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Regulations - Texas Bitcoin Conference Panel

The Texas Bitcoin Conference recently took place in Austin, Texas on October 28 to 29. Amongst all the talks and panels, we found the 4-person panel discussing Regulations to be the most interesting.

Panel Members

The panel had 4 members and a moderator.

Sheldon Weisfeld – CEO of CoinVault ATM
Sheldon is a seasoned entrepreneur and business development guru. Sheldon constantly seeks the opportunity to solve industry problems with novel solutions.

Robert Long – Lawyer
Robert Long previously served as a senior attorney at the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA), as well as a federal prosecutor with the U.S. Department of Justice (DOJ).

Daniel Winters – Founder of Global Tax
Daniel Winters, founder of Global Tax, has presented on Bitcoin & Taxes at the Texas Bitcoin Conference and the New York Bitcoin Center. Daniel has also published articles on Bitcoin and taxes and was recently interviewed by Bloomberg regarding New Jersey's tax treatment of Bitcoin transactions.

Jason Seibert – Lawyer, ICO Advisor
Jason and his practice covers: securities law, intellectual property rights (trademark and trade secret infringement), cryptocurrency regulatory compliance, and various contractual disputes.

Paul Snow – Chief Architect at Factom (Panel Moderator)
A leader in the open-source technology arena, Paul brings more than three decades of software development experience to his position at the helm of Factom.

Topics brought up by each panel member

  1. Decision to either comply or not comply with regulation
  2. Bitcoin income is taxable income and compliance
  3. Is your ICO a security?
  4. Compliance component of KYC/AML

Cryptocurrency regulation is currently in a gray area with many questions still unanswered, but we all know and fully expect the relevant government bodies to eventually start policing activity in this sector. The only question is, "When?".

A couple of the important and interesting points from the panel are noted below:

  • Bitcoin is defined to have value and a virtual currency by FinCEN. The guidance for Bitcoin is starting to come out but regulators are still trying to figure it out.
  • Bitcoin is a commodity under the CFTC but for IRS purposes it’s a type of property. For tax purposes, what's important is what you bought it for and what you sold it for.
  • Howey Analysis:
    1. Is there an investment of money?
    2. is the money going into a common enterprise?
    3. Is there a reasonable expectation of profit
    4. Is the profit through the managerial efforts of other?
  • Many companies deliberately choose to operate and hold their token sale out of the USA and exclude US investors in an attempt to not be regulated by the SEC.
  • As a consumer/investor, it does not matter where and how you’ve acquired your coins, you have made an investment in a capital asset; the dollar value of what you paid is the most important factor.
  • The IRS has limited staff and they tend to focus on high profile things to scare people into enforcement because they really don’t know what you’re doing most of the time with your bitcoin transactions. US based virtual currency exchanges do not send 1099 records of your trades to the IRS. However, you still have the obligation to report your trades.

These are again just a few of the points that were discussed during the 45-minute panel. We strongly recommend you watch the full panel discussion because government bodies are finally moving to try and regulate this space.