Playing with fire with FinCen and SEC, Binance may face a hefty penalty again after already losing 50 percent of its trading business
I am a tax attorney, here are my answers to the most common questions about the taxation of bitcoins
Edit: On March 25, 2014 the IRS released Notice 2014-21 addressing the taxation of bitcoins. This post was updated on March 26, 2014 to reflect the IRS's positions contained in the Notice. Last Edit: June 2017 Introduction I've noticed a significant amount of uncertainty around here about the taxation of bitcoins. In effort to provide some guidance , I've compiled some of the most common questions I've seen and tried to provide straight-forward, easy to understand answers. I am a tax attorney, but there is so much uncertainty surrounding bitcoins that I expect some people to disagree with one or more of my conclusions. If you have a contradictory opinion, please share it. We would all benefit from an educated discussion of this issue. Keep in mind this post is intended for a layman audience. If you are a tax professional or want a detailed examination of this topic, you find this post lacking. Please don't nit pick this post with technicalities or narrow exceptions, I purposely excluded such nuances for the sake of readability. I should note that this post does not address aggressive tax planning strategies. Such strategies are a lot of fun to discuss, but they do not belong in this type of post. If you are interested in such strategies, perhaps we can make a follow-up post on another day. Legal Disclaimer This post was created for general guidance on matters of interest only, and does not constitute legal advice. You should not act upon the information contained in this publication without obtaining specific advice from a tax professional. No representation or warranty (expressed or implied) is given as to the accuracy or completeness of the information contained in this post, and I do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this post or for any decision based on it. CIRCULAR 230 DISCLOSURE To ensure compliance with requirements imposed by the IRS, I inform you that any U.S. federal tax advice in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein. THE AUTHOR Tyson P. Cross is a tax attorney licensed in California and Nevada. He represents individuals and businesses with tax issues related to Bitcoin and other cryptocurrencies, including tax return preparation, tax planning, and FinCEN compliance. He can be reached at Tel: +1 775-376-5690 or by visiting www.BitcoinTaxSolutions.com. Topic 1: Realization #1: Are gains on Bitcoins taxable? Yes. This is one of the only unequivocal answers you'll find in this post. All income is taxable, regardless of source or form, unless the Internal Revenue Code specifically states otherwise. Bitcoins present a lot of interesting tax questions, but whether gains are taxable is not one of them. #2: When do my gains become taxable?* Gains are taxable in the year they are realized. Realization occurs when you exchange bitcoins for any type of other property; such as cash, merchandise, or services. This includes everything from haircuts to yachts. Essentially, any transaction involving Bitcoin is a realization event and triggers taxable gain. Note: IRS Notice 2014-21 expressly confirms this treatment. Because I've seen a lot of misinformation on this point, I want to make myself perfectly clear. If you own bitcoins that have appreciated in value, you cannot use them to purchase goods or services without realizing gain. Such a purchase is an accession to wealth. It puts you in the same position as if you had first sold the bitcoins for cash and then used the proceeds to purchase the goods or services directly. Yet, one would be a taxable transaction while the other would not? The IRS would never tolerate such a blatant loophole, and neither would the courts. In fact, this exact argument has already been rejected for other types of assets. The outcome for bitcoins will be the same. Unfortunately, this has some serious implications for the future of bitcoin. I have to question the effectiveness of bitcoin as a medium of exchange when the user has to calculate his or her tax liability on every single transaction. As the saying goes, the power to tax is the power to destroy, and this is no exception. Note: There is a code section that might provide some relief here, but only if bitcoins are categorized as a foreign currency. Under this code section, the use of bitcoin to buy goods and services would be tax free as long as the transaction was personal (i.e. not for business or investment) and did not generate more than $200 of gain. Unfortunately, the IRS ruled in Notice 2014-21 that bitcoin is not a currency for tax purposes. So, this code section is inapplicable unless the IRS changes its position sometime in the future. #3: What if I sell my bitcoins but do not withdraw the proceeds from the exchange? It doesn't matter, your gains were realized the moment you sold them. It is irrelevant whether the proceeds from the sale are kept in your bank account or your exchange account, you still have a realized gain for tax purposes. #4: What if I exchange my bitcoins for altcoins? Is this a like-kind exchange? This is a fair question and implicates what is known as a "like-kind exchange." Under Section 1031 of the tax code, exchanges of like-kind property do not trigger recognition of capital gains, and therefore are tax-free. Whether or not bitcoins/altoins are like-kind is uncertain to say the least. As intangible property, bitcoins/altcoins would qualify as like-kind only if they have the same rights, characteristics, and obligations. This is a very difficult test to apply to