Bankruptcy and F.B.I. arrests of Bitcoin Exchanges have made it difficult for Bitcoin to gain trust in the real world of monetizing its value. The U.S. Securities and Exchange Commission is leery of bitcoin, reports PCWorld today.
While the CSBS emerging payments congressional liaison group meet in Chicago next week to dig deeper into the digital currency world for payments, the SEC, the final word in regulation for the U.S. securities markets, are posting negative comments on Bitcoin.
Bitcoin websites abound and Bitcoin conferences are rapidly growing. Despite solid support from entrepreneurs, there are the regulatory bodies such as the SEC who are not so quick to embrace bitcoin protocol. There have been too many issues in recent months that make the Dept. of Justice the largest holder of bitcoins due to seizure and forfeiture rules.
The SEC is concerned about the Mt.Gox exchange collapse and the missing 650,000 bitcoins that translate to the $28 million value in loss. The U.S. inability to access the Mt.Gox CEO Mark Karpeles in the U.S. despite repeated requests raises the trust issue. China’s repeated ban on its banks transferring money as a third party in receipt of bitcoin transferred to cash is a problem.
As long on the negative as the U.S. SEC finds Bitcoin, the IRS has listed it as a commodity for tax rules. Along with that listing is the inherent warning of high volatility attached to it. In addition the US Internal Revenue Service (IRS) has announced it will investigate cybersecurity crimes involving digital currencies.
The National Forensic Training Alliance (NCFTA), a non-profit organization has a one year contract for the investigative research project with the IRS. It was founded in 1997 by The FBI, Carnegie Mellon’s Computer Emergency response Team (CERT) and the National White Collar Crime Center. The cyber theft attack on Target last Holiday season drew the NCFTA in to work on that Internet theft problem with the formation of a new coalition for cybersecurity.
Despite the negativity from some regulatory groups, merchants have been embracing bitcoin payment due to its cost savings and efficiency to transfer globally. Avalara, a merchant compliance provider of cloud-based compliance solutions, provides a bitcoin tax compliance platform. The platform allows retailers, digital currency processors and wallet services to calculate sales tax and value added tax (VAT) in real time at processing. The challenge of accepting bitcoin payment for accounting record keeping is properly provided for tax reporting.
Avalara’s senior director Webb Stevens sees the continued growth of bitcoin payment use and provides a resource to meet the growing need. He states that, “With many online business processing millions of transactions per day, it’s critical that they get accurate and compliant sales tax rates for every transaction.”