Many people in cryptocurrency don’t want to report their finances to the IRS and this is the reason they are in cryptocurrency in the first place. I get it. I really do. The system we have is not the one that could have been envisioned in 1776 and it is no where near what the Founding Father’s set up for us. But, as humans, we have taken what we were given and run with it. So, we’re here. One of the biggest reasons for blockchain based money is, “how do we fix what we have?”
There are plenty of other people, like me, who are what I call “rule followers”. Not because we love the way the government works or because we really like paying taxes, but because we look at things from the perspective of, “The less suits sending me letters and knocking on my door, the better”. So, we report everything we’re supposed to. We don’t play games and we seek out the rules and find ways to make them work for us. Yeah, we will pay tens of thousands more in taxes each year, but we also won’t end up with new bracelets and lots of suits in our lives.
It turns out Wikimedia is run by rule followers too. They have hesitantly been paying attention to Bitcoin and either toying with the idea or literally playing with it since 2011. Recently, they decided to start taking Bitcoin for donations.
This is great! It will literally give visibility and credibility to millions of people who would otherwise ignore or avoid Bitcoin altogether. Also, it means that they figured out it is possible to accept, use, and cash out Bitcoin completely legally.
The IRS ruling roughly states that Bitcoin and crypto currencies are property, not currency. Technically, according to the constitution, they couldn’t rule crypto as currency because the federal government is the only body that has the power to create currency in the US (never mind the legality of exchanging other country’s currencies to USD and back).
Many people think this is a bad thing, but I don’t see it that way. Yes, it is a pain in the ass to calculate each transaction’s value to USD. That is if you’re doing it manually. If you are using a tool like CryptoWalletReport.com*, it’s automated and easy to do.
Likely, Wikimedia talked to the IRS and they said one of two things:
- Cash it out immediately to USD and then the value of the crypto doesn’t matter to us
- Keep it in BTC and calculate your capital gains, pay taxes on that.
Since Wikimedia is a 501c3, they likely went with option 1 and are treating the crypto like the Salvation Army or GoodWill treats clothing, as temporary value containers until they can get cash out.
If they can do this, track their transactions and show the reporting that it came in and went out the same day, then they are good to go. Nevermind the implications to the value of BTC as they cash out every transaction. I guess the rest of us will just hope that those donors will go straight back to their exchanges and re-up their wallet for what they donated.
*Disclaimer: I built CryptoWalletReport.com
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