TIME Virtual Currency

How Bitcoins Could Put Your Finances at Risk

Virtual currencies could cause you to lose "real" money, according to a new report

The Consumer Finance Protection Bureau released a report Monday concluding that virtual currencies, such as Bitcoin, offer less protection than regular currencies and can be vulnerable to outrageous mark-ups, online scams and hackers.

In addition to publishing the report, the bureau has also added a virtual currency section to their complaint page where people who have run into problems with Bitcoin or other similar currencies can register their issues.

According to Bitcoin.com, there are more than 13 million units of virtual currency around the world.

TIME apps

Apple Takes a Cautious Step Towards Bitcoin

As part of its ongoing developer conference this week, Apple has added a section to its developer guidelines regarding apps for virtual currencies, including, possibly, Bitcoin.

If you look for Bitcoin apps in the App Store right now, you’ll notice most of them are tickers that monitor Bitcoin’s exchange rate. But if you use Bitcoin yourself and want to move some of that money around, there aren’t any apps that’ll let you do that just yet.

That may all change soon, provided that transmitting virtual currencies is allowed in your neck of the woods.

Apple’s new guideline reads as follows:

Apps may facilitate transmission of approved virtual currencies provided that they do so in compliance with all state and federal laws for the territories in which the app functions.

TechCrunch co-editor Matthew Panzarino posits that Apple will probably take a cautious approach with such apps:

Does this mean Apple will start accepting bitcoin apps that transmit currency in the App Store immediately? Probably not, unless there have been rulings declaring the currency “legal” in a given region. If there is no ruling, I wouldn’t count on it.

And note that Apple doesn’t explicitly mention Bitcoin by name — just “virtual currencies,” though Bitcoin is currently the highest-profile of the virtual currencies out there.

TIME Bitcoin

The IRS Will Tax Bitcoin As a Property

The IRS has announced it will categorize virtual money as property, not as currency. The move will impose significant taxes and regulations on the fledging Bitcoin market, but will likely be a boon for investors, since trading profits will be treated as capital gains

The Internal Revenue Service announced on Tuesday that it will categorize virtual currencies like Bitcoin as property, and not as a currency, a move that will impose significant taxes and regulations on the fledging market, but will likely be a boon for investors.

Payments made to employees and workers with virtual currency will be subject to federal income tax, and any payment made using virtual currency will now have to be reported in the same way as other payments made in property.

But any gains investors make from Bitcoin will be treated as capital gains, meaning they could be subject to lower tax rates.

Bitcoin ‘miners’, who verify transactions made with the virtual currency and generate new currency using complex algorithms, will now be forced to pay income taxes on their earnings, as well as payroll taxes to any employees.

Governments are beginning to step up their regulation of Bitcoin as the virtual currency struggles to achieve legitimacy.

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