virtual currency. Additionally, if characterized as a foreign currency, bitcoins would be automatically barred from like-kind treatment anyways. Thus, there are two significant legal hurdles that must be overcome before bitcoin and altcoins can qualify as for like-kind status. Although nothing is for certain when it comes to bitcoins, I'm fairly confident that the IRS would not agree with like-kind treatment and you run the risk of having the unrecognized gains added to your tax return (with penalties and interest added). Thus, I would not suggest that you try to qualify such a transaction as a like kind exchange until further guidance on this issue is given by the IRS or you obtain a tax opinion letter from an attorney concluding that your treatment of bitcoins/altcoins as like-kind appropriate. Lastly, keep in mind that like-kind exchanges must still be reported on your tax return (using Form 8824). edit: IRS Notice 2014-21 concluded that bitcoins are not a foreign currency, therefore it is possible that bitcoin can qualify for like-kind treatment if the "rights and characteristics" test is met. #5: So how can I avoid realizing gains on my bitcoins? The only way to avoid realization is to hold your bitcoins without selling or exchanging them. If you were hoping for a different answer, I'm sorry. Whether you decide to actually report you realized gains is of course a different matter, but as far as the law is concerned, you have realized gains upon any sale or exchange of your bitcoins. #6: How does the IRS know about my gains? * The IRS only knows what it is told. This means that it has no knowledge of your bitcoin transactions unless someone tells them. Here are four way that can happen (others may exist). First, your bitcoin exchange or payment processor may report your transactions to the IRS. This would be done with a Form 1099, which you’ve probably encountered at one time or another in a different context. However, it does not appear that bitcoin transactions are currently subject to the 1099 reporting requirements (although that will probably change). Thus, unless they voluntarily file a 1099 against you, it is unlikely that the IRS will receive a report of your bitcoin transactions. Note that they would need your social security number to file a 1099 in your name. Edit: IRS Notice 2014-21 clarifies that "payment settlors" who convert bitcoin payments to cash for merchants will have to file 1099s. IF you are not a merchant, than this does not impact you. Second, your bank or bitcoin exchange might file a Suspicious Activity Report ("SAR"). US banks and bitcoin exchanges are required to file SARs for wire transfers that are “suspicious” and larger than $5,000 ($2,000 in the case of bitcoin exchanges). The meaning of “suspicious” is very vague and highly discretionary. Out of an abundance of caution, many banks automatically treat all international transfer as “suspicious.” So, if you’ve sent or received a wire transfer of more than $5,000 to/from an international bitcoin exchange like Mt. Gox or BTC-e, you can be pretty sure that your bank has already filed a SAR against you (although they are prohibited from telling you if they did, so you'll never know for sure). The larger and/or more frequent you SAR filings, the more likely they will become a legitimate red flag and trigger an investigation. Although FinCEN is generally concerned with money laundering activities, the IRS does have access to FinCEN filings and it is common for IRS special agents to participate in FinCEN investigations. Third, someone can rat you out to the IRS, which happens far more often than you might think. The simple fact is that people get jealous, and if they've heard that you've made lots of tax free money with bitcoin, they might get tempted to make sure justice is served. There's also that nice reward the IRS will pay them for snitching. Fourth, you voluntarily and accurately report your gains on your tax return. That might sound ridiculous to some people given the inherent anonymity of bitcoin, but there are some very rich people in prison right now who used to think the same thing about their Swiss bank accounts. The fact is that penalties for failing to report income are significant. This includes the possibility of criminal prosecution. You can also add to this the additional penalties for failing to report foreign financial accounts (discussed below), which can be even more severe. At the end of the day, you have a decision to make. You can comply with the law and pay taxes just like everyone else, which is admittedly unpleasant. Alternatively, you can violate the law and hope that you don't get caught. Maybe you will, maybe you won't. If you are caught, though, the amount of money you'll be forced to pay in penalties and interest will drastically exceed the amount you saved. That's not to mention the possibility of a felony criminal conviction and a prolonged stay at Club Fed. Personally, I have seen the havoc wreaked on people's lives by tax crimes and I would never want to be in their shoes. Neither should you. TL; DR: Gains on bitcoins are taxable income. They become taxable when you sell bitcoins for cash or exchange them for goods or services. The IRS does not receive any direct information regarding your bitcoin transactions, but it has other ways of finding out. The monetary and criminal penalties for failing to report gains are not worth the taxes you'd save. Continued BelowEdit: This post has been edited since it was first posted. An asterisk was placed next to the questions that underwent more than just grammatical changes. Additionally, questions related to losses were inadvertently omitted from the first post, but have since been added back.
