Forbes: Bitcoin Online Payments Face Sudden Barrier from Regulators

Libra Coin News
Wed, 08/07/2019 - 08:32
Yuri Molchan
Bitcoin is again getting to be used as a money substitute, instead of being a store of value but it does not seem to be all that simple
Cover image via www.123rf.com
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Over the few years recently, Bitcoin has been mainly used as a store of value, instead of means of payment as it was meant to be in the whitepaper.

Currently, Bitcoin daily payments are making a comeback due to the appearance of the Lightning Network. This protocol allows users to enjoy low-priced BTC payments.

However, US regulators, as reported by Forbes, qualify Bitcoin payments as something to be taxed.

BTC payments through special apps

Customers can pay for goods and services with their Bitcoin using special smartphone apps, such as Fold and Bitrefill or Flexa. The latter was used by the Winklevoss twins to set up crypto payments in such giant chains as Whole Foods, Starbucks and several others.

Those apps work, using the Lightning Network. The team keeps improving the technical aspects of those operations. However, the US and many other countries consider crypto payments as taxable events, as if those were Bitcoin trading operations on exchanges.

Basically, whether you buy a house or a pizza with Bitcoin, you have to pay taxes by the same scheme. This issue may stand in the way of the global Bitcoin adoption in the near future.

What crypto industry top figures have to say about this

The chief executives of Bitrefill and Shapeshift went into this issue this year during the Bitcoin 2019 event that took place in San Francisco. Erik Voorhees, from Shapeshift, expressed an opinion that taxing BTC payments may discourage a big number of crypto users and that this issue may eliminate potential good points of the BTC cashless system.

Voorhees also pointed out that this problem can hardly be solved by technical innovations.

A solution on the horizon

Coin Center is trying to solve the problem with the legislation by suggesting a bill that would allow people to spend up to $600 in BTC without having to pay taxes on capital gains on those.

About the author

Yuri is a journalist interested in technology and technical innovations. He has been in crypto since 2017. Believes that blockchain and cryptocurrencies have a potential to transform the world in the future. ‘Hodls’ cryptocurrencies. Has written for several crypto media. Currently is a news writer at U.Today.