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    U.S. government takes new steps to address cryptocurrency

    | Feb 19, 2020 | Tax Controversy

    Digital currency, also referred to as cryptocurrency with examples like Bitcoin, continue to present hurdles for governments throughout the world. As discussed in a previous post, available here, the Internal Revenue Service (IRS) has made efforts to account for this asset. A recent report shows this government agency is not the only one responding to the continued presence of cryptocurrency.

    What are other government agencies doing in response to cryptocurrency?

    One issue involves the simple cost to create cryptocurrency. Cryptocurrency is an expensive form of currency. Why? In order to create this form of currency multiple computers are running multiple algorithms. This calls for enormous amounts of computer power, massive amounts of electricity leading to a big cost. According to some estimates, at one-point last year it actually cost more to create a cryptocurrency then it did to buy it. The estimate put the creation cost at $4060 and the cost of purchase at $3500.

    Another issue involves how cryptocurrency is impacting the value of the U.S. dollar. The United States Office of the Director of National Intelligence wrote a job listing calling for researchers to help dig into this question. One potential resolution: developing a digital dollar. Experts are working on proposals for the potential framework to move forward with such an offering.

    What does this mean for taxpayers?

    It means the government continues to watch cryptocurrency. It is developing a plan not only to deal with potential taxation and regulation of this form of currency but may move to join the market.

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