It is now easier for you to invest in Bitcoin

A couple of developments in America have made Bitcoin look like a safer bet.

First, the US Commodity Futures Trading Commission has ruled that Bitcoin should be considered a commodity:

In First Action against an Unregistered Bitcoin Options Trading Platform, CFTC Holds that Bitcoin and Other Virtual Currencies Are a Commodity Covered by the Commodity Exchange Act

The ruling might hurt some of the exchanges, which must now register and get permission to trade in the derivatives and futures that were created around Bitcoin. But it means that Bitcoin has taken another step towards the mainstream.

The second recent development is the inclusion of the Bitcoin Investment Trust, a $US31 million Bitcoin fund, into an exchange traded fund run by ARK. Here’s the total breakdown of the portfolio:

As you can see, at just 0.36% of the ETF, Bitcoin currently makes up such a miniscule proportion of the fund that it almost isn’t there. But for a commodity that has lost almost 80% of its value in the past couple of years, that may be the exact amount of exposure investors are looking for:

The cryptocurrency is still a major headache to use and is often tied to criminal behaviour. For a while its legality was a question, and when that was established, there were fears of how it would be treated by authorities. So if you do want to engage in some Bitcoin speculation, you should take heed of a note from the Australian Tax Office:

Transacting with bitcoins is akin to a barter arrangement, with similar tax consequences.

The ATO’s view is that Bitcoin is neither money nor a foreign currency, and the supply of Bitcoin is not a financial supply for goods and services tax (GST) purposes. Bitcoin is, however, an asset for capital gains tax (CGT) purposes.

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