Topic: Is There A Good Reason To Still Be Calling BTC Money/Currency? - page 2. (Read 6380 times)

There is a reason that lawyers "practice" law.  You can ask ten lawyers the same question and get fifteen different answers.  Does it surprise you that a securities lawyer would see bitcoins as a type of security?  A real estate lawyer would see them as real property, an Intellectual Property Lawyer would see them as IP etc etc etc.....

My background is in economics, econometrics, commodities, equities and derivatives so I am also biased.  My opinion is based on what mostly resembles bitcoins in use and utility, I find this to be diamonds.  If we had a willy wonka teleportation machine and could move diamonds instantaneously and securely across space they would function exactly as bitcoins do.  Does Lil Jon have to wear a USB stick with 5000btc in it around his neck to give it another use and make you accept it as a physical good?

There is no way bitcoins are a security.  Bitcoins are individual things.  You could securitize bitcoins by creating a security that signifies ownership in a bitcoin (or bitcoins) and possibly trade that on a stock market but by definition a security is only a document ownership of some underlying thing.

As far as if bitcoins need to be taxed that depends on your jurisdiction.  A blanket statement saying they are subject to some kind of tax is ridiculously broad.

Having read a different topic, a person posted that he had spoken to a securities lawyer, and they had reached the conclusion that public trading on the "Global bitcoin stock exchange" (and hence any exchange in the US dealing with securities) would subject it to SEC and relevant laws. A security is defined as:

 "(3) the term “security” means—

(A) a note, stock certificate, treasury stock certificate, bond, treasury bond, debenture, certificate of deposit, interest coupon, bill, check, draft, warrant, debit instrument as defined in section 916(c) of the Electronic Fund Transfer Act, money order, traveler’s check, letter of credit, warehouse receipt, negotiable bill of lading, evidence of indebtedness, certificate of interest in or participation in any profit-sharing agreement, collateral-trust certificate, pre-reorganization certificate of subscription, transferable share, investment contract, voting trust certificate, or certificate of interest in tangible or intangible property;"

US Code Title 18 § 513. Securities of the States and private entities.

Considering the fact that a securities lawyer has a far superior legal comprehension than myself, I concur that Bitcoins are not considered Barter. Also, it cannot be considered both a barter and a security, which I fallaciously argued earlier. However, as Bitcoin is a "debit instrument as defined in section 916(c) of the Electronic Fund Transfer Act" ("As used in this section, the term "debit instrument" means a card, code, or other device, other than a check, draft, or similar paper instrument, by the use of which a person may initiate an electronic fund transfer.") any Bitcoin exchange based in the U.S. is subject to the SEC and relevant laws. And, of course, in the globalized financial business sphere, all stock exchanges in the world are subject to similar legal provisions and all defintions of "securities" are likewise or very similar, and due to "harmonization" the laws and definitions are being aligned continuously.

So all Bitcoin exchanges, wherever situated are subject to the exchange laws of the host nation, as Bitcoin is a kind of "security", I contend. Exactly which tax laws that are applicable is beyond my current knowledge; although the only point that we have agreed upon so far is that gains on Bitcoin trades are subject to some kind of tax.

I'd love a few milikittens.

A $5000 profit would not create a need for a 1099-b to be filed as it would be a private party sale.  1099-b filing requirements only apply if the sale is in the normal course of trade or business.

Your view that the purchase of bitcoins for fiat currency constitutes a barter exchange because you could possibly trade them for a product or service elsewhere after receiving them is not a valid argument.  First barter is defined as trading goods or services for goods or services.  If an exchange only deals in bitcoins for fiat currency no barter exists.  Any bartering done later by that individual with the bitcoins they purchased is outside the realm of the exchange.  If the person makes a profit it is their responsibility to report income to the proper taxing authority.

That's not a bad idea. I'll offer one gram of kitten for each bitcoin.

If a person bought $5 million worth of silver and sold it for $5 million within a short time-span, than I agree with you that a 1099-b would not be required. If instead they sold it for a profit of $5000 a form is required. The IRS would presumably have a lot of problems enforcing the law upon thousands of traders based in the U.S., which is why they are more than likely to enforce the law upon the exchange.


Again I am in agreement with you; however similar laws exist in the U.K., Australia, China taxes virtual money trading despite having outlawed the practice, in South Korea "a court ruled in September of last year that profits from the trading of "cyber money" should be subject to 10 percent value added tax (VAT)". So such laws are either global or definately globally expanding. Most of Bitcoin traders are located in advanced economies where the likelihood of such laws already being in existence is high.

http://www.koreatimes.co.kr/www/news/nation/2010/01/116_58775.html

CryptoCommodity; none of these exceptions are applicable to Bitcoins. The issue of "Internet Based Barter" and "Trade Dollars" is multifaceted as Bitcoins have several uses. It can be traded for USD, it can be traded for other goods and services. If you purchase 10 Bitcoins for $100 and sell them for $200 you earn $100. Is that to be considered as a strict capital gain, or do you "earn trade or barter dollars through a barter exchange"? You could be right that this is not considered a barter exchange, however I believe that it is. You could purchase 10 Bitcoins for $100 and after an aprreciation of value exchange them for goods or services valued, say, $200. In this case it is clear that the transaction is considered a barter, in which $100 has been earned which may or may not (due to specific circumstances) be subject to tax.

benjamindees What are you talking about - you cannot pay U.S. taxes with Dwolla, Pound Sterling or any other currency but USD.

Maybe you'd consider updating the Wikipedia. If true, that is a very interesting fact missing from the discussion: http://en.wikipedia.org/wiki/Liberty_Dollar#Conviction

Well the Queen Mother hasn't specially knighted anyone and blessed them with the sovereign authority to issue turds into their toilet bowls.  Yet, there they are.

Would you care to cite any of these laws, or are you just unlawfully issuing opinion from your nether regions?


Dollars still exist.  You can pay your tax in dollars, yes?  As far as I can tell, there's nothing preventing the US from printing up more dollars?

USD is backed by bullets