The U.S. federal tax framework for virtual currency remains ambiguous. In the face of emerging technology, the IRS has taken a cautious approach using a “best guess” tax treatment until the technology is sufficiently mature. In particular, for this rapidly evolving ecosystem, a careful regulatory approach is prudent. Regulations that are hastily written have the chance of stifling innovation or force companies to seek jurisdiction elsewhere. However, legal ambiguity and uncertainty in this wait and see approach may have a negative impact on startup investment and impact individuals honestly using the technology. This paper looks at IRS statements and previous actions in the space while highlighting current gaps that must be filled. Until the IRS can give more complete tax guidance, Congress should provide safe harbor legislation so users and businesses are not unnecessarily penalized for attempts to comply with their tax liabilities.