Exactly that - they can pass as much legislation as they want but if they can not enforce it then it is irrelevant. This just sums up nicely how far out of touch State legislators are - they have no understanding of the real world.

It's hard to know the extent to which most legislators are "out of touch" - their apparent stupidity always seems to work out in their favor (see link).

The irrelevant laws still give the State the ability to criminalize any target at will. I see the "seizure" of the Mt. Gox Dwolla accounts in this light. Others say that Gox should have known they were in violation of blah blah. Maybe so, but the US tax code, for example, is so opaque that not even the legislators know how big it is (and that's just one cluster of laws). How many laws did someone break today?... that's for the State to decide, whenever the mood strikes them.

Teaser: "So, depending on whom you ask, our elected representatives are of the opinion that this particular section of the United States Code is somewhere between 2,500 and 2,500,000 pages long."

http://www.trygve.com/taxcode.html

Put me down for "unregulated BTC".           

From the (mind-numbing) government of Canada tax site:

"Deemed proceeds of disposition

    This is an expression used when a person is considered to have received an amount for the disposition of property, even though the person did not actually receive that amount."

... and ...

"Eligible amount of the gift

    Under proposed changes, this is generally the amount by which the fair market value of the gifted property exceeds the amount of the advantage, if any, received for the gift.

    Under proposed changes, the advantage is generally the total value of all property, services, compensation, or other benefits to which you are entitled as partial consideration for, or in gratitude for, the gift. The advantage may be contingent or receivable in the future, and given either to you or a person not dealing at arm's length with you.

    Under proposed changes, the advantage also includes any limited-recourse debt in respect of the gift at the time it was made. For example, there may be a limited-recourse debt if the property was acquired though a tax shelter that is a gifting arrangement. In this case, the eligible amount of the gift will be reported in box 13 of Form T5003, Statement of Tax Shelter Information. For more information on gifting arrangements and tax shelters, see Guide T4068, Guide for the Partnership Information Return (T5013 forms)"

Sorry for the emetic. My point was just to illustrate that the State is very aware of how to turn commodities into fiat equivalents whether or not the parties to the transaction actually used fiat, and indeed whether or not a transaction even took place!

http://www.cra-arc.gc.ca/tx/ndvdls/lf-vnts/dth/glssry-eng.html#proceeds

Of course, rules vary from one jurisdiction to another, but when one State entity finds a way to make a tax grab then others tend to follow suit.

What does truth have to do with it? We are talking tax regulations.     

Amazingly, the tax authorities see barter transactions as being taxable.

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Bartering-Tax-Center#

Perhaps less amazingly, they see everything as being taxable.

Good digging - that seems reassuring. I've been digging also and I'm finding that the deeper I go the deeper it gets. Part of the problem is that I'm flitting back and forth between US and Canadian sites.

The Canadian tax agency says, in part:

"The Department takes the view that barter transactions are within the
purview of the Income Tax Act."

...

"Where the taxpayer is an employee, e.g.
a mechanic, occasional help given to a friend or neighbour in exchange for
something would not be taxable unless the taxpayer made a regular habit of
providing such services for cash or barter."

http://www.cra-arc.gc.ca/E/pub/tp/it490/it490-e.txt

... which I find completely unhelpful. The "regular habit" would have me looking over my shoulder for the tax man whenever I thought about helping a friend or neighbour (Canadian spelling), which is perhaps exactly their intention.

Is my habit irregular? Is it a habit at all? Only the taxman knows.

Anyway, there is evidence to support your position (equal trade means no tax implications) and there is evidence to support more sinister interpretations (there are no even trades, and everything is taxable unless the taxman decides not to bother).

The Canadian guideline is old, and was written long before crypto-currencies appeared - it was written to make a tax grab against "barter clubs" which were springing up at the time and have since gone out of fashion, perhaps because of the government response. The "barter exchange" referred to in the American guideline is perhaps the same phenomenon.

How this will all relate to BTC interactions is up to taxmen everywhere to decide. Run for the hills!       
 

I say dont do any deal with fiat currency, just keep trading with each other using bitcoins

You Sir are exactly what the community needs.

Good on you.

No - for some reason they are want to involve state regulation at the development level as Gavin was involved.

What they will want is every Wallet registered to a person address - the ability to cease accounts, funds trace every transaction. Basically they want to copy the current banking system because that worked so well and foist it upon us.

Can you quote me a source? I have never seen any regulatory body mention that. What has been stated is regulation of exchanges. Which is regulation of fiat currency. Just as you are required to pay a tax on any profit made from selling anything. (U.S. citizens)

cool. I just no evidence of measures that invasive. Although, who knows what the future holds?