Virtual currency occupies a distinct regulatory category that most tax authorities worldwide define as digital representations of value functioning as mediums of exchange, units of account, or stores of value, yet lacking legal tender status in any jurisdiction. The Internal Revenue Service established the foundational framework in Notice 2014-21, classifying virtual currency as property for federal tax purposes rather than currency, a designation that fundamentally shapes reporting obligations and tax treatment for millions of holders and businesses.
Understanding this classification carries immediate consequences. Property …