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Senators move to exempt Bitcoin, crypto miners from proposed U.S. tax rules

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Re: Senators move to exempt Bitcoin, crypto miners from proposed U.S. tax rules

#21

Post by PragmaticPulp »

drcode wrote: post #4

It seems rather unprecedented that there are currently US citizens who are billionaires because of their crypto holdings, without the government having any insight into precisely who these people are. It seems like eventually the government is going to push for more onerous reporting laws to return to the usual equilibrium, where the government has at least some basic idea regarding who owns what (which I think they…

> It seems rather unprecedented that there are currently US citizens who are billionaires because of their crypto holdings,

Perhaps, but it’s not as common as it sounds. Maybe there are people out there who invested $33,000 into Bitcoin when it was $1 and then didn’t sell a single penny as it rose and crashed multiple times, but the number of people achieving billionaire status without starting out with tens of millions invested is going to be quite small.

Also, once you pass a specific threshold of wealth it doesn’t pay to flout the rules and risk increasing consequences. Famous and wealthy people have gone to prison for tax evasion in the range of millions of dollars. Trying to dodge taxes to remain a billionaire instead of paying the relatively small capital gains taxes wouldn’t be a rational move.

Anyone sitting on huge amounts of crypto worth has likely hired teams of lawyers to cross every t and dot every i to stay in full compliance rather than put their windfall at risk for some irrelevant level of taxation.

Re: Senators move to exempt Bitcoin, crypto miners from proposed U.S. tax rules

#22

Post by danielvf »

Finally found the text of the amendment:

https://www.finance.senate.gov/imo/media/doc/Wyden%20Lummis%...

The amendment is short and explicitly notes that that the following categories do not count as brokers:

(A) validating distributed ledger transactions

(B) selling hardware or software for which the sole function is to permit a person to control private keys which are used for accessing digital assets on a distributed ledger, or

(C) developing digital assets or their cor- responding protocols for use by other persons, provided that such other persons are not cus- tomers of the person developing such assets or protocols.

Re: Senators move to exempt Bitcoin, crypto miners from proposed U.S. tax rules

#23

Post by de_keyboard »

JohnJamesRambo wrote: post #19
nickthemagicman wrote: post #5

Earlier quoted context omitted.

Isn't crypto a direct threat to their power? If finance can't be tracked it can't be taxed. If it's mainstream more and more people could potentially switch to crypto, which would reduce their tax collections. Just theorizing. I have no idea if this would happen.

If they wanted to squash it they should have done it much earlier (if it was possible at all and wouldn't have just caused Streisand Effect). Now you have congressmen with laser eyes on 100k bitcoin twitter profile pics, the head of SEC taught classes about blockchain at MIT; it is way too late. The smart thing is to embrace it, the complete opposite of the Chinese government course of action. You set back the entire…

I don't think crypto can be blocked at this point - there will always be a communication channel for sharing blocks. Hell, it could be done via SMS messages if necessary.

They can significantly hurt the price but limiting reputable shops from accepting it though.

Re: Senators move to exempt Bitcoin, crypto miners from proposed U.S. tax rules

#24

Post by vmception »

ilaksh wrote: post #17

I have heard that they are aiming to make an exception for Bitcoin only but try to stop everything else. That would be a really horrible outcome because Bitcoin is by far the most outdated and least useful cryptocurrency.

nobody is trying to make an exception for just bitcoin, they are trying to fix it for the whole class of crypto and broader digital payments

Re: Senators move to exempt Bitcoin, crypto miners from proposed U.S. tax rules

#25

Post by nprz »

whateveracct wrote: post #7
nickthemagicman wrote: post #5

Earlier quoted context omitted.

Isn't crypto a direct threat to their power? If finance can't be tracked it can't be taxed. If it's mainstream more and more people could potentially switch to crypto, which would reduce their tax collections. Just theorizing. I have no idea if this would happen.

BTC can be tracked better than cash

So why are ransomware hackers never prosecuted?

Re: Senators move to exempt Bitcoin, crypto miners from proposed U.S. tax rules

#26

Post by ghostbrainalpha »

drcode wrote: post #9
whateveracct wrote: post #7

Earlier quoted context omitted.

BTC can be tracked better than cash

Sure, if you don't use mixers

Side question: How difficult is it to use a mixer?

If you have the tech skills to mine bitcoin is it trivial to find and use a mixer, or is it something requiring more specific expertise?

Re: Senators move to exempt Bitcoin, crypto miners from proposed U.S. tax rules

#27

Post by vmception »

dougSF70 wrote: post #2

Obviously HN community is down on crypto. This exemption is a sign that Bitcoin is getting closer to the mainstream of finance. Like most flanker-moves, Governments should be incorporating it in to their tax policies rather than shunning it. Cannabis is a good proxy, states can keep it illegal and not make tax revenue or they can legalize it, control it and tax it. The feds should do the same. Same for crypto, keepin…

What is most significant about this is that all crypto bills have died in committee before now. And suddenly, all at once, crypto is being debated on the floor of the whole senate in a bill that the President wanted. They are recognizing it as a distinct asset class that is able to have attributes of other asset classes. This means old money has to wake up now.

Re: Senators move to exempt Bitcoin, crypto miners from proposed U.S. tax rules

#28

Post by dougSF70 »

verdverm wrote: post #13
dougSF70 wrote: post #2

Obviously HN community is down on crypto. This exemption is a sign that Bitcoin is getting closer to the mainstream of finance. Like most flanker-moves, Governments should be incorporating it in to their tax policies rather than shunning it. Cannabis is a good proxy, states can keep it illegal and not make tax revenue or they can legalize it, control it and tax it. The feds should do the same. Same for crypto, keepin…

> Obviously HN community is down on crypto. This will earn you downvotes because it is a childish sentiment of HN. Many on HN dislike crypto in its current form of lawlessness. Regulation like this is a positive step for the ecosystem. Cryptos will still have to prove their value outside of finance to become more accepted by HN.

Point taken, this characterization is too broad.

Re: Senators move to exempt Bitcoin, crypto miners from proposed U.S. tax rules

#30

Post by vmception »

dragontamer wrote: post #16
drcode wrote: post #9

Earlier quoted context omitted.

Sure, if you don't use mixers

I'm pretty sure mixers are currently illegal and will be treated as such once the debate starts. Money laundering (aka, pooling cash together to make it harder to track) is defacto illegal by itself, even if you use the money for legitimate purposes.

What you described is not illegal by itself. Obfuscating the origin of earnings is not illegal. Although "pooling" may be regulated in other ways.

A federal "money laundering" charge requires an illicit origin, and so since successful money laundering will never have an illicit origin, the charge can only be tacked on to another indictment.

After centuries of not having much surveillance tools of the money supply, the state has had a 50 year run of the privilege of deputizing financial intermediaries to surveil the electronic payment system. Now the electronic payment system will begin to inherit the same tenets of cash. This is just a reversion to the mean.

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