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The Current Federal Tax Treatment of Cryptocurrency

In Bitcoin, Crytpocurrency by Jason Freeman and Jason CarrLeave a Comment

In 2014, the IRS announced that the use of convertible virtual currency to pay for goods or services in a real-world transaction has tax consequences.[1]Those consequences may result in a tax liability for the consumer. As a result—particularly in light of the IRS’s efforts to crackdown on failures to report cryptocurrency transactions, see here and here—it’s important to understand how cryptocurrency …

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Initial Coin Offerings (“ICO”) Regulation

In Bitcoin, Blockchain, Crytpocurrency by Jason Freeman and Spencer BanksLeave a Comment

Cryptocurrency[1] regulation has evolved into a complex patchwork.  There is currently no central federal regulator; instead, several agencies have taken an active role in developing the regulatory framework—though not all regulators have taken consistent approaches in their classification of cryptocurrency and related investment vehicles. This regulatory landscape can present challenges for companies seeking to employ virtual currency instruments.  Perhaps nowhere …

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Cryptocurrency Regulation: Recent Developments

In Blockchain, Crytpocurrency by Jason Freeman and Jason CarrLeave a Comment

Regulators are actively taking a role in the development of virtual currency-related markets and products. Earlier this month, for example, the Securities and Exchange Commission (SEC) initiated a broad investigation into companies and professionals behind a number of recent initial coin offerings (ICOs).[1] See our prior posts on ICOs, such as here. The December 2017 launch of the first cryptocurrency futures …

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Enforcement Actions: Virtual Currency Exchanges

In Blockchain, Crytpocurrency by Jason FreemanLeave a Comment

The Financial Crimes Enforcement Network (FinCEN), working with the U.S. Attorney’s Office for the Northern District of California, recently assessed a $110,003,314 civil money penalty against BTC-e a/k/a Canton Business Corporation (“BTC-e”) for willfully violating U.S. anti-money laundering (AML) laws under the Bank Secrecy Act (“BSA”).  The enforcement action relates to BTC-e’s convertible-virtual-currency-exchange operations.  And as FinCEN’s press release indicates, …

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SEC: Virtual Tokens Issued in Blockchain-Based ICO’s may be “Securities”

In Blockchain, Crytpocurrency by Jason Freeman1 Comment

The Securities & Exchange Commission (“SEC”) recently issued a Report finding that DAO Tokens—digital, Ethereum-based tokens issued to investors—should be classified as securities under the Securities Act of 1933 (“Securities Act”) and the Securities Exchange Act of 1934 (“Exchange Act”).  The Report emphasizes the risks of emerging technologies and investor interfaces when it comes to compliance with federal securities laws.  …

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The IRS Believes Bitcoin Users are Evading Taxes, Tests Boundaries of John Doe Summons Procedure

In Bitcoin, Crytpocurrency by Jason FreemanLeave a Comment

The IRS recently filed a petition with a federal district court in the Northern District of California requesting leave to serve a “John Doe” summons on Coinbase, Inc., a U.S.-based Bitcoin exchange.  The summons would require Coinbase to turn over all of its records related to every convertible virtual currency transaction from 2013-2015—that information would include the names of owners, …