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The irs provides a non-exhaustive definition of digital asset which I think seems to provide the needed narrowing of definition. https://www.irs.gov/businesses

The irs provides a non-exhaustive definition of digital asset which I think seems to provide the needed narrowing of definition. https://www.irs.gov/businesses/small-businesses-self-employed/digital-assets https://www.irs.gov/businesses/small-businesses-self-employe...

EGreg 4y ago
A non-exhaustive list does nothing to narrow a definition. A bank account representing dollars in the account is by definition storing your digital assets. Did you receive dollars in an electronic account?
- woodruffw 4y ago
  Per the link: > Digital assets are not real currency (also known as “fiat”) because they are not the coin and paper money of the United States or a foreign country and are not digitally issued by a government’s central bank.
  - EGreg 4y ago
    Correct. Your local bank’s balance is none of those, either. Neither is your Venmo balance or your VISA / Mastercard balance from the issuing bank.
    - woodruffw 4y ago
      I don't know why you think that. The Fed's term for commercial balances is "Commercial Bank Money," and it is absolutely issued by the central bank. The fact that it's tracked on digital ledgers rather than paper ledgers and cotton bills does not change that.
      - EGreg 4y ago
        I think that because it’s actually true. Most assets in circulation that we use as money are not fiat! The central bank issues money to banks. The treasury may mint coins or print paper money (the greenback). Those are legal tender (which btw the Supreme Court of the United States struck down the Legal Tender Act as unconstitutional, but President Grant stuffed the court with two justices and they reversed this ruling in their very next session). If your federal government issues a CBDC or mails checks to you drawn on the treasury, that is fiat. If your local bank employe an underwriter to review your business and approve a LOAN to you, they just create a balance within the bank. The existence of the FDIC and Federal Reserve does NOT make this money fiat. Anyway, your credit card balance is NOT legal tender. No one has to accept it as payment of a debt. The only reason it is accepted is that merchants are willing to contract with Mastercard and your issuing bank. But they don’t have to. Many merchants decline the payments. Same with Venmo and all those other systems. Sorry but it’s NOT fiat. You may deposit fiat into a bank, and it will give you a balance. Their terms probably state that they can lend out your money and not have an obligation convert it all back to actual fiat currency (eg cash and coins). The bank may use the Automated Clearing House system (ACH) run by the Federal Reserve to send money to, say, Venmo or PayPal or another bank. Those companies then give you a balance. But that isn’t fiat, either. Bitcoin is just a decentralized PayPal. And the internal credits are a floating exchange rate instead of maintaining a peg. You buy some amount of a digital asset — whether denominated in dollars or bitcoins — and it is stored on a ledger. That’s all. Whether the ledger is inside PayPal or on a public blockchain is irrelevant. If you received a payment inside Venmo, you received some amount of a digital asset. You would owe income taxes same as if you received an in-kind payment in spaghetti!
        woodruffw 4y ago
        Whether or not it's legal tender, or fiat, or "greenbacks" has nothing to do with whether it's currency for the purpose of taxation, which is the sole object of interest in this conversation. The IRS considers the funds you have on deposit with a bank (in the form of Commercial Bank Money) to be currency for the purpose of taxation. They also consider the funds your have on "deposit" (in the form of Nonbank Money) with non-bank financial services to be currency for the purpose of taxation. Finally, they consider your digital assets, defined above, to be property for the purpose of taxation. Edit: to be maximally precise, digital assets are considered non-currency property.
        EGreg 4y ago
        Whether it's currency or non-currency property, the question is whether you received digital assets. If you received a digital balance in a bank account, you've received digital assets. They are not issued by a central bank nor are they fiat. So by your definition you gave, they are in fact digital assets, and you have to check the checkmark! That's my point. You can try to argue that digital bank balances in a database are not digital assets, but I wouldn't risk it.
- sbelskie 4y ago
  A non-exhaustive list can exclude things (the list from the IRS excludes fiat currency) and so obviously can narrow a definition.
  - EGreg 4y ago
    If a non-exhaustive list leaves something off, that doesn't automatically mean it isn't reflected in the more general category. By definition, it's not exhaustive, so if you get the pattern wrong, too bad. Or maybe there is no "right" answer and they make it up as they go along. Here is a non-exhaustive list of Tasty Foods: Fruits, Vegetables, Meat. If you had a Tasty Food, you have to report it. You had fish. Should you report it?

