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17 Fla. St. U. Bus. Rev. 109 (2018)
The Problematic Tax Treatment of Cryptocurrencies

handle is hein.journals/fsubr17 and id is 116 raw text is: THE PROBLEMATIC TAX TREATMENT OF CRYPTO CURRENCIES ROLAND WEEKLEY* I. IN TRODU CTION .................................................................. 109 II. VIRTUAL CURRENCIES DEFINED ........................................ 112 III. CRYPTOCURRENCIES DEFINED ........................................... 114 A. The Advantages and Disadvantages of Bitcoins ......... 118 B. Blockchain's Significance as a Game Changer ........... 119 IV. THE SHIFTING NATURE OF BITCOINS ................................. 121 V. THE SERVICE DECLARES BITCOINS PROPERTY .................. 124 A . B itcoins as Property ..................................................... 124 B. Bitcoins Function as Currency and Commodity ..... 126 1. Bitcoins as Currency ............................................. 126 2. The Trouble with Bitcoins ..................................... 127 a. G ains and Losses ............................................. 127 i. Alternative Approaches to Bitcoin Taxation 131 b. Gifts and Charitable Donations of Bitcoins .... 134 c. Bitcoins as Tax Havens ................................... 136 VI. OTHER AGENCIES GET IT RIGHT ........................................ 138 A . FinCEN 's Regulations ................................................. 138 B . B itcoins as Securities .................................................. 141 C. The U.S. Commodity Futures Trading Commission.. 144 V II. C ON CLU SION ...................................................................... 146 I. INTRODUCTION Thanks to the revolutionary technology underlying cryptocurrencies,1 people who use them are no longer forced to pay the high transaction costs that banks require.2 Virtual currencies, Bitcoin in particular, have gained infamy in recent years due to their use on the dark web.3 Although people use virtual currencies * Tax LLM expected 2018 University of Florida Levin College of Law. I would like to thank Professor Linda Jellum for taking the time to work with me on this paper. Her help and guidance were crucial to this paper. 1. Cryptocurrencies are a type of virtual currency where cryptography is used to generate units of value. See infra Part III. 2. Noelle Acheson, Why Use Bitcoin?, COINDESK, http://www.coindesk.com/ information/why-use-bitcoin/ (last updated Jan. 28, 2018). Recent fluctuations in the price of Bitcoin have led to higher transaction costs, but Bitcoin remains cheaper in several parts of the world. 3. See generally KRISTIN FINKLEA, CONG. RESEARCH SERV., R44101, DARK WEB (2017) (giving a detailed explanation of the dark web).

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