Out of control CSWs permissioned BCH is a danger to himself, nChain and BCH
SV/nChain/CSW/Calvin are intent on turning BCH into a permissioned blockchain. This is a dangerous and fatal mistake. In 2014 FinCen ruled that miners are not money transmitters. The reason FinCen decided this way is because individual miners have no power to restrict some or other transaction from entering the blockchain (as it will just be picked up by another miner). This also protects developers, because ultimately the consensus among miners is the arbiter of what goes in the blockchain, not the developers. With their (CSW&Co.) plans to make BCH permissioned (and the fact that they seem to have attained a majority hashrate), they are jeopardizing this FinCen ruling for BCH. It means that in their instance, FinCen could rule CSW, Calvin, nChain, Coingeek and other collaborateurs "money transmitters", apply the full weight of money transmitter regulations to them and make them liable for any infraction. Not only would it be extremely costly to attempt to comply, the matter of the fact is that CSW&Co. cannot comply, because it would have to involve mandatory indentification, KYC, AML for every address involved in every BCH transaction. It would become flat out impossible to use the chain at all.
OKCoin offers $20,000 USD reward for disproving Mr. Roger Ver’s forgery claim against Star Xu.
OKCoin’s response Dropbox of files: https://www.dropbox.com/sh/7dudlieancb1tr0/AAA0xmqujCZsvaQ0f_Uf-03Da?dl=0 1. Operating Bitcoin.com facing a new counterparty The Ripple FinCen findings related to dealing with Roger Ver set off an internal review related to conducting further business with Mr. Roger Ver. OKCoin’s team came to a decision to discontinue facing Mr. Ver on the management of Bitcoin.com for two core reasons. The first being the findings of the Ripple investigation. The second, on further review, the contract was not in good standing as it did not contain the OKCoin legal entity in the contract. It should also be made aware that OKCoin made every effort to continue management of Bitcoin.com facing a different counterpart under a legally binding contract. 2. Different Versions of the Contract In our review post the Ripple FinCen findings, it was found that v7 (the contract Mr. Ver holds) was not the version of the contract which our finance and accounting department held (v8) digitally and physically. In the past 24 hours, Mr. Ver made public false accusations that CEO Star Xu forged the v8 contract. There was never forgery committed by Star Xu. We would find such forgery to be a serious breach and view the actions of Mr. Ver to assume and claim forgery a seriously misplaced allegation. We will further review every course of action in light of these false accusations by Mr. Ver. OKCoin holds the original v8 hardcopy contract signed by a former employee at OKCoin and this contract was given to our finance department in December 2014. The document is open to any forensic investigation on the date it was signed. OKCoin also has the digital contract sent to our finance department over QQ on December 16th, 2014 by said former employee. We have provided these screenshots. The former employee and Mr. Ver are friends and formerly worked together at Blockchain.info. Dropbox Exhibit A 3. Oath from CEO Star Xu: "I have attached the digital communications and attachment of the v8 contract that my former colleague sent via QQ to our accountant on December 16th, 2014. The digital and hardcopy of the original signed contract by the former employee are held internally by our finance and operation teams. If I am found to have forged the v8 contract, I face legal ramifications. I welcome Mr. Ver to hire a forensic investigator to examine the authenticity of the hard copy contract. I can promise God on my family’s name that I did not forge the contract. I wonder if Mr. Ver and my former colleague would dare make the same oath of honesty.” OKCoin will reward $20,000 USD to anyone with authentication skills confirming that the digital and hardcopy of v8 are genuine and signed from December of 2014 by our former employee. Those with information can send findings to [email protected] 4. Mr. Roger Ver going public: Mr. Roger Ver first enacted the threat of use of public opinion as a method of pressuring OKCoin into settling on an agreement. Mr. Ver added a reporter Mr. Jon Southurst of Coindesk into the email communications. OKCoin only released a public notice after being contacted by media for comments. It was relayed to OKCoin that Mr. Roger Ver had contacted them to release openly the private communications. We are regretful that this has become a public matter due to the tactics Mr. Ver used. Dropbox Exhibit B 5. Mr. Roger Ver’s accusations of intent to money launder: Mr. Roger Ver falsely accused OKCoin of intending to money launder when it is shown in multiple correspondence that a new contract and new counterpart to receive funds were required for continued management of Bitcoin.com. Mr. Ver has repeatedly shown to be quick to bully and make false allegations in his business dealings. No payment was ever made, attempted, nor intended to a counterparty other than Mr. Ver in the course of OKCoin’s management of Bitcoin.com Dropbox Exhibit C 6. OKCoin’s bitcoin.com contained no ads: Everyone is free to view the Bitcoin.com that