Bitcoin’s status under the law is still developing, with new changes coming every day.
There are several important considerations when deciding whether to use or accept Bitcoin for your business:
Although the IRS determined altcoins was “property” under the law, precedent is still evolving on that issue and there are legislative measures in place to change this decision. Until we know exactly how altcoin will be treated by the government, it is difficult to ascertain its legality in any context.
Remember that alternative currency is no substitute for proper “Know Your Customer” (“KYC”) protocols. If accepting altcoins as payment, some other form of KYC procedures should be put in place for these customers to ensure, first of all, that customers of are of proper age and secondly, that the customer has not been banned or is otherwise not eligible to receive the site’s products or services.
When accepting altcoins, it is important to implement clear refund policies. Will customers be refunded in altcoins if they pay in altcoins? Will all payments immediately be converted to cash value? Customer disclosure is key as with all issues involving trade practices.
This one is simple: Cash out frequently. The volatility of alt currency can result in spikes; both up and down. The more often a business cashes out altcoins payments for real money, the lower its risk of loss through value fluctuations.
Pay all required taxes, and stay current on how altcoins are being treated for accounting purposes. This is all new, and the details are still being sorted out at the state and federal levels. Predictably, the IRS is making use of altcoins complicated, so get professional tax advice on how payments should be treated for accounting purposes. Take a conservative approach, and do not use Bitcoins to avoid paying taxes that would otherwise be due.
Recognize that there is some risk involved in any novel business model or payment method. Follow basic security standards and keep a watchful eye on the value of any altcoins you may accept.