Does the government consider cryptocurrencies property or currency?
by: Anthony Parent
Would you believe that two separate divisions of US Treasury have competing and contradictory definitions of what cryptocurrencies are? Yes, you would believe that. Because you have been paying attention.
The Financial Crimes Enforcement network (FinCEN), a division of the US Treasury) calls cryptocurrencies currency. Why? So that it can claim jurisdiction over cryptocurrencies and regulate them under the Bank Secrecy Act of 1970. If FinCEN considered cryptocurrencies to be property, the ability of FinCEN to regulate them would be in question.
Yet, on the other hand, the IRS, another division within the US Treasury takes the opposite approach. It considers cryptocurrencies to be property and not currency. Why? Because this claim allows for a much more invasive taxation regime. If taxpayers were able to use cryptocurrencies as an alternative currency, the IRS would have a dfficult time taxing phony inflationary gains. But with the IRS's current edict, buying a cup of coffee with a cryptocurrenices will likley result in a capital gain (or loss) that would need to be reported and taxes paid on.
Watch our video below to learn more about the inconstent rules the US Treasury enforces.