was created and used by OKCoin here in the Web Archives: https://web.archive.org/web/20150315024642/http://www.bitcoin.com/ There are no OKCoin ads on the Bitcoin.com that we managed. OKCoin paid Mr. Ver $10,000 USD per month and developed and operated the website as agreed upon. We also tried to court interested parties to advertise on the website. Mr. Ver continually threatened to use the one month termination notice clause contained in the contract for failing to generate further revenue. These threats occurred while simultaneously asking and expecting OKCoin to continue in good faith to improve Bitcoin.com despite that overhang. Mr. Ver even suggested to redirect Bitcoin.com to OKCoin or OKLink for an exorbitant sum.. Mr. Ver sought to close the agreement for the full $550,000 USD dollars remaining followed by an attempt to ask for $200,000 or lower. Mr. Ver did not care for the proper management of Bitcoin.com but was rather solely focused on extracting more money from it. We have provided the sources of these communications. Dropbox Exhibit D 7. OKCoin is not insolvent: To our disappointment, this public slander by Mr. Ver included directly speculating that OKCoin is insolvent, under financial duress and may become the next Mt. Gox. These actions show a lack of respect and proper due diligence. Time will prove that OKCoin’s financial health is strong. We are currently executing on several business projects in the fintech space to improve the lives of consumers and businesses. We generate healthy revenues and have received significant venture capital investments. Our customer service is 24/7 and we welcome any user who has funds on OKCoin to test and withdraw funds. It should be noted that Mr. Ver prior to the Mt. Gox event reported to the public that Mt. Gox had no problems as can be seen in this video. https://www.youtube.com/watch?v=y4SCAw264qM 8. OKCoin’s commitment to innovation: We would like to apologize to our customers for this distraction and for wasting your time over such a small matter. OKCoin will continue to release better and better products as a leader in financial technology and we would like to thank again our customers and supporters of our company.
US Bitcoin traders who identify as users are under siege. Do you have the same issue in your country?
As a bitcoin trader myself, I follow all the news of us trader arrests. These fall into two categories. First, the user did something otherwise unlawful such as trafficking drugs or committing money laundering and was charged with "operating an unlicensed money servicing business" and "conspiracy for agreeing to distribute controlled dangerous substances". In these types of cases I agree that the user should be punished for conspiracy to distribute drugs and money laundering. The second type of case that is becoming far more prevalent now is where the bitcoin user has simply made sales and purchases of bitcoin for his or her own account. These users are still charged with "Operating an unlicensed money services business." This I do not agree with at all because FIN-2008-G008 declared that "When a broker or dealer in currency or other commodities accepts and transmits funds solely for the purpose of effecting a bona fide purchase or sale of currency or other commodities for or with a customer, such person is not engaged as a business in the transfer of funds, and is not acting as a money transmitter as that term is defined in our regulations.8 In such circumstances, the transmission of funds is a fundamental element of the actual transaction necessary to execute the contract for the purchase or sale of the currency or the other commodity. The transmission of funds is not a separate and discrete service provided in addition to the underlying transaction. It is a necessary and integral part of the transaction." This determination was reiterated in subsequent guidance FIN-2013-G001 & response FIN-2014-R002. Simply put a bitcoin user who only purchases or sells bitcoin of his own account to or from a customer is not a money transmitter. Most simple bitcoin traders operate under this guidance and are simply flabbergasted when confronted with charges for operating an "unlicensed money services business" or "operating an unlicensed bitcoin exchange". When the government makes their case the conveniently only quote the portion of the rule that states " An exchanger is a person engaged as a business in theexchange of virtual currency for real currency, funds, or other virtual currency". [FIN-2013-G001] Except that it is clearly explained in FIN-2008-G008 that "When a broker or dealer in currency or other commodities accepts and transmits funds solely for the purpose of effecting a bona fide purchase or sale of currency or other commodities for or with a customer, such person is not engaged as a business in the transfer of funds, and is not acting as a money transmitter as that term is defined in our regulations." This is carried forward and reiterated in FIN-2013-G001 where it states "In 2008, FinCEN issued guidance stating that as long as a broker or dealer in real currency or other commodities accepts and transmits funds solely for the purpose of effecting a bona fide purchase or sale of the real currency or other commodities for or with a customer, such person is not acting as a money transmitter under the