While conceptually all cryptocurrencies can be exchanged for legal tender, and a handful are even loosely linked to a national debt currency, none actually are legal tender.
By contrast the King Dollar functions like a deed to certify the bearer’s whole or partial ownership of a specified amount of real, nationally-issued money, held on deposit, payable to the token bearer on demand.
In this respect, it acts like the U.S. Silver Certificates authorized to exist by Executive Order 11110.
"With the stroke of a pen, Mr. Kennedy was on his way to putting the Federal Reserve Bank of New York out of business. If enough of these silver certificates were to come into circulation they would have eliminated the demand for Federal Reserve notes."
The King Dollar promise to pay rests firmly on 100% vaulted, insured, legal tender in tangible specie form held by the King Dollar Trust as a member of the United Precious Metals Association.
Legal Tender Silver Benefits:
1: Not Taxable Property
Legal tender is a special kind of personal property, constituting government authorized coins, currencies and bank notes legally approved to serve as a medium of exchange and for payment of public and private obligations. When used as a medium of exchange, legal tender is expressly exempt from taxation, per se. However, typical cryptocurrencies are not treated this way. On March 26, 2014 The United States Internal Revenue Service (“IRS”) released Notice 2014-21, IRS Virtual Currency Guidance.
Notice 2014-21 first reaffirms that virtual currencies, such as Bitcoin do “not have legal tender status in any jurisdiction,” and then goes on to state that “[i]f the fair market value of property received in exchange for virtual currency exceeds the taxpayer’s adjusted basis of the virtual currency, the taxpayer has a taxable gain.” In other words, without legal tender status, the “means of the exchange” is regarded as a separate part of the trade and is also measured in transactions, regardless of whether the trading of other property might otherwise be tax neutral. A week after the IRS notice, it was no joke that on April Fool’s day of 2014, in an article and video interview published in Yahoo Finance, CNBC contributor Gina Sanchez lamented:
"It's a terrible thing," says Sanchez of Bitcoin's IRS categorization. "This is already a really negative story, in my opinion. What this says is every time you make a transaction, you basically have to keep track of your capital gains — every transaction."
She added in the interview portion, “That’s ridiculous. If you are using it to buy coffee, that’s ridiculous.” While property is often afforded preferential treatment in terms of long-term capital gains tax rates, short-term gains and losses are generally not granted these lower rates. Daily market value fluctuations in an actively used cryptocurrency can create an accounting nightmare, even if tax treatment itself is not adverse for a specific user. The writing is on the wall for virtual currency users. Since the release of that 2014 notice: (1) the federal judiciary has authorized the IRS to serve John Doe summons on Coinbase Inc., seeking information about U.S. taxpayers who conducted transactions in convertible virtual currency; (2) the U.S. Commodity Futures Trading Commission (CFTC) has declared that Bitcoin (like other virtual currencies) falls within the broad definition of a “commodity”; and (3) U.S. state banking regulators have signaled that financial regulatory requirements should extend to activity involving bitcoin and other virtual currencies.
Legally, transactions employing anything other than legal tender as a medium of exchange are treated as barter transactions, so what was previously a simple purchase of a good or service now requires a income gain or loss analysis under § 1001 of the Internal Revenue Code, which reads in part as follows:
(a) Computation of gain or loss.—The gain from the sale or other disposition of property shall be the excess of the amount realized therefrom over the adjusted basis …
(b) Amount realized.—The amount realized from the sale or other disposition of property shall be the sum of any money received plus the fair market value of the property (other than money) received. …
While daunting to contemplate compliance with these provisions, they nevertheless constitute the state of the law for U.S. citizens engaged in the use of cryptocurrencies.
2. Authorized Payments of Debt
In stark contrast to the bookkeeping obstacles and complexities of barter transactions, which require tracking the taxpayer’s tax basis in the non-legal-tender medium of exchange, federal law simply provides:
United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues.
U.S. precious metal minted coinage is expressly included within the definition of legal tender. Moreover, recent years have witnessed a growing trend among the several States to adopt legislation expressly recognizing U.S. minted precious metal coin as legal tender. Such action reinforces existing federal law while also constituting an exercise of each State’s reserved right under the United States Constitution which provides that “No State shall ... make anything but gold and silver coin a tender in payment of debts.”
For example, in 2011 the Utah legislature adopted the Specie Legal Tender Act by which it became the first State in more than a century to expressly recognize gold and silver coin as a legally authorized medium of exchange and to eliminate state capital gains taxes on the same. Amendments adopted in 2012 dealt with how to calculate and remit sales taxes on purchases consummated in specie legal tender. In 2014, Oklahoma adopted similar specie legal tender legislation. That same year Texas and Louisiana enacted elements of the foregoing, and Texas even authorized a state-run, gold repository. In 2017, Arizona likewise recognized specie legal tender and abolished state capital gains taxes on gold and silver. At present, five states have laws expressly recognizing gold and silver coin as legal tender, including two statutes that date from the 19th century.
The U.S. Supreme Court recognized in Lane County v. Oregon, 74 U. S. 71 (1868) that in the performance of its “essential functions” a State possesses broad powers to specify acceptable tender for the payment of taxes:
If, therefore, the condition of any State, in the judgment of its legislature, requires the collection of taxes in kind, that is to say, by the delivery to the proper officers of a certain proportion of products, or in gold and silver bullion, or in gold and silver coin, it is not easy to see upon what principle the national legislature can interfere with the exercise, to that end, of this power, original in the States, and never as yet surrendered.
Whether paying for goods or services specie legal tender is an authorized medium of exchange.
3. Allows for Choice in Currency
Functionally, the United States today has five distinct legal tender currency standards—Gold, Silver, Platinum, and base metal coins, as well as the Federal Reserve Note.
Silver is a commodity currency while a Federal Reserve Note is a debt currency.
Silver bullion stores the human energy and effort that went into creating the coin and its exchange value is dependent upon the collective desire for this stored human effort at that moment in time.
A Federal Reserve Note represents a Cabal-Owes-You from the Federal Reserve Cabal. This Cabal-Owes-You is not redeemable for any commodity, but, illogically, only redeemable for another Cabal-Owes-You promise (if you can access the private property at the (non)Federal (no)Reserve cabal.
Legally the United States code does not define a "dollar" while the courts have attempted to: “a dollar is a dollar regardless of the physical embodiment of the currency.”
In the real world, however, the kind of currency exchanged carries enormous implications.
The question needs to be posed to every individual:
How do you want to store your excess production?
In stored Energy or Energy Owed-To-You?