Virtual currencies, like their fiat counterparts, may be used for many purposes, including to purchase goods and services, like a cup of coffee. In 2014, the IRS determined that it would treat convertible virtual currency as property, thus subjecting it to capital gain/loss and investment income tax treatment and associated reporting requirements. This treatment hinders the use of virtual currencies as a method of payment, subjecting them to applicable sales tax as well as the calculation and reporting of capital gain/loss on each transaction and hindering the use of virtual currencies to facilitate micro-payments, another promising use case for virtual currencies to reach a wide spectrum of potential participants in the financial system. The Chamber of Digital Commerce supports policies that treat virtual currencies fairly – as an alternative currency. As such, convertible virtual currencies should not be subject to capital gain or investment income tax, or burdensome tax regulation that would force virtual currency users to calculate and pay gain or loss when transacting with virtual currencies.
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