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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

#151

Post by meowface »

dragontamer wrote: post #65
vmception wrote: post #30

Earlier quoted context omitted.

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…

> 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. Fair. But think about it: a _singular_ person in your mixing pool can make the entire pool illegal. One, singular, person using that money for contraband (illegal porn, illegal drugs, illegal tax evasion) will turn the ent…

>But think about it: a _singular_ person in your mixing pool can make the entire pool illegal. One, singular, person using that money for contraband (illegal porn, illegal drugs, illegal tax evasion) will turn the entire pool illegal.

It's very difficult to know, but I'm leaning towards this not holding up in court. At least not upon appeal. If a mixer has tens of millions of known participant addresses and the government tries to argue that merely owning a single address that received anything from the mixer means you aided and abetted some other crime from some other person who used the mixer, I think the defense could point out how that just isn't remotely statistically sufficient to imply any sort of involvement.

>Do you trust everyone else in the pool to be using it for legitimate gains? If you went into court, would you be able to say with a straight face that "Everyone in my mixing pool was in fact, doing legal activities?"

I'm not sure if proving a negative will work. Now, if they can prove you had knowledge at the time that at least one person used it illicitly, then I think it'd depend how the mixer works. If it works so that any "dirty money" is purged out within the next few transactions, then they might have to prove that you sent or received funds close to those distribution windows and had specific knowledge that some specific illegal act was likely occurring at that time.

I see how they could potentially prosecute the owners of the mixers, if the owners are aware of at least one case of criminal use, but prosecuting the users sounds much more difficult.

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

#152

Post by sunshinerag »

p_l wrote: post #124
sunshinerag wrote: post #119

Earlier quoted context omitted.

There is nothing in POW that requires CO2 emissions.

But the core principle of Proof of Work is wasting energy. If it takes from green sources, that just means those green sources won't be available to push out polluting ones. Combine this with buildup of polluting sources as backups for intermittent ones...

No, there is no waste. It is a very efficient conversion of energy to security of the ledger.

And with that ledger instead of all the wars and waste generated by manipulatable central bank ledgers it’s a win.

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

#153

Post by RamshackleJ »

akira2501 wrote: post #149
Taek wrote: post #133

Earlier quoted context omitted.

A proper CO2 tax wouldn't be disruptive to bitcoin, bitcoin only cares that everyone pays the same price for electricity. If the absolute cost of electricity goes up, nothing changes.

> If the absolute cost of electricity goes up, nothing changes. The cost of electricity does impact the cost per transaction on the network, does it not?

nope, transactions clear at a rate unrelated to mining(so long as at least 1 person is mining).

The only thing that impacts transaction costs is how many other people are trying to clear their own transactions and bidding up the sat/vbyte rate.

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

#154

Post by cwkoss »

deegles wrote: post #134
meowkit wrote: post #84

Earlier quoted context omitted.

You’re off base. The original definition was putting tax and KYC requirements on people who don’t have, and can’t get, that information. Network nodes facilitate transactions, they don’t broker them. Its like treating an exchanges electricity provider as part of the equity trade. It’s not tax evasion. The law as originally stated would have crippled the industry in the US.

Devil's advocate for a moment... the definition of a broker is "a person who buys and sells goods or assets for others," or it can mean to "arrange or negotiate" a deal or plan. How is a miner not a broker then? They accept transactions and then place them on a blockchain by performing some kind of work. Sure, at the moment few if any cryptos are definitely securities, but what is going to happen when a company creat…

Miners never have custodial control of the funds in those transactions.

They are much more like auditors or accountants than brokers.

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

#155

Post by RandomLensman »

freeone3000 wrote: post #142
skybrian wrote: post #74

Earlier quoted context omitted.

Why isn’t it part of the solution? It seems like keeping track of who buys mining equipment (at least at large scale) would be a pretty important component in making sure that they pay taxes? Just like it’s important that brokerages report your stock transactions to the IRS.

