Bitcoin was illegal in California? Whoops, governor fixes that 165-year-old money law California Governor Jerry Brown has signed off on a law legitimizing Bitcoin and other cryptocurrencies for use in the state. The governor rubber-stamped AB 129, enacting what legislators say is a much-needed overhaul of the state codes on currencies. Under the new law, digital currencies and community currencies are …
iIf they don't allow it, they can't tax it.
Not true! The States and the Feds tax all sorts of illegal things.
For example, many states sell marijuana "tax stamps" even though weed is illegal to posses in those states. Furthermore, there's a line item on the IRS 1040 form (line 21, "taxable income not reported elsewhere") where you are expected to report your gains, ill-gotten or otherwise, which were not reported anywhere else. (See also IRS Publication 525, Page 31 - "Illegal Activities".)
Need I remind you that that's how they got Capone?
Bit like the law which required London cabbies to have a bale of straw in the boot repealed in the 1960ies, long after anyone was worried about starving cab horses. Ultimately that kind of law would prevent any kind of exchange or contract from being legal unless one side paid legal tender currency to the other.
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