EGreg 4y ago

A non-exhaustive list does nothing to narrow a definition. A bank account representing dollars in the account is by definition storing your digital assets. Did you receive dollars in an electronic account?

woodruffw 4y ago
Per the link: > Digital assets are not real currency (also known as “fiat”) because they are not the coin and paper money of the United States or a foreign country and are not digitally issued by a government’s central bank.
- EGreg 4y ago
  Correct. Your local bank’s balance is none of those, either. Neither is your Venmo balance or your VISA / Mastercard balance from the issuing bank.
  - woodruffw 4y ago
    I don't know why you think that. The Fed's term for commercial balances is "Commercial Bank Money," and it is absolutely issued by the central bank. The fact that it's tracked on digital ledgers rather than paper ledgers and cotton bills does not change that.
    - EGreg 4y ago
      I think that because it’s actually true. Most assets in circulation that we use as money are not fiat! The central bank issues money to banks. The treasury may mint coins or print paper money (the greenback). Those are legal tender (which btw the Supreme Court of the United States struck down the Legal Tender Act as unconstitutional, but President Grant stuffed the court with two justices and they reversed this ruling in their very next session). If your federal government issues a CBDC or mails checks to you drawn on the treasury, that is fiat. If your local bank employe an underwriter to review your business and approve a LOAN to you, they just create a balance within the bank. The existence of the FDIC and Federal Reserve does NOT make this money fiat. Anyway, your credit card balance is NOT legal tender. No one has to accept it as payment of a debt. The only reason it is accepted is that merchants are willing to contract with Mastercard and your issuing bank. But they don’t have to. Many merchants decline the payments. Same with Venmo and all those other systems. Sorry but it’s NOT fiat. You may deposit fiat into a bank, and it will give you a balance. Their terms probably state that they can lend out your money and not have an obligation convert it all back to actual fiat currency (eg cash and coins). The bank may use the Automated Clearing House system (ACH) run by the Federal Reserve to send money to, say, Venmo or PayPal or another bank. Those companies then give you a balance. But that isn’t fiat, either. Bitcoin is just a decentralized PayPal. And the internal credits are a floating exchange rate instead of maintaining a peg. You buy some amount of a digital asset — whether denominated in dollars or bitcoins — and it is stored on a ledger. That’s all. Whether the ledger is inside PayPal or on a public blockchain is irrelevant. If you received a payment inside Venmo, you received some amount of a digital asset. You would owe income taxes same as if you received an in-kind payment in spaghetti!
      - woodruffw 4y ago
        Whether or not it's legal tender, or fiat, or "greenbacks" has nothing to do with whether it's currency for the purpose of taxation, which is the sole object of interest in this conversation. The IRS considers the funds you have on deposit with a bank (in the form of Commercial Bank Money) to be currency for the purpose of taxation. They also consider the funds your have on "deposit" (in the form of Nonbank Money) with non-bank financial services to be currency for the purpose of taxation. Finally, they consider your digital assets, defined above, to be property for the purpose of taxation. Edit: to be maximally precise, digital assets are considered non-currency property.
        EGreg 4y ago
        Whether it's currency or non-currency property, the question is whether you received digital assets. If you received a digital balance in a bank account, you've received digital assets. They are not issued by a central bank nor are they fiat. So by your definition you gave, they are in fact digital assets, and you have to check the checkmark! That's my point. You can try to argue that digital bank balances in a database are not digital assets, but I wouldn't risk it.
sbelskie 4y ago
A non-exhaustive list can exclude things (the list from the IRS excludes fiat currency) and so obviously can narrow a definition.
- EGreg 4y ago
  If a non-exhaustive list leaves something off, that doesn't automatically mean it isn't reflected in the more general category. By definition, it's not exhaustive, so if you get the pattern wrong, too bad. Or maybe there is no "right" answer and they make it up as they go along. Here is a non-exhaustive list of Tasty Foods: Fruits, Vegetables, Meat. If you had a Tasty Food, you have to report it. You had fish. Should you report it?