Riley Snyder

Reno

A Nevada state agency released a consumer guidance report for online currencies like bitcoin on Friday morning, marking another step towards legitimization for the controversial currency.

The Nevada Financial Institutions Division released the advisory in conjuncture with a group of national state organizations, spokeswoman Teri Williams said. The advisory appears to be one of the state’s first public reports on bitcoin and similar currencies.

The advisory briefly explained the function of cryptocurrencies, including bitcoin and litecoin, and listed several consumer concerns including volatility, the lack of loss insurance and regulation, potential tax issues and possible connection to criminal activities.

Bitcoin doesn’t physically exist. It is a digital-only currency that operates independent of any government or regulatory body. It helps to think of bitcoin a bit like a digital version of gold — especially now that the IRS has declared bitcoin property, subject to capital gains taxes should it appreciate in value against the dollar. Online businesses, including Overstock.com, Reddit and PayPal, as well as some physical locations have started accepting bitcoin as an alternative form of currency.

Though the technology behind bitcoin can seem complex, there’s a growing industry of companies designed to make bitcoin more user-friendly and accessible. Services like Bitpay can make paying with bitcoin easier for both merchants and consumers, and many more bitcoin-centric services exist to help with everything from managing a bitcoin wallet to computing taxes owed on bitcoin transactions.

The advisory was released in conjuncture with the Conference of State Bank Supervisors and the North American Securities Administrators Association. It will be posted on the division’s website and sent out to some industry groups, Williams said.

Jay Yerxa, a local bitcoin enthusiast, said he was overall satisfied with the content of the release, and has happy to see the government recognizing online currencies like bitcoin. However, he expressed a desire for more information, especially on what consumers and businesses will have to pay now that the IRS has ruled bitcoin as a property subject to capital gains tax.

“I think it was good to put it out, and I actually expect to see more and more releases like this, whether it’s advising consumers or advising businesses on how they should be handling these types of currencies from a tax perspective,” he said.

The division isn’t planning on issuing any additional releases in the foreseeable future, but businesses and consumers alike should be aware of the risks involved in using Bitcoin, Williams said.

“For the business community, they have to be aware of the same pitfalls ...of the currency,” she said.