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

marketwatch.com

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

#41

Post by KingMachiavelli »

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's not a big deal. It isn't that different than finding a significant amount of oil/precious metals on your land. As soon as you try to extract the value of the resource/crypto, the government will know. If you just sell it, the crypto exchange will report it to the IRS. If you try to trade/buy goods with it directly, any assets you get will create a paper trail that the IRS will eventually discover.

Consider the fact that illegal enterprises like drug dealers will pay a premium to launder the money (probably >=10%) and then pay taxes on the remainder. If you have the gains legally (crypto), it makes little sense to not just pay the normal taxes.

Also, if you made a significant amount of money on any crypto, you probably held it for more then a year at which point to capital gains tax is probably at most only 15% (Anyway the taxes are basically nothing compared to the benefits of having 100% clean money that can be reinvested and make 10-15% in the stock market.

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

#42

Post by drcode »

PragmaticPulp wrote: post #21
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 milli…

Agree with all of this, except that I don't think these folks are currently reporting their holdings, as there is currently no requirement to do this.

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

#43

Post by drcode »

jondwillis wrote: post #29
drcode wrote: post #9

Earlier quoted context omitted.

Sure, if you don't use mixers

Or, swap to a privacy token and back.

Just want to point out it's not quite that easy: If you convert 1.24 (or whatever) bitcoins into zcash/monero/etc and then 1.24 right back into bitcoins, everyone will know those transactions were likely connected.

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

#44

Post by sleepybrett »

vmception wrote: post #30
dragontamer wrote: post #16

Earlier quoted context omitted.

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, th…

I'm not sure how to phrase this. But I'm reminded of the dark knight returns where because all the mobs pooled their money together with their launderer (their mixer) they could all be prosecuted together in a RICO case. Is use of a mixer de facto evidence of laundering...

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

#45

Post by spicymaki »

nickthemagicman wrote: post #5
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…

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.

> Isn't crypto a direct threat to their power?

It is not a threat to their power, imagine the corrupting power of being able to produce wealth anonymously without being traced or taxed and having that sanctioned by the government.

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

#46

Post by Tepix »

danielvf wrote: post #22

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 distribu…

I guess we need a proper CO2 tax to encourage better technology than proof of work

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

#47

Post by sleepybrett »

dougSF70 wrote: post #28
verdverm wrote: post #13

Earlier quoted context omitted.

> 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.

Since 99% of tokens out there are specifically created as pump and dump schemes i'm not sure that it's all that over-broad.

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

#48

Post by drcode »

KingMachiavelli wrote: post #41
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's not a big deal. It isn't that different than finding a significant amount of oil/precious metals on your land. As soon as you try to extract the value of the resource/crypto, the government will know. If you just sell it, the crypto exchange will report it to the IRS. If you try to trade/buy goods with it directly, any assets you get will create a paper trail that the IRS will eventually discover. Consider the f…

all good points

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

#49

Post by dougSF70 »

PragmaticPulp wrote: post #37
dougSF70 wrote: post #33

Earlier quoted context omitted.

Sure, there are substantive differences between Crypto and Cannabis, the point I was trying to make is that Bitcoin is beyond the tipping point. The point that makes sense to bring it into the fold. Secondly, if the USA is seen to be focussed on legitimizing crypto then this would be a signal to NK / RU hacking groups that US Government Agencies are taking an active interest and including it in their daily operationa…

> the point I was trying to make is that Bitcoin is beyond the tipping point It’s no longer about Bitcoin. It’s about alternative asset classes. I think the new ventures in the crypto space have realized that BTC is old news and that the real money is in creating endless new crypto assets and ventures.

I guess that is the worry of any government: money that could fuel the economy gets spirited away into dubious Crypto ventures - e.g. Dogecoin. BTC might be old news but it isn't a deliberate scam.

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

#50

Post by uncomputation »

backprop1993 wrote: post #38

They want to exempt miners who are making Bitcoin from paying taxes on it? Why? They are making revenue from this activity. Of course they should pay taxes on that revenue. This makes no sense at all.

Did you read the article? This is just about exempting non-exchanges from “broker” status i.e. keeping track of users’ personal information, transaction history, and data. The representatives said they agree people not paying taxes on crypto is a problem, but classifying them as brokers is not the solution.
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