FWIW, I think that there is no capital-gains-type tax on currency conversions. In other words, if I take dollars and buy yen today, and the interconvert rate changes and I convert back and make a "profit," that is not considered income. If that's the case, then ecash has an excellent precedent behind it to avoid any taxes on interest, especially if that interest is, in effect, paid by increasing the inherent value of the currency.
And most of the "interest" will simply be the avoided inflation loss that would have otherwise occurred. Buying ecash may be equivalent to buying an absolutely non-inflating currency that the government can't manipulate.
Jim Bell jimbell@pacifier.com
There is a tax event that occurs when one converts from one currency to another (be it capital or current). In your example the purchase of Yen and later sale may result in a gain if the Yen appreciates, or a loss if it drops. This is a taxable event. You actually refer to the method that was used in the 14th - 16th century in europo to pay interest when it was against church (really "Church") law. Early banks would do currency or metals-to-currency trades with people and imply a rent or interest rate. It was also the begining of the discount trade bill (I'll give you 90 cents today and get your dollar in a year from the person you sold those chairs to). I'll still cling to my Ecash is curency not a currency agument as well BTW. Frank O. Trotter, III - fotiii@crl.com www.marktwain.com - Fax: +1 314 569-4906 --------------------------------------------