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Every important person in BitCoin just got subpoenaed by NY financial regulators

forbes.com

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Re: Every important person in BitCoin just got subpoenaed by NY financial regulators

#51

Post by swampthing »

DougWebb wrote: post #15
pnathan wrote: post #6

Unpopular opinion of the day: bitcoin is real money, and the government will regulate it and control it as such. In my opinion, the end-game is this: bitcoin addresses are taxable, with occasional tax agents spot-checking large accumulations of bitcoin to determine if said addresses fall within their jurisdiction. Bitcoin has the unusual ability to have a very tight trace on where a given virtual coin goes: that just…

A bitcoin address is just a container for some amount of BTC. Holding an amount of currency isn't taxable, and exchanging currency often isn't taxable either. (I'm generalizing across jurisdictions, but I think what I'm saying is true for most of them.) If you move money from one pocket to another, or one savings account to another (that you own), that's not taxable. Very many transfers between bitcoin addresses is j…

I'm not sure that's an accurate representation of how things work in the tax world. You don't pay a tax when you pay a bill, but it's likely the recipient of your money includes it as income on their tax return. Same goes for any seller - whether or not a sales tax is involved. If you were to transfer a large amount of money from your bank account to a friend's, your friend would likely have to count that money as income on their tax return (as a gift).

The way the US tax code is set up, any income is taxable unless there's an exception for it.

Re: Every important person in BitCoin just got subpoenaed by NY financial regulators

#52

Post by dclowd9901 »

swampthing wrote: post #51
DougWebb wrote: post #15

Earlier quoted context omitted.

A bitcoin address is just a container for some amount of BTC. Holding an amount of currency isn't taxable, and exchanging currency often isn't taxable either. (I'm generalizing across jurisdictions, but I think what I'm saying is true for most of them.) If you move money from one pocket to another, or one savings account to another (that you own), that's not taxable. Very many transfers between bitcoin addresses is j…

I'm not sure that's an accurate representation of how things work in the tax world. You don't pay a tax when you pay a bill, but it's likely the recipient of your money includes it as income on their tax return. Same goes for any seller - whether or not a sales tax is involved. If you were to transfer a large amount of money from your bank account to a friend's, your friend would likely have to count that money as in…

Theory question:

If I gift my friend $X, and then he gifts it right back to me, and we proceed to do this back and forth ad infinitum, is it the case that the IRS would eventually bleed that money to $0?

Re: Every important person in BitCoin just got subpoenaed by NY financial regulators

#53

Post by thinkcomp »

hyperplane wrote: post #4
aspensmonster wrote: post #2

Well, my own submission just got [dead]ed --no indication as to why-- but I'll paste my comment here as well: I know very little about Bitcoin or money transmission laws. Unlike other currencies it does not seem to have fundamental dependence on any centralized arbiter, though the practicalities of large exchanges like Mt. Gox seem apparent to me. That lack of dependence on a Fed-like body appears to me like its bigg…

"I'd like to know what exactly is entailed in becoming compliant with money transmitting and laundering regulations." This. Someone with more understanding of financial regulation, please step in and explain what it is the government would actually want from the currency. This sounds scary to some extent but there's no real reason that it needs to be. I assume it is to enforce real-world identities at the USD/BTC exc…

http://www.thinkcomputer.com/corporate/whitepapers/heldhosta... is a good place to start.

Re: Every important person in BitCoin just got subpoenaed by NY financial regulators

#55

Post by ebiester »

dclowd9901 wrote: post #52
swampthing wrote: post #51

Earlier quoted context omitted.

I'm not sure that's an accurate representation of how things work in the tax world. You don't pay a tax when you pay a bill, but it's likely the recipient of your money includes it as income on their tax return. Same goes for any seller - whether or not a sales tax is involved. If you were to transfer a large amount of money from your bank account to a friend's, your friend would likely have to count that money as in…

Theory question: If I gift my friend $X, and then he gifts it right back to me, and we proceed to do this back and forth ad infinitum, is it the case that the IRS would eventually bleed that money to $0?

Yes, but only via the gift tax and after you've reached the gift tax exemption, which is pretty big.

Re: Every important person in BitCoin just got subpoenaed by NY financial regulators

#56

Post by scarecrowbob »

_delirium wrote: post #35
rayiner wrote: post #16

Earlier quoted context omitted.

I don't think it's dead. I think a lot of people romanticize things like Bitcoin as being part of a world that's lawless relative to the real one. And as hackers, it's one where the lack of order favors them, just as the lack of order in the Wild West favored those with the most horses and guns.

