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Top stablecoins shed $7B in May as traders redeem tokens en masse

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Re: Top stablecoins shed $7B in May as traders redeem tokens en masse

#141

Post by s-lambert »

jen729w wrote: post #88
jen729w wrote: post #34

Earlier quoted context omitted.

> no issues with tax&bank issues Sure about that bit? This may be the perception – that holding your assets in 'the crypto system' avoids tax issues – but the taxman will disagree. Swapping $BTC for $USDC or whatever your tether of choice is is a 'taxable event'. You've sold one security in exchange for another. It doesn't matter that they're both crypto. Now, it might be harder for the taxman to detect this event, w…

Sorry all, should have been specific: Australia. https://www.ato.gov.au/General/Other-languages/In-detail/Inf... But be careful! Actually read what your local tax office puts out. Assume nothing: it can be very easy to get yourself in to trouble. For example: - You buy BTC @ $1 - You exchange BTC @ $11 for $RANDOM - You just made $10 :-) and you owe the taxman ~$3 (if you're in Australia) - $RANDOM falls to ~$0 - So…

>- But you still owe the taxman $3! (though you might be able to claim some sort of offset on your material loss of $RANDOM; IANAA)

From what I understand, you have to actually realize your losses/gains if you want to claim tax on them. So if $RANDOM drops to ~$0 then you can't use it for capital losses until you trade it to another crypto (or cash). You could probably just trade $RANDOM to something else and then back to realize the losses.

Re: Top stablecoins shed $7B in May as traders redeem tokens en masse

#142

Post by nikanj »

grey-area wrote: post #140
delusional wrote: post #134

Earlier quoted context omitted.

> Why would anyone buy Tether at this point? There's zero upside potential, after all. Tether, and "stablecoins" in general are known as the casino chips of Crypto. A way to exchange more volatile crypto for what is supposed to be essentially dollars without creating a taxable event. Assuming crypto is still something people want to trade, that's still a valuable service. Tether isn't supposed to be an investment. It…

Technically, isn’t selling one asset and buying another precisely the definition of a taxable event? I don’t see how tether helps you avoid taxes unless you’re going to lie about your transactions and hope nobody notices.

You answered your own question

Re: Top stablecoins shed $7B in May as traders redeem tokens en masse

#143

Post by nikanj »

unityByFreedom wrote: post #100
Animats wrote: post #25

The big question with Tether has been, if they are holding commercial paper, whose commercial paper? Traders who deal in commercial paper of real companies that do real stuff don't see Tether present in that market. The dollar amounts are too big to hide. The suspicion is that their "commercial paper" is high-interest loans to other cryptocurrency companies. With the whole crypto sector in decline, those loans are at…

> This is how you get a 2008-type crash - loans which seem to be unrelated but are tied to a common market. How does this happen again 15 years later? Is it because we ineffectively dealt with 2008? A result of the repeal of Glass-Steagall? Or have we over regulated banking to the point the miscreants went underground to build things like crypto? I don't get it. Crashing over and over doesn't seem good for anyone.

Crashes are a huge wealth transfer from the optimistic to the opportunistic. They’re very good for the few

Re: Top stablecoins shed $7B in May as traders redeem tokens en masse

#144

Post by slyfocks »

grey-area wrote: post #140
delusional wrote: post #134

Earlier quoted context omitted.

> Why would anyone buy Tether at this point? There's zero upside potential, after all. Tether, and "stablecoins" in general are known as the casino chips of Crypto. A way to exchange more volatile crypto for what is supposed to be essentially dollars without creating a taxable event. Assuming crypto is still something people want to trade, that's still a valuable service. Tether isn't supposed to be an investment. It…

Technically, isn’t selling one asset and buying another precisely the definition of a taxable event? I don’t see how tether helps you avoid taxes unless you’re going to lie about your transactions and hope nobody notices.

It is indeed a taxable event. People who exchange crypto for “stable”coins are generally doing so to stay out of the KYC banking realm so they can lie about their transactions to their country’s tax authorities.

Re: Top stablecoins shed $7B in May as traders redeem tokens en masse

#145

Post by grey-area »

uwuemu wrote: post #96
mellavora wrote: post #90

Earlier quoted context omitted.

Please check your local regulations on this. What Uwuemu says makes sense, but tax law does not have to make sense. I might be wrong, but I believe the IRS views every transaction as a taxable event. Crypto -> crypto included.

That's nice and all and I don't live in the US, but just imagining the way you would track all of this makes me shiver. Anyways, from my point of view (and also many countries point of view), the entire point of realized gain tax is to be the income tax for stock traders... i.e. income is what the government typically collects taxes on... when I convert BTC to DOGE (or whatever), there is no income, so there is nothi…

In the vast majority of countries including the UK, US and Europe this is a taxable event.

Which country are you talking about here?

Re: Top stablecoins shed $7B in May as traders redeem tokens en masse

#146

Post by swinglock »

uwuemu wrote: post #96
mellavora wrote: post #90

Earlier quoted context omitted.

Please check your local regulations on this. What Uwuemu says makes sense, but tax law does not have to make sense. I might be wrong, but I believe the IRS views every transaction as a taxable event. Crypto -> crypto included.

