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

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

#141

Post by rsynnott »

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?

Well, it'd probably get you flagged for investigation as an unusually incompetent money launderer, but I suspect you could convincingly argue that it's not taxable.

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

#142

Post by rsynnott »

jasonlingx wrote: post #96
threeseed wrote: post #75

Earlier quoted context omitted.

Why ? Seems like a great tax to me. The people who are most likely to be hoarding large sums of cash are the type of people who you want to be taxing.

Seems like a great way to discourage saving and keeping people living hand to mouth.

Indeed. Why, if the government applies small taxes to cash savings of over 125k, I just won't save at all!

Wait, what?

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

#143

Post by rsynnott »

Thiz wrote: post #18
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…

Great explanation. Ignore my ignorance in crypto stuff, so, what's stopping us from creating a hundred accounts in one computer and having a couple of bitcoins in each one of them? Or even spread in one hundred shared peer-to-peer bank services?

Nothing. For that matter, nothing stops you having a hundred bank accounts, but doing so will certainly increase your chances of an audit.

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

#144

Post by rsynnott »

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.

> If the government steps in to "de-anonymize" bitcoin, then people will simply begin using tumbling services.

Well, yes. Of course, it's not like tax authorities haven't had to deal with money laundering before.

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

#145

Post by rsynnott »

meowface wrote: post #46
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…

I doubt they'd bother trying to tax transactions from one Bitcoin address to another. It'd be incredibly infeasible. They will probably start requiring that all vendors who exchange real world currency or commodities for Bitcoin pay taxes on all such trades, however. Which isn't all that unreasonable.

It would seem far less infeasible than taxing cash transactions (far easier to trace), and cash transactions are certainly a thing of great interest to tax authorities.

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

#146

Post by rsynnott »

A1kmm wrote: post #20
pkinsky wrote: post #9

Earlier quoted context omitted.

As I understand it, if you want to receive bitcoins with wallet A and send those same bitcoins with wallet B, you would need to transfer said bitcoins from wallet A to B. And each transfer is recorded in the blockchain.

This is correct. However, it is difficult to prove that A and B (or perhaps every wallet in some long chain) are owned by the same person, especially if everyone has a large number of wallets and doesn't reuse them when they are empty. Let's say the blockcoin shows a transfer of 1 BTC to a new wallet A, and then to a new wallet B, and then from B to a wallet owned by a registered BTC-USD exchange C; to comply with go…

It sounds like you're talking about extremely trivial money laundering; while it might have caused some confusion a century ago when the Mafia started doing it, modern tax authorities deal with a hell of a lot worse.

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

#147

Post by rsynnott »

pmorici wrote: post #44

"the department says it wants to make sure Bitcoin company customers’ funds are “safe and sound,” expressing concern about consumer complaints “about how quickly virtual currency transactions are processed.”" So, are they saying there are complaints that the transactions are processed too quickly ? Because I've never had a BitCoin transaction take more than an hour or so to complete where as my regular bank routinely…

I suspect they're talking more about conversion (see MtGox's perennial problems with withdrawing real money, and recently even bitcoins).

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

#148

Post by roel_v »

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?

No, because the amount will get lower and lower until it gets below the exemption threshold, at which point it will remain constant.

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

#149

Post by roel_v »

bluedino wrote: post #67
e12e wrote: post #65

Earlier quoted context omitted.

> Holding an amount of currency isn't taxable It is in Norway - any cash or deposits in excess of 750.000 NOK (around 125.000 USD or so) is taxed in addtion to interest being taxed as income. Now, cash isn't easily detectable, so it is a very easy asset to hide -- but while possible, that would be tax evasion and is illegal.

Taxed at what percent? Ludicrous.

In the Netherlands, all assets over €21K (roughly $28K) are taxed at 1.2 %. This includes cash, bonds, stocks, real estate held for investment, paintings held as investments; everything that is not for personal use (so cars and yachts are not included, nor are second homes for personal use).

Yes it is preposterous.

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

#150

Post by hvidgaard »

LekkoscPiwa wrote: post #29
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…

However, BTC is just a great example that might find followers who will make it hmmmm... more anonymous. Money has just two functions: (1) It has to maintain its value over time (2) People must accept it as means of setting payments BTC seems to meet both. It's not anonymous "enough", but I guess this could be fixed with another iteration. (another electronic currency). It would be great for the world to have more cu…

Full anonymity can be had with the addition zero-coin. Currently the bitcoin team doesn't feel that it has a place in the main protocol, but that may change in the future.
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