Momentum remains strong for virtual currencies in light of newly introduced legislation in the House of Representatives.This week, Rep. Steve Stockman, R-Texas, introduced the "Virtual Currency Tax Reform Act," which would treat bitcoin and other algorithmic vehicles as a currency, not a capital asset or property. As such, it would not be subject to capital gains or losses.
The legislation claims it is a currency, since it acts as a medium of exchange, a unit of account and/or a store of value. It negates a recent ruling by the IRS that suggests digital currencies may be treated as property and therefore subject to capital gains taxes.In 2013, Stockman began accepting bitcoin donations for a Senate campaign, according to Forex Minute, a financial news website.The primary function of digital currencies is to preserve purchase power parity over time and across geographical barriers. Its creation involves an effective and efficient allocation of resources that acts as a proxy for general economic activity.
When the currency creation is economically feasible, its uses tend to be economically sustainable by encouraging prudent, long-term investment in land, labor and capital.Long-term investment, as opposed to short-term arbitrage activity, provides the greatest economic multiplier, causing greater employment and income growth for the masses. The value of this algorithmic currency would be determined by aggregate demand and supply globally, in lieu of appointed central bankers who can devise imprudent monetary policy that too often adversely affects the world, sometimes in very short order.
