Shawn Wikoff: Electronic currency law in the U . S .

United States digital currency policy is the area of financial laws and regulations that goes for the
customers, retailers, and users of digital currency. This regulatory structure consist of tax legal
guidelines and FINCEN transparency regulations between financing exchanges and the
customers and corps with whom they conduct business.

The regulating and topic environment

The Internal Revenue Service (I.R.S) describes virtual Currencies (VC)s as "a digital
representation of value that functions as a medium of exchange, a unit of account, and/or a store
of value [and] does not have legal tender status in any jurisdiction." Although, electronic
payment setups have been a component of American life since at least 1871 when Western Union
"introduced money transfer" across the telegraph and in 1914 "introduced the first shopper
charge-card," digital currencies are different from all of these digital payment structures because
unlike customary digital transfers of value, electronic currencies do not represent a claim on
value; instead the digital currency are the value.

The consultant Shawn Wikoff: The National Automated Clearing House Association (NACHA),
by way of the Automated Clearing House (ACH) "moves almost $39 trillion and 22 billion
digital financial transactions each and every year. These digital transactions of money through
the ACH Network symbolize a claim to actual physical legal tender. Otherwise, "unlike
electronic money, a electronic currencies, particularly in its decentralised variant, does not
represent a claim on the issuer." Electronic payment systems, such as the ACH, have lowered the
expenses and time needed to pass value and increased reliability and transparence. Then again,
classic digital payment platforms, despite the presence of transnational networks and satellite
communications, are different from a virtual currency. For example, the Bitcoin exchange
Coinbase charges only 1% on all Bitcoin exchanges to legal tender. Compare this to "2%-4% for
regular online payment systems, like PayPal and credit card providers, or a The prevailing
average of 7.49% for remittance sent through major remittance corridors. The small costs of
transmitting value is a great incentive to both users and sellers. Faster transaction speed is also an
advantage of using electronic Currencies. electronic Currencies may also aid to cut down on
identity theft as a result of cryptographic nature of many of the currencies.

A couple of experts predict various kinds of digital currenciess continues to increase, and the
demand for the financial system to adopt methods of accepting these currencies will continue to
expand. In 2011, Simon Edwards, the Director of Corporate Affairs at Microsoft, sent a letter
toward Reserve Bank of Australia asking, "whether the domestic payments infrastructure could
be modified or adjusted in some way to facilitate and manage the exchange of value beyond
basic currencies." The web sale of goods and services in the United States accounted for an
annual total of $283,009,000,000 financial transactions from the start of 3rd quarter 2013 to the
end of 2nd quarter 2014 (adjusted for seasonal variation). electronic currenciesss are increasing
as a percentage of these financial transactions. The Bitcoin exchange company Coinbase offers a
payment service that allows merchants to receive Bitcoin and then rapidly exchange the Bitcoin
into fiat currency. The speed of this exchange assists providers to avoid the volatility of Bitcoin.
In September 2014, Ebay said just that its payment processor Braintree will be accepting Bitcoin.
As of November 2014, the market capitalization of Bitcoin is just below five billion U.S. dollars,
but has reached historic highs close to fourteen billion dollars. The progression of Internet use
and the digital world is also increasing. World Internet use increased from 15.8% in 2005 to
38.1% in 2013.

This Internet evolution is portrayed by a purchaser need for a decentralized Internet experience
that's|that's|that will be|that is certainly|that can be|that would be} not restricted or reliant on
common institutions and governments. This movement aims to create an Internet based on the
idea of digital, Distributed Parallel (VDP) States, "acting as a kind of organizational counterpoint
to that State's governing bodies." Crypto-currency and also other digital currencies are the VDP
movements' currency alternative to common currency and traditional financial institutions.

Shawn Wikoff:Financial guidelines

The prevailing amount of electronic currencies use in the The current market is extremely
unlikely to significantly affect the Federal Reserve's ability to conduct Financing guidelines;
however, if the size of the electronic currencies market were to expand larger it might affect
Fiscal law. Despite having the impact virtual currencies could have on Financial law, the Reserve
doesn't possess the authority to supervise or regulate digital currencies. According to May 9,
2014 meeting of the Federal Advisory Council and Board of Governors of the Federal Reserve,
the electronic currencies "Bitcoin does not present a threat to economic activity by disrupting
regular channels of commerce; rather, it could serve as a boon. Its Existing transmissibility opens
new markets to merchants and service providers" and "capital flows from the developed to the
developing world should increase." In the Treasury Department's 2009 Report to Congress on
International Economic and Exchange Rate Policies, the Treasury stated that the dollar will
remain to be a major reserve currency "as long as the United States maintains sound
macroeconomic policies and deep, liquid, and open financial markets."

The IRS treats virtual currencies as property and requires for gains or losses upon an transaction
of electronic currencies to be calculated. This suggests that every electronic currencies user must
track the gains or losses of every one of their digital currencies transactions to stay in
conformation with IRS regulations. Tax Foundation, a tax approach research agency, claims that
the IRS got it wrong by categorizing electronic currencies as property because the required
record keeping creates compliance obstacles, and by categorizing digital currencies as property,
the IRS is ignoring how digital currencies is used and managing it as something that people hold
for an financial investment. The pseudonymity of digital currencies accounts allow users to hide
funds and evade taxes. Similar to receiving cash, merchants may not report the earnings to the
IRS if the seller believes the IRS will not have the means to account for the transaction. The IRS
may just be able to audit a electronic currencies exchange the merchandiser uses, but if the
merchant is using a personal digital currencies account or using multiple exchanges the IRS
might not be able to track these financial activities.