On Tuesday, a tax agency revealed its plans to regulate the Bitcoin to an extent. The Los Angeles Times said the Internal Revenue Service will be ruling Bitcoin as a property and will be taxed in accordance to its codes on property transactions as it does not consider it as legal tender. The announcement of the federal agency means that workers who get paid in the virtual currency will be subject to federal payroll and income taxes. Moreover, the paper said the IRS will allow Bitcoins to be treated as capital assets and will be subject under the same way as stocks and bonds are regulated.
Senator Thomas Carper is reportedly on board with the IRS' latest move, and applauded the agency for its growing response to regulate the virtual currency. The LA Times said Carper is one of the staunch supporters of regulating virtual currencies. He said in a statement, "(The guidance) provides clarity for taxpayers who want to ensure that they're doing the right thing and playing by the rules when utilizing Bitcoin."
Because of the growing popularity of Bitcoin, the virtual currency has attracted lawmakers across the globe for its potential use to propagate and encourage illegal activities like money laundering, drug trafficking and even child pornography. Since Bitcoin is not controlled by any central bank or government, the LA Times said the need for more oversight on the virtual currency has increased as it has been at the center of several scandals.
Users of black online marketplace Silk Road had used Bitcoins to purchase drugs and and even guns-for-hire until the government shut it down and arrested the founder last year. Popular virtual exchange Mt Gox shuttered unexpectedly, to the ire of its creditors, and claimed in their bankruptcy filing that around 850,000 Bitcoins worth a little under $500 million were deemed missing.