That's nice and all and I don't live in the US, but just imagining the way you would track all of this makes me shiver. Anyways, from my point of view (and also many countries point of view), the entire point of realized gain tax is to be the income tax for stock traders... i.e. income is what the government typically collects taxes on... when I convert BTC to DOGE (or whatever), there is no income, so there is nothi…

It's the same as stocks. Let's walk through an example.

You have 1 share of Stock A and I have 1 share of Stock B. We both paid 1 USD for each of our different stocks.

Now I want Stock A and you want Stock B, so we'll trade with each other, and lucky us, both stocks are now valued at 2 USD per share.

After performing this trade, ask yourself these questions (from my perspective, or swap A and B for yours, it's the same either way):

* Have I held Stock B?

* What did I pay for Stock B?

* Do I now hold Stock B?

* Why not?

* What did I sell it for?

* And how much was that valued?

* So then how much did I gain?

* How much is owed in tax?

Unless your local tax law specifies "cashing out" not only as a taxable event, but the only taxable event, which I assure you it does not for stocks, the correct answers are as below. The equivalent to what you seem to describe for crypto would be transferring money in and out of the exchange where you trade stocks, and it would be ludicrous if this was the taxable event, which it isn't - but this is a common misconception among amateur crypto traders.

* I did hold 1 Stock B.

* I paid 1 USD for it.

* I don't hold it anymore.

* My dog did not eat it, so I must have sold it, which I did.

* I sold it for 1 Stock A and it was valued at 2 USD at the time of the transaction.

* 1 USD of value was gained at the time I sold from the time I bought.

* I owe a percentage of the 1 USD of value gained, depending on the capital gains tax rate, which differs.

I'd ask the local tax office anonymously. Not knowing doesn't fly as an excuse, everyone says that and it doesn't matter if it's true. Where is this place, if you don't mind?

Bonus question, what if we trade 1 DOGE for 1 Stock C? Is that different? What about 1 DOGE for 1 USD? What about 1 DOGE for 1 token backed by 1 USD? What about 1 Stock C for 1 token backed by 1 USD? Somehow it seems to get more complicated with "cashing out" laws, not less. Also I don't believe they exist, but I'd like to know too if they do anywhere.

Re: Top stablecoins shed $7B in May as traders redeem tokens en masse

#147

Post by mateuszf »

slyfocks wrote: post #144
grey-area wrote: post #140

Earlier quoted context omitted.

Technically, isn’t selling one asset and buying another precisely the definition of a taxable event? I don’t see how tether helps you avoid taxes unless you’re going to lie about your transactions and hope nobody notices.

It is indeed a taxable event. People who exchange crypto for “stable”coins are generally doing so to stay out of the KYC banking realm so they can lie about their transactions to their country’s tax authorities.

Maybe in US, but not in all countries.

Re: Top stablecoins shed $7B in May as traders redeem tokens en masse

#148

Post by web4 »

Closi wrote: post #133
web4 wrote: post #125

Earlier quoted context omitted.

not everybody lives in the UK. the point is not to be a system that beats a single service for sending GBP from A to B in the UK. the point is a system that has a variety of uses and applications accessible by anybody, regardless of which country the user resides in. even in countries with good banking like UK, many e-commerce companies will still choose Stripe VISA and PayPal to reach customers outside the UK and in…

This doesn’t explain why paying with Crypto is better though in this use case. The UK example just shows that a decentralised blockchain approach isn’t required to meet the use case you are describing - in fact it’s worse for the described use case in almost every metric. Having a different, worse alternative isn’t exactly something to shout about.

use case depends on consumer. paying for an abortion in a southern US state or paying a Russian or Iranian contractor for web design services might be a suitable example of crypto. paying for an in-game asset to avoid 30% App Store fees may be another use case in the future. or purchasing digital assets like art, domains. and smart contract functionality like escrow, auctions, loans and lending, global crowdfunds is another use case.

whether it is better or worse for each of those depends who you ask and what their goals are, and also in what year you ask. ten years ago it was inconceivable to do these things with crypto, ten years from now it may be that these systems will continue to improve in terms of fees, privacy, scalability and user experience. consider the current cohort of users to be beta testers who are taking on additional risk and technical burden while the system continues to improve.

Re: Top stablecoins shed $7B in May as traders redeem tokens en masse

#149

Post by robinduckett »

slyfocks wrote: post #144
grey-area wrote: post #140

Earlier quoted context omitted.

Technically, isn’t selling one asset and buying another precisely the definition of a taxable event? I don’t see how tether helps you avoid taxes unless you’re going to lie about your transactions and hope nobody notices.

It is indeed a taxable event. People who exchange crypto for “stable”coins are generally doing so to stay out of the KYC banking realm so they can lie about their transactions to their country’s tax authorities.

In the UK, it is only a taxable event when the coin is exchanged to a "readily convertible asset", i.e. Bitcoin, Mainnet ETH.

Re: Top stablecoins shed $7B in May as traders redeem tokens en masse

#150

Post by jsemrau »

I read about this last week [1] and am still quite perplexed about Tether and its a backing. If you look at the redemption pattern you can see large movements. I.e. a whale must be withdrawing funds. This really reminds me of 2008.

[1] https://app.finclout.io/t/kVr06N0

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