Cryptocurrencies are NOT barter trade credits.
Barter trade credits are NOT crypto currencies because they are not convertible to cash nor do they have a stored value, nor is cryptography involved with trade barter credits. IRTA has obtained numerous rulings verifying that cryptocurrencies have nothing to do with the organized trade exchange industry. The U.S. barter industry that was recognized by the IRS as a legal alternative form of commerce via the Tax Equity and Fiscal Responsibility Act (TEFRA) in 1982.
The IRS’s website at irs.gov is helpful in defining digital assets and delineating the differences between barter exchange trade dollars and digital assets:
“For federal tax purposes, digital assets are treated as property. General tax principles applicable to property transactions apply to transactions using digital assets. You may be required to report your digital asset activity on your tax return.
Definition of Digital Assets
Digital assets are broadly defined as any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology as specified by the Secretary.
Digital assets include (but are not limited to):
Convertible virtual currency and cryptocurrency
Stablecoins
Non-fungible tokens (NFTs)”
The danger in the proliferation of cryptocurrencies presents a threat to the barter industry due to states reviewing their financial regulations in an attempt to regulate cryptocurrencies. The risk to the barter industry is that a given jurisdiction may unknowingly re-write their regulatory language so-tightly as to restrict or even eliminate heretofore legal barter activity in a given jurisdiction. Additionally, state regulatory definition may conflict with future federal regulations – which will add another layer of confusion for the public at large.
IRTA has successfully protected the barter industry with any previous regulatory re-write situations. And IRTA will continue to pro-actively protect the legal barter industry’s interests as it relates to new proposed cryptocurrency regulatory actions.
Please see IRTA’s Advisory Memos that cover in great detail the reasons why barter trade credits are NOT cryptocurrencies, under the ‘Library” tab, and “IRTA Advisory Memos” subtab.