Indications That Digital Currency is Replacing Money

Bitcoin has been given status of a (PSP) “payment service provider” by French financial institution Aqoba. Bitcoin is not to the best of my knowledge a PSP, but Aqoba is. Bitcoin is able to take advantage of their PSP status without having to be one.

California Governor Mr. Brown signed into law the removal of a ban on the use of crypto-currencies.

California bill AB129 repeals a restriction on the use of anything, but the lawful money of the United States. Bill AB129 acknowledges popular digital currencies as legitimate such as Ripple & Bitcoin.

Bitcoin now has an International Bank ID number (IBAN) which allows transactions through PayPal and WorldPay and other digital payment networks.

The Internal Revenue Service (IRS) said that bitcoins and other crypto-currencies are to be taxed as property – not as currency. Bitcoins will be taxed as ordinary income or as assets subject to capital gains taxes under the certain circumstances.

According to the IRS crypto-currencies will not be “treated as legal-tender currency” and the US dollar value of virtual currencies will be subject to taxation on gains and losses just as property transactions are calculated.

Publication 525 states: a taxpayer who receives virtual currency as payment for goods or services must, in computing gross income, include the fair market value of the virtual currency, measured in U.S. dollars, as of the date that the virtual currency was received.

A taxpayer who mines virtual currency is subject to the fair market value of the US dollar at the time of mining which would translate to the date of receipt which is considered gross income.
Publication 551 states: the Basis of Assets, that virtual currency is subject to fair market value of the virtual currency in US dollars as of the date of receipt.