US rules Bitcoin as property, not currency

Since the bankruptcy of Mt.Gox, the world's largest Bitcoin trading platform, Bitcoin has been silent for a while. Yesterday morning, the US Internal Revenue Service issued a notice that Bitcoin virtual currency is property, not currency, and plans to impose taxes on Bitcoin transactions. This news has made Bitcoin players excited again.

Although virtual currencies such as Bitcoin can circulate like currency in some cases, they do not enjoy legal tender status in any jurisdiction and are therefore not real currencies. The U.S. Internal Revenue Service said that virtual currencies are treated as property, and the basic tax principles related to property transactions also apply to virtual currency transactions. The department said that just like investment products such as stocks and bonds, investors' profits from virtual currencies are also subject to capital gains tax; employees' wages paid in virtual currencies are also subject to personal income tax and payroll tax.

The notice clearly states that virtual currency payments of more than $600 are generally required to be reported to the Internal Revenue Service. If taxpayers fail to report virtual currency transactions in a timely and correct manner, they may be subject to penalties.

Industry insiders generally believe that taxation means that Bitcoin is gradually moving from marginalization to mainstream attention, which is a big benefit to Bitcoin.

Du Jun, co-founder of China's bitcoin trading platform Huobi, said that this undoubtedly gives practitioners hope that bitcoin will be included in the scope of regulation. For practitioners, we do not expect the government to treat bitcoin as a currency. Du Jun frankly said that now bitcoin is treated as a commodity, which is actually the best attitude.

Yesterday, the price of Bitcoin did not fluctuate greatly due to this news, and basically remained at around $570. Du Jun believes that although the United States proposed to impose taxes on Bitcoin, its attitude towards Bitcoin has not changed. Previously, the United States regarded Bitcoin as a financial derivative product, and now it has only made this attitude clear.

Bitcoin transactions have long been unregulated. This virtual currency is often associated with tax evasion, money laundering, violence and other incidents, and has been directly banned by some countries such as Thailand. The attitude of the People's Bank of China towards Bitcoin is that it is just a form of investment. Although it cannot be given a legal status in the short term, it does not interfere with Bitcoin transactions.