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Bitcoin Business: This Week’s Summary

Written by Veldt Gold
Mar 29, 2014
Veldt Gold
Mar 29, 2014

The price of Bitcoin continues to fall. China hates it. And then there’s the IRS…

First things first and Bitcoin took a big fall this week to less than $500. As of right now it remains at around $490, which is the lowest it has been for a while. This seems to be happening in light of a steady stream of anti-Bitcoin news from China, such as reports of the People’s Bank of China (PBOC) moving towards stopping all Bitcoin transactions from April 15th. This news was reported by multiple news agencies on March 21st, but was later dismissed by Chinese Bitcoin exchanges, such as OKCoin and BTCChina. Their respective representatives both stated that they haven’t heard anything about it in the form of an “official announcement”. BTCTrade and Huobi have also denied receiving any official statement from PBOC. So the news turned out to be a hoax, but the price of Bitcoin still suffered and it is now sitting at half of it’s higest value of $1,000.

And then there’s the IRS and their Virtual Currency Guidance. Bitcoin does not have legal tender status in any jurisdiction, therefore it isn’t currency. The IRS is treating it as property instead, which means your Bitcoin is now subject to capital gains or losses. Of course, if you decide to keep your Bitcoin transactions off the books, which nobody can force you not to do, then you may be able to get away with it, and best of luck to you. People still do tax-free trades of tangible property on s small scale. But with crypto currencies being intangible and their market steadily growing, it may become increasingly harder to trade in them under the all seeing eye of the government. The authorities will have a hard time stopping the use of virtual currency altogether, but it can get a firmer grip on merchants by forcing them to only accept Bitcoin that comes from an exchange that issues appropriate tax returns. And this is something that current Bitcoin traders have to keep in mind in the future.