How to Spend Bitcoin Correctly: The Legality of Bitcoin in the United States
To stay in compliance with the current laws when you spend Bitcoin, we need to know and understand those laws. So, let's take a look at the current US regulations regarding Bitcoin as of 2020.
We here at CryptoDetail love our Bitcoin. It is the "King of the Cryptos" only due to its innovation and liquidity. Since its creation in 2008, Bitcoin was freely traded back and forth between users without hindrance. But, as we all knew would happen, the government took notice and had to try to find a way to regulate what was designed to be unregulated. However, as the government has imposed its various statutes and regulations, the cryptosphere has adapted, survived, and even thrived.
But, to stay in "compliance" with the current laws and make sure you use the best places to spend bitcoin, we need to know and understand those laws. So, let's take a look at the current US regulations regarding how you can spend Bitcoin.
How to Choose Places to Spend Bitcoin: The Government Entities and Their Positions
The Commodity Futures Trading Commission (CFTC) has classified Bitcoin and other virtual currencies as commodities. Conversely, the Securities and Exchange Commission (SEC) has stated that Bitcoin itself is not a commodity or security (However, this entity actively regulates tokens as the virtual equivalent of fiat stock shares). The SEC also heavily monitors and regulates exchanges; and, has in fact, begun criminal investigations and prosecutions of several Bitcoin's largest traders using their profiles on sites like LocalBitcoins. So, it seems the SEC has its limits.
The Internal Revenue Service (IRS) classifies virtual currencies ("VCs), including BTC as describes Virtual Currencies (VCs) as "a digital representation of value that functions as a medium of exchange, a unit of account, and a store of value [and] does not have legal tender status in any jurisdiction."
Best Places to Spend Bitcoin: Who accepts BTC
So what are the best places to spend bitcoin? We here at CryptoDetail disagree with the FUDsters. We believe that Bitcoin and its brethren have grown too large for such an attempt. There are billions of US Dollars tied into Bitcoin alone. It is not just the "hackers" or the "black marketeers" who use it. Amazon, Hotels. Com, Gyft, IBM, and Microsoft are only a few US-based companies that accept BTC. There are hundreds, if not thousands, more places to spend bitcoin, who either accept BTC and pay some portion of their employee's paychecks and retirement in that currency.
So, regardless of any possible attempt at a ban (wouldn't Jaime Dimon love that?), we here at CryptoDetail feel that the US government will continue its careful assessment of filling its coffers with taxes it can impose.
What does all of that legalese mean?
Does the IRS think of Bitcoin as a savings bond that cannot be given a set value as it is not actually "legal tender"—confused yet? Try reading the US tax code sometimes. In short, the IRS considers Bitcoin to be much like an "investment." And, as we all know (or, we should since we say that all the time here on CryptoDetail), Bitcoin is NOT an investment (somebody PLEASE send the IRS a copy of the Bitcoin White Paper).
The National Automated Clearing House Association (NACHA) uses ACH transfers Clearing House (ACH) to move trillions of fiat dollars in billion of electronic transactions each year as such NACHA is a Bitcoin competitor. So, that entity classifies BTC (and other VCs) as having "no claim on the issuer" (meaning, again, "not legal tender").
Under the Electronic Fund Transfer Act (EFTA), the FDIC does not insure Bitcoin transfers. This means that The FDIC classifies Bitcoin as something outside of their authority as outlined in the EFTA. Again, "not legal tender."
The US Constitution gives Congress the right to "regulate commerce." So, we can be sure that there will be future regulation at the federal level.
Some have said this regulation will be an outright ban on Bitcoin and other cryptos under the Stamp Act. That law was written just after the US civil war to prevent anyone from minting money of any kind.
Always be prepared
At the moment, the only thing we need to do in regards to Bitcoin here in the US is to keep careful records and to accurately report any gains or losses incurred through our BTC transactions and trades. Keep emails, screenshots of conversations and deals, and periodically print out Blockchain transactions to support your numbers. This gives you the proof you need to survive any audit. After all, the government only wants what it sees as its share of your "income." As long as you accurately report and pay taxes on any gains you make and can prove any losses you have incurred, you won't have a problem. When it comes to searching for the places to spend bitcoin, you will have to check every single source to make sure that it can be trusted.
If you are a US citizen, it is a good idea to follow the Boy Scout motto and "always be prepared." So, keep those records. If you do not have them, take the time to dig them up and print them out. Then, to be completely prepared (especially if you are a more significant player more than a few thousand dollars each year), build your team. You are going to want to take your time and find a crypto-friendly lawyer and a crypto-friendly accountant.
Again, take your time, schedule meetings with a few, and speak with them. As with any team, there needs to be a connection and a comfortability factor. So, meet with a few lawyers and a few accountants before making your choices concerning the best places to spend bitcoin and resources you use. While you may never need them, you might. So, it is good to have people you feel you can trust, waiting for just a phone call away.
Please Note
Nothing we have said here is meant to be or presented as legal or financial advice. As always, it is up to you alone to do your due diligence, especially when ensuring your compliance with the relevant law. So, please build that team, keep those records and cover your butt with proof and the experts you may or may not need in any situation where you may face legal scrutiny. Believe us when we say, "Big Brother is watching,"; and he (Uncle Sam) ALWAYS wants his piece of the pie. If you're going to find the best places to spend bitcoin, you will have to do a lot of your research and be careful when you spend bitcoin on all kinds of websites.
Danny Donahue
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