Bitcoin Weekly Recap 11-11-2016
IRS Inspector General: Agency Must Closely Monitor Bitcoin
In a report released earlier this week, the inspector general for the Internal Revenue Service declared that the agency wasn’t providing sufficient oversight to police Bitcoin activity. According to the IG report, there was scant evidence that the IRS’s different departments were acting in any sort of coordinated way to monitor and police the use of Bitcoin – and taxpayers could be taking advantage of its “anonymity” to shelter their transactions from the tax agency. Such worries are the result of the IRS decision to treat digital currency as property, which then triggers capital gains tax concerns when something like Bitcoin is used to make a purchase. The agency has reportedly responded positively, but without agreeing to adopt all the IG recommendations due to limited resources.
FBI DarkNet Primer Cites Bitcoin’s Role in Illegal Transactions
The FBI recently released its DarkNet primer, after a lengthy effort to disrupt the DarkNet in an international effort it called Operation Hyperion (seriously; who names these things?). That effort was conducted in cooperation with agencies from the UK, Australia, New Zealand, Canada, and the United States, and involved making direct contact with more than 150 potential suspects who were believed to have engaged in illegal transactions on the DarkNet’s marketplaces. The released primer is designed to educate readers about the DarkNet, which is a series of deep web marketplaces where criminals can purchase everything from drugs and guns to chemical, radiological, and biological information and materials. The primer noted that “Payment for these goods and services is usually through virtual currency like bitcoin, also designed to be anonymous.”
Gemini Announces Asian Expansion
The Gemini digital currency exchange has announced that it will be bringing its Bitcoin and Ether trading services to two new markets: Japan and South Korea. Along with those trading opportunities, customers in those countries will also be able to take advantage of the exchange’s daily Bitcoin auction. The timing appears to be ideal, as South Korea is seeing a flurry of Bitcoin and blockchain action, while Japan recently announced the relaxation of a Bitcoin sales tax in a move that some analysts expect to spur more digital currency interest in that nation.
Let’s Hold Off on Predicting Trump’s Impact on Bitcoin
The United States of America recently completed its quadrennial ritual for electing a new President, and that’s naturally led to questions and prognostications about what the new Trump presidency will mean for Bitcoin – and by extension, other digital currencies as well. Some are foreseeing a period of regulatory relaxation – no doubt due to the President-Elect’s stated commitment to reducing regulations throughout the Federal bureaucracy. Others are predicting higher Bitcoin prices as they anticipate the world descending into chaos – not unlike those who once predicted that Reagan’s win would result in World War III.
The reality is that we won’t know the impact of the election on Bitcoin or digital currency policy right away, if at all. The fact is that the candidates never addressed Bitcoin. They were not asked meaningful questions about it during the debates, and offered no real insights into what, if any, value they placed upon it. For all intents and purposes, Bitcoin was a nonentity throughout the electoral cycle. For now, the Bitcoin community can continue to be cautiously optimistic as it waits to see how the new President’s Cabinet will eventually take shape, and which priorities the incoming Congress puts forth once it’s sworn in. Any predictions made right now are likely to be about as reliable as a coin flip.