I'm not sure that analogy plays out well for hackers in the long term. Ultimately, the wild west was not won by cowboys with some horses and guns, but large-scale ranchers with title to hundreds of thousands of acres. The cowboys may still have movies made about them, but the likes of King Ranch came out on top economically.

I believe it is more correct to think of cowboys along the terms of freelancers and lifestyle business folks... people who don't need massive success, just freedom from having to be at a highly structured job from 9-5.

Or at least that is the idea that I get from the many I know or have met.

In that sense, the larger market "winners" like the king ranch aren't really a factor, except as their presence begins to foment regulations that must apply to every single person and begin to restructure the world into one where it is increasingly difficult to live outside of a corporate structure.... ie. they fence off formerly commonly held land.

Re: Every important person in BitCoin just got subpoenaed by NY financial regulators

#57

Post by dendory »

DougWebb wrote: post #15
pnathan wrote: post #6

Unpopular opinion of the day: bitcoin is real money, and the government will regulate it and control it as such. In my opinion, the end-game is this: bitcoin addresses are taxable, with occasional tax agents spot-checking large accumulations of bitcoin to determine if said addresses fall within their jurisdiction. Bitcoin has the unusual ability to have a very tight trace on where a given virtual coin goes: that just…

A bitcoin address is just a container for some amount of BTC. Holding an amount of currency isn't taxable, and exchanging currency often isn't taxable either. (I'm generalizing across jurisdictions, but I think what I'm saying is true for most of them.) If you move money from one pocket to another, or one savings account to another (that you own), that's not taxable. Very many transfers between bitcoin addresses is j…

In Canada, even if you destroy all paperwork and tell the taxman that you don't remember anything, the law permits them to look at your assets and decide how much you owe. Then it's your burden to prove otherwise. Is it different in the US? Hell they could even force exchanges or code mainteners to build in a tax system.

Re: Every important person in BitCoin just got subpoenaed by NY financial regulators

#58

Post by swampthing »

dclowd9901 wrote: post #52
swampthing wrote: post #51

Earlier quoted context omitted.

I'm not sure that's an accurate representation of how things work in the tax world. You don't pay a tax when you pay a bill, but it's likely the recipient of your money includes it as income on their tax return. Same goes for any seller - whether or not a sales tax is involved. If you were to transfer a large amount of money from your bank account to a friend's, your friend would likely have to count that money as in…

Theory question: If I gift my friend $X, and then he gifts it right back to me, and we proceed to do this back and forth ad infinitum, is it the case that the IRS would eventually bleed that money to $0?

It's possible they could take that position, but I suspect you or your lawyer would be able to come up with a way out of most of it. For example, you could argue they were a series of interest-free loans, so there was no income to anyone (other than the forgiveness of any interest the IRS would impute to the loans). Or maybe there's an exception in the tax code for the situation you describe - I'm not a tax attorney :)

And as ebiester noted, there's an exemption for gifts under a certain amount.

Re: Every important person in BitCoin just got subpoenaed by NY financial regulators

#59

Post by samstave »

nilved wrote: post #50
pnathan wrote: post #6

Unpopular opinion of the day: bitcoin is real money, and the government will regulate it and control it as such. In my opinion, the end-game is this: bitcoin addresses are taxable, with occasional tax agents spot-checking large accumulations of bitcoin to determine if said addresses fall within their jurisdiction. Bitcoin has the unusual ability to have a very tight trace on where a given virtual coin goes: that just…

> Unpopular opinion of the day: bitcoin is real money, and the government will regulate it and control it as such. Which government?

There is only one, the NSA

Re: Every important person in BitCoin just got subpoenaed by NY financial regulators

#60

Post by mbreese »

sillysaurus wrote: post #47
flyinglizard wrote: post #22

Earlier quoted context omitted.

This is why I don't believe in BTC for the long term. It's not anywhere near anonymous. Those saying BTC has no inherent value (as opposed to gold, for example) are completely overlooking the fact that BTC is the only kind of exchange that can be used for illicit activities in a relatively untraceable manner (good luck buying stuff on SR using gold). Unfortunately, BTC is traceable if governments decide to spend the…

If the government steps in to "de-anonymize" bitcoin, then people will simply begin using tumbling services. People don't use those services right now because there's no impetus to. But as soon as the trust inherent to the public ledger is violated by creating a large-scale effort to track the flow of bitcoin, then people will counter that action with tumblers.

Yes, because tumbling services aren't designed to launder money or anything...

Just using Bitcoin for transactions doesn't eliminate legal obligations. I imagine that if they ever got popular, tumbling services would be the first things that would be regulated (or shutdown by the gov't).

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