It’s obvious media outlets have been talking about the ever popular electronic currency – “Bitcoin”, over the past several months. With political discussions looming, uncertainty grows deeper as investors decide to cash-in or decide to hold for the long-term possible gains. Interest increases daily as everyone around the world offers their opinion of either where Bitcoin is going or what the next new hot thing will be in the crypto-currency world. Pillsbury, Winthrop, Shaw and Pittman, a large US law firm, is positioning itself as an industry leader for this market segment by offering webinars on Virtual Currency Legal issues, with a focus on Bitcoin.
Tax regulations for Bitcoin?
The hot topics, at least from a legal perspective, are pending regulation for Bitcoin and other crypto-currencies in the US and abroad and the US tax treatment of Bitcoin. Currently, Bitcoin firms are subject to the AML and money transmitter rules that apply on the state and federal level. Everyone is waiting for New York, which plans on being the first state in the country to offer tailored regulation for Bitcoin and cryptocurrency firms. In addition, the SEC and the CFTC are reserving their right to regulate this market in the future.
IRS wants in on the action
Other impacting news involves the IRS ruling specifically aimed at Bitcoin. The IRS intends on taxing Bitcoin and other cryptocurrencies as property, meaning any time there is a transfer in Bitcoin, a tax consequence occurs. The most effected companies are those who mine Bitcoin, they must use the time the Bitcoin is minted as the basis for US taxation.
The regulatory and tax landscape in the virtual currency space is rapidly developing. Both International, Federal, and State regulators are eager to stake their jurisdiction, many are doing so quickly. The IRS sent an early warning shot declaring Bitcoin will be treated as property. New York will be coming out with their own regulations soon and it will be interesting to see how competing Federal Agencies, such as the CFTC and SEC, enter this space.