It’s official. Coinbase users will now be charged cash equivalence fees by their credit card company.
Governments all around the world appear to be cracking down on tax evasion and anonymity as it relates to cryptocurrency. Banks now want a piece of the pie too. It appears the way to get in on the action is by changing Merchant Category Codes associated with Coinbase transactions.
A Merchant Category Code is a four digit number assigned to merchants. It allows businesses to be categorized by the types of goods and services they sell. It’s a way for tax agencies like America’s Internal Revenue Service and Canada’s Canada Revenue Agency to keep tabs on businesses.
A cash equivalence fee is an immediate charge to a credit card that acts as proof of purchase of another secure financial instrument. A secure instrument could be foreign currency, poker chips lottery tickets, traveler’s cheques and now, cryptocurrency.
Notice the transactions below. One from the end of 2017 and the other confirmed just this week. Both purchases for $1,000 in cryptocurrency. The first stands alone. The second comes with a $10 cash equivalence fee.
Add all of this to the fact JP Morgan Chase, Bank of America and Citigroup are now barring customers from purchasing cryptocurrency with credit cards.
It looks like the battle between centralized governments and decentralized digital economies is really heating up. Governments are gaining ground, even as they scramble to put together tax policies relating to cryptocurrency.
The crypto world is on the edge of its seat as the G20 summit inches closer. The globe’s top economic powers appear set to discuss cryptocurrency regulation in detail next month.
While in one sense regulation legitimizes bitcoin and its cousins, the cryptocurrency market is currently experiencing its largest crash dating back to 2013.
At one point on Monday, bitcoin’s price sat at a three-month low of under $7,000 US.
Don’t necessarily count on this current crash coming to an end right away. The duration of Bitcoin’s longest downtrend was exactly 411 days.
It’s quite clear now that cryptocurrency still has a long way to go in terms of mass adoption.
Featured image from Shutterstock.
Last modified: May 20, 2020 9:07 PM UTC