Microsoft Points have now been swapped over for real currency.
The good news is that the transition to real currency eliminates any confusion that may stem from conversion between Microsoft Points and real currency. Unfortunately, the switch also means that purchases made with real currency will be charged local sales tax.
For now, any points balance left in Xbox Live accounts will remain valid (and tax free for purchases) until June 1, 2015. Points cards will still be redeemable and be converted into real cash. Points cards will be phased out at retail and replaced with Xbox Gift Cards at the end of this year.
For more information about the changeover, Microsoft's put up a handy-dandy FAQ on the Xbox Live support page.