More Bad Cryptocurrency News: Tax Bill Closes Inter-Crypto Trading Loopholes On January 1st

While on the surface the government has been generally mundane, under the surface, the attacks continue in the War on Cryptocurrency…

One of the key features that was argued from the beginning about cryptocurrency was that is was “decentralized” (which it’s not) and “outside the system”.

Just how outside of the system is it?

  • Futures trading
  • Vampire Squid developing a crypto trading desk
  • Coinbase reporting to the IRS people who have made profit on Bitcoin

Not very outside the system if you ask me.

But now, it’s getting more and more into the system every day, and believe a silverbug when he says it:

There’s nothing that the U.S. government hates more than anything and everything that makes the U.S. dollar look bad.

And Bitcoin’s parabolic mania has made the U.S. dollar look bad, it’s made the stock market look so boring, and it’s made gold and silver super-chap for contrarians and value investors, let alone given us true believers another year to add to our stacks at rock bottom prices.

Speaking of the IRS, there’s a little crypto-nugget (or pesky thorn) thrown in there that Bitcoin fans are gonna hate, and those trading one crypto for another on the exchanges are gonna hate even more:

The full brunt and regulatory burden of the IRS.

Here’s Bloomberg reporting:

Investors in bitcoin and other virtual currencies would lose a lucrative tax break under the Republican tax bill that’s on its way to President Donald Trump’s desk.

New limits in the bill would bar cryptocurrency owners from deferring capital gains taxes when trading one type of virtual currency for another — effectively closing a gray area in the tax code, experts say.

Those gains can be considerable. Bitcoin, which had an initial price of less than 1 cent when it first traded in 2010, was around $1,000 as 2017 began and surpassed $19,000 this week, at least briefly, before paring some of the gains. Many enthusiasts jump between bitcoin and a long list of similarly volatile competitors, such as ether.

Here’s the crux of the matter:

Most cryptocurrency investors have ignored that legal fuzziness, and taken the approach that trading a stash of, say, bitcoins for litecoins, qualifies as swapping one form of property for a similar one. “People have probably foot-faulted all over the place,” Lemaster said.

Once a swapped asset is actually sold, the seller would owe capital gains taxes, at a tax rate that depends on whether it was held for more than a year. While that may take a bite out of some investors’ gains, it’s good for cryptocurrencies in the long run, said Ryan Losi, who leads the international tax practice at accounting firm PIASCIK.

Although I’m quite sure the crypto fans are going to say all of this new regulation, reporting requirements, taxation, government oversight, committees, departments, and red tape is a good thing for providing Bitcoin legitimacy.

Wait, they just did in the very next paragraph:

More defined regulation will mean that digital assets are more easily accepted in the mainstream, Losi said.

Stack accordingly…

– Half Dollar


 

About the Author

U.S. Army Iraq War Combat Veteran Paul “Half Dollar” Eberhart has an AS in Information Systems and Security from Western Technical College and a BA in Spanish from The University of North Carolina at Chapel Hill. Paul dived into gold & silver in 2009 as a natural progression from the prepper community. He is self-studied in the field of economics, an active amateur trader, and a Silver Bug at heart.

Paul’s free book Gold & Silver 2.0: Tales from the Crypto can be found in the usual places like Amazon, Apple iBooks & Google Play, or online at PaulEberhart.com. Paul’s Twitter is @Paul_Eberhart.

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