This is not what broker requirements are. If you are under broker requirements, and you wish to mine a new block, you must have, for every transaction you include in the block, the legal name of the person whose transaction it is, their address, and whether they are a politically compromised individual (ex, a general or politician of a nation that is not the US). For every transaction you're going to include in the b…

Payment facilitators and processor would normally fall under some sort of KYC regime, I think (let's say when onboarding a merchant). Arguably, there isn't really a one-to-one correspondence with a miner, but to completely exempt miners here is an interesting twist.

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

#156

Post by vkou »

sunshinerag wrote: post #152
p_l wrote: post #124

Earlier quoted context omitted.

But the core principle of Proof of Work is wasting energy. If it takes from green sources, that just means those green sources won't be available to push out polluting ones. Combine this with buildup of polluting sources as backups for intermittent ones...

No, there is no waste. It is a very efficient conversion of energy to security of the ledger. And with that ledger instead of all the wars and waste generated by manipulatable central bank ledgers it’s a win.

1. There is nothing efficient about wasting that much electricity on securing a ledger that can handle single-digit transactions per second.

2. The needs of central banks don't start wars, the needs of politicians, warhawk nationalists, and the needs of modern industrial economies do. [1] Unless BTC somehow magically gets rid of politicians, nationalism, or of our addiction to oil, that's not going to change.

[1] The US didn't invade Grenada because of the Fed. The USSR didn't invade Afghanistan on behalf of Gosbank. China didn't invade Tibet to fix the balance sheet of the PBC. Vietnam didn't fight a war with its occupiers, and then a civil war, and then a war with Cambodia, and then a war with China, because it was unhappy with the Dong to USD exchange rate. The US participated in that civil war because of domino theory, not because of its departure from the gold standard. The list goes on and on. [2]

[2] Wars aren't fought over currencies, wars are fought over territory, pan-ethnic nationalism, to increase the internal popularity of a warhawk, to maintain a hegemony, to impose one's religion on another, to expel unwanted people from a territory, etc, etc, etc. Bitcoin solves none of these problems.

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

#157

Post by 3np »

JumpCrisscross wrote: post #150
cwkoss wrote: post #139

Earlier quoted context omitted.

Also note that this crypto tax-reporting provision was slid into a huge bipartisan infrastructure deal. It really never should have been included in this legislation in the first place. Exempting actors in the crypto space who facillitate crypto usage without ever having custodial control of the funds makes a lot of sense. (Just like envelope manufacturers shouldn't have to register as money transmitters because peop…

> this crypto tax provision was slid into a huge bipartisan infrastructure deal. It really never should have been included in this legislation in the first place. Why not? The infrastructure is being paid for in part by this tax. They're fundamentally linked.

The biggest issues were less with the tax part and more with requirements around KYC, data gathering, and reporting.

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

#158

Post by X6S1x6Okd1st »

freeone3000 wrote: post #135
X6S1x6Okd1st wrote: post #127

Earlier quoted context omitted.

Miners typically get their funds as income, not necessarily cap gains.

It's a gain based on your invested capital, isn't it? It's textbook capital gains. PoS, PoW, whatever.

Odd that you call it textbook capital gains, what textbook are you working from?

It seems pretty clearly like income to me.

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

#160

Post by chollida1 »

thehappypm wrote: post #60
toomuchtodo wrote: post #6

Earlier quoted context omitted.

Venmo is pushing crypto hard because Instant Payments are coming down the pipeline from the Fed in the next 18 months (already in beta testing with a handful of smaller banks, they're ahead of schedule based on my reading of the roadmap), and that kills Venmo (and Paypal to a lesser extend) if they don't have something to pivot to. That's what you're seeing Visa, Paypal, and others attempt to go upmarket (business pa…

Venmo's core value right now is that it's ubiquitous. Everyone has a Venmo account and everyone trusts it. I paid an electrician through it yesterday -- no new Fed tech is going to replace it overnight, just like Zelle didn't kill it either.

> Venmo's core value right now is that it's ubiquitous

Is it? I just did a straw poll of people in my office, located in Canada. People from 28-50 no one has venmo. 3 of 15 knew about it.

Now my sample may not match the rest of the world as these are some pretty highly educated and high networth individuals so venmo isn't something that would really benefit us, but it does really weaken the ubiquitous claim

Where is Venmo ubiquitous?

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