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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

#61

Post by josho »

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…

It's doublespeak for we are taking an interest in this burgeoning opportunity and will likely be adding requirements to exchanges that will help to limit fraud, and ensure that the government gets whatever tax revenue they are obligated.

Frankly, I see it as the powerful interests (banks/gov) taking their first step to assert their control of the new market.

Someone less pessimistic may feel this is a good measure to ensure that something good will stay good by helping to keep fraud out of this new system.

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

#62

Post by adestefan »

ebiester wrote: post #55
dclowd9901 wrote: post #52

Earlier quoted context omitted.

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.

It's not that big. It's $14,000 per person per year.

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

#63

Post by Nursie »

mtgx wrote: post #30
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 think in the short term at least, this is beneficial for Bitcoin, if it's recognized as money, and businesses and "normal" people start trusting to use it without fearing repercussions from the government, as long as they "follow the rules". This could lead to more centralized exchanges, which again is good in the short term - the more the merrier, so people can easily get Bitcoin with their dollars. But I think th…

Local wallets is not a really accurate term - all BTC transactions go in the public ledger. It's kinda one of the flaws of bitcoin, there's no such thing as an offline transaction.

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

#64

Post by ics »

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 everyone launders their money in a deliberate attempt to circumvent government regulation, they'll simply impose broader and harsher regulations. If crypto currencies are going to take over the future, then Bitcoin is a huge win for governments because of this. Your anonymity depends on your actions as in the real world, except the paper trail is significantly improved. Central banks may be perturbed by all this but the IRS certainly won't be. The only way to get past this in the long run is either to A) be on the other side of the law or B) use an implementation that forces anonymity, in which case there is still the threat of it becoming illegal once it's considered to be a large enough target.

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

#65

Post by e12e »

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…

> 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.

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

#66

Post by dclowd9901 »

adestefan wrote: post #62
ebiester wrote: post #55

Earlier quoted context omitted.

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

It's not that big. It's $14,000 per person per year.

I'm trying to think of a way to "test" this, like set up a couple of accounts and programmatically transfer money back and forth. I imagine most banks/processors have some sort of mechanism to limit transactions that would be considered suspect (such as automated back-and-forth transfers). But the lower limit's not a problem -- by repeating the transaction, you'd be contributing to the limit of $/year, even with a miniscule amount.

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

#67

Post by bluedino »

e12e wrote: post #65
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…

> 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.

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

#68

Post by qu4z-2 »

wmf wrote: post #39
_delirium wrote: post #35

Earlier quoted context omitted.

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.

Yeah, there are some fairly lawless places on Earth today and you don't see many people (other than rdl) moving there to make their fortune. People subconsciously prefer the rule of law but it's cool to romanticize Bitcoin data havens and whatnot.

In fairness, people might want laws about not being stabbed, while still being okay with not having laws about sharing information online.

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

#69

Post by sgk284 »

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.

I agree, the thought of merely holding money being a taxable event seems weird (speaking as an American). That said, it's a great way to ensure that people don't hoard cash and instead spend it or invest it (in theory, keeping the economy moving).

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

#70

Post by betterunix »

VMG wrote: post #43
rayiner wrote: post #12

Earlier quoted context omitted.

I don't know why this should be unpopular, except among people who see the Internet as a new Wild West. The basic advantage of Bitcoin, that its controlled by an algorithm rather than a central bank, exists whether or not financial regulations apply to Bitcoin. Does it destroy the utility of a crypto currency for exchanges and processors to be required to detect e.g. money laundering?

> Does it destroy the utility of a crypto currency for exchanges and processors to be required to detect e.g. money laundering? It introduces a mandatory third party (the government) to transactions where only two parties are intended. Such a virtual currency could be designed, and I don't believe it would be successful. The Bitcoin protocol allows two parties to transact without any outside interference. If governme…

"The Bitcoin protocol allows two parties to transact without any outside interference"

...other than the entire Bitcoin network, right? When last I checked the design of Bitcoin called for transactions to be checked by other Bitcoin users and then broadcast to the entire network. That is about as far as one can get from a two party transaction.

If you want real two party transactions, you probably want this sort of thing:

http://blog.koehntopp.de/uploads/chaum_fiat_naor_ecash.pdf

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