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Education

That looks interesting on the one hand, but if you factor
in that you can create a new bitcoin wallet every few
seconds, you realize that it's not that easy to see anyone's
real balance. What is more, a wallet address is a code, such
as: 1BvBMSEYstWetqTFn5Au4m4GFg7xJaNVN2.
Legal ease:
It's actually quite hard to connect people to their virtual
currency wallets because wallets can be created and
operated without connecting any personal data to the
wallet. While this is illegal in some instances, it happens
often.
Is virtual currency legal?
Is bitcoin the end Yes, virtual currency is legal. Like other property (that is not

controlled), virtual currency can be owned by individuals
of payments as we for personal use without excessively complicated legal
compliance.
know them? The IRS treats bitcoin like property and requires that
owners of bitcoin report gains or losses to the IRS.
By Adam Atlas Interestingly, of the likely many thousands of people who
own bitcoin in the United States, perhaps as little as 802
Attorney at Law have actually reported ownership of that asset to the IRS
(see "Only 802 people told the IRS about bitcoin – lawsuit,"
he up-and-down hype over virtual currency by Jeff John Roberts, Fortune, March 19, 2017).
is officially on an upswing. And bitcoin just
passed $2,000 in value per coin. It is perhaps a The takeaway for readers is to keep track of your bitcoin
T good time to revisit some legal issues pertain- gains and losses so that you can accurately report them to
ing to virtual currency ‒ with the ISO's perspective in the IRS.
mind. It's possible to write a stand-alone book on each of
the topics in this article, so please note that the informa- What are the legal issues with virtual currency?
tion provided is a summary of key highlights only. Legal issues associated with virtual currency are

What is virtual currency? everywhere. The fact that virtual currency can facilitate
somewhat anonymous, instantaneous, free and even
Virtual currency is a type of unregulated, digital money international transactions for no fee means they have
that is issued and sometimes controlled by its developers, become part of the criminal landscape.
and used and accepted among the members of a specific
virtual community. The most well known virtual currency Honest, law-abiding businesses starting out in the areas of
is bitcoin. virtual currency wallets, exchanges or trading platforms
must register with the U.S. Department of the Treasury
Virtual currencies operate on a public ledger or on a private Financial Crimes Enforcement Network (FinCEN), as
ledger. In each case, the ledger refers to a master-record of well as obtain up to 49 individual U.S. state licenses. This
who owns how much of the currency. Where the ledger is process takes years and can cost millions of dollars.
public, anyone can see which virtual currency addresses
have sent or received the virtual currency and in what Setting up a national virtual currency business is similar to
quantity. A private ledger, on the other hand, is usually setting up a national money transmitter business. And the
centrally controlled and private – as the name suggests. endeavor requires a high level of technical sophistication.

Think of virtual currency as banking in the cloud. If one or What are the implications for ISOs?
another computer is down, the balances of all depositors Processing of U.S. dollars from credit and debit cards is not
are still recorded in the cloud. It's also possible to transfer going away anytime soon. (I, for one, certainly hope not).
value from one bitcoin wallet to another within seconds, Banks, regulators and the entire economy are too heavily
and without material fees, to or from anywhere in the invested in real currency (as opposed to virtual currency).
world.
At least some ISOs' current merchant clients are accepting
Bitcoin is a public-ledger distributed virtual currency. In bitcoin as a form of payment right now. However small,
plain English, that means anyone can see everyone else's that processing volume is being deducted from the card
(there are millions of accounts) bitcoin wallet balance.

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