transmission.  Even if neither the Bitcoin or dollars are transmitted.  All that is required is the act of exchanging.

Their insane part is this isn't even consistent with their EXISTING rulings.  A business which exchanges dollars for euros is NOT a money transmitter.  FinCEN has even provided administrative ruling indicating so on more than one occasion. 

FinCen is willing to pretend that the following statements are consistent:
If you exchange dollars for euros, you are a currency dealer, NOT a money transmitter.
If you exchange dollars for bitcoins, you are a money transmitter, NOT a currency dealer.

Is it any surprise that every other governmental agency simply ignored FinCEN's "guidance"?

[ElectricMucus]

ITT: This is good for Bitcoin because

[bitblazing]

This is good for bitcoin for one huge fundamental reason. I no have no incentive to ever convert it to USD.  Woot!!!!

[Ibian]

This is good for bitcoin for one huge fundamental reason. I no have no incentive to ever convert it to USD.  Woot!!!!

Doesn't mean you can avoid taxes. Just try. As already noted, the law is whatever The Man says it is, even when he contradicts himself.

[bitblazing]

Good luck trying to enforce that.


The SEC can not even regulate the scams on the pink sheets. Let alone Bitcoin.

[ElectricMucus]

Good luck trying to enforce that.


The SEC can not even regulate the scams on the pink sheets. Let alone Bitcoin.

planning on committing tax fraud aren't we?

[Torque]

This is exactly the clarification they needed to not make the move.

Elaborate...

I think that he means that many Wall Streeters have been involved trading in bitcoin for some time now (perhaps the last 3 years), the attraction being that they have been able to make quick easy trades and enormous profits basically tax-free due to the lack of clear guidance issued from the IRS.  Now that guidance has been issued on taxable bitcoin gains, and being required to hold bitcoin for at least 12 months to avoid income tax, it may scare some WS players away.

I don't think it makes much sense when trying to use it as a currency.  If I buy bitcoin at 3pm to use for a cup of coffee and go to buy coffee at 4pm and my bitcoin appreciated in that hour, I'm not going to make a record of every single buy/sell and determine if it is a gain or loss to report to the IRS.  Stupid.

But maybe it'll encourage the investors to HODL large amounts of bitcoin for at least 12 months.

[MatTheCat]

Isn't this exactly the clarification they needed to make a serious move?

On the one hand, The Man recognises Bitcoin as a valid asset.

On the other hand The Man undermines the whole fundamental purpose of Bitcoin by implementing a capital gains tax with every purchase made with Bitcoin. Sounds totally unenforceable in practice but just as with internet piracy, there will always be those that are made an example of and totally fucking nailed to the last letter of the law for buying a cheeseburger with a Bitcoin they made 56.6% profit on and failied to declare to tax authority.

[bitblazing]

Good luck trying to enforce that.


The SEC can not even regulate the scams on the pink sheets. Let alone Bitcoin.

planning on committing tax fraud aren't we?

Did I say that no! I am making a point that IRS has no clue what to do with Bitcoin and it is reaching for straws. I pay the IRS on time every year and will continue to do so. So dont put words in my mouth.