regulations. However, if the broker or dealer transfers funds between a customer and a third party that is not part of the currency or commodity transaction, such transmission of funds is no longer a fundamental element of the actual transaction necessary to execute the contract for the purchase or sale of the currency or the other commodity. This scenario is, therefore, money transmission. Examples include, in part, (1) the transfer of funds between a customer and a third party by permitting a third party to fund a customer’s account; (2) the transfer of value from a customer’s currency or commodity position to the account of another customer; or (3) the closing out of a customer’s currency or commodity position, with a transfer of proceeds to a third party. Since the definition of a money transmitter does not differentiate between real currencies and convertible virtual currencies, the same rules apply to brokers and dealers of e-currency and e-precious metals. A simple way to think about the definition of a money transmitter is that a money transmitter typically collects funds from one customer and transmits those funds to another customer via its agents in a remote location. So A western Union agent for example collects $100 from Bob Smith in Iowa and deposits this money into its Bank of America Account. Peggy Sue in Ohio goes to a western union agent where the agent prints out a check from western union or gets an ach credit into its business checking account from Bank of America and pays out a portion of the received funds to Peggy Sue. Western Union is transmitting money by accepting it from agent A and transmitting it to agent B for further credit to Peggy Sue. So let's think about this in terms of bitcoin. Bitcoin is a centralized ledger of funds for each public key or "account". If I have 0.05 bitcoin in account 1001 and I want to pay my landlord 0.05 bitcoin rent,I send the bitcoin to account 1002. All this does is make a notation on the blockchain that account 1001 now has 0 bitcoin and account 1002 now has 0.05 bitcoin. This is simplified a bit so you programmers out there don't cringe over the details of constructing a bitcoin transaction, inputs, and outputs. Suffice it to say, that sending my landlord who is standing next to me, 0.05 bitcoin, does not make me a money transmitter any more than paying him with my VISA card. In fact in both cases we could consider VISA or bitcoin a money transmitter since they take funds from person A and transmit them to person B via their agents. In VISA's case the party's banks are the agents, while in bitcoin's example the agents could be the wallet program on each phone or computer that reads the person's wallet or account balance. Circle back to our friendly traders under siege. No, not the criminals slinging drugs, they knowingly committed their actions. I'm speaking about the bitcoin users, only selling or purchasing bitcoins from their own account to or from a customer. These traders haven't committed an offenses at all according to fincen's directions. What does the government do? Do they engage in a public information campaign to inform these traders of their rights and responsibilities? Do they create a new MSB category for digital currency and define rules and responsibilities for a virtual currency trader? No, instead they try to mislead traders in these cases where a secondary offense such as drug trafficking hasn't been committed. "You have got to be kidding me. Right?" No, I'm really not. If you start reading into these cases you'll find literally hundreds of examples of agents encouraging traders to send bitcoin to a trader in Africa for example so that trader can disburse local currency to a friend. Agents buying bitcoin for less than $10,000 USD without ID and considering this illegal behavior in the indictment! Remember a user doesn't need to report any transaction unless it exceeds $10,000 USD if it is part of his trade or business. If an auto worker who is a casual user that only trades bitcoin 3 times a year sold his for Christmas money to a friend, he wouldn't even need to report the $15,000 sale. But most traders who trade on a daily basis or do it for a living will need to file either an IRS 8300 or a Fincen CTR. Such agents who approach these casual traders entice them with inflated rates and use such phrases as "I'm going to make you rich!'". And they often ask questions about limits and regulations that don't apply to the bitcoin user. They consider all responses as violations of the money transmitter regulations that aren't supposed to apply. So what is a trader to do? You have two choices. You can follow the law literally as most have done and have countless agents come and test you...and then worry about being arrested on charges that don't even apply to you except when acting unlawfully when strongly encouraged or even elicited under duress in some cases by government agents. Or you can falsely claim you are a money transmitter and follow those rules. On my own personal journey I decided in October of 2014 to register with Fincen because I saw that one of my suppliers had done so on his website. I asked him about it and he said it was a precautionary measure. I asked around and I was told by many that I had to select money transmitter and other and write in bitcoin trader because there was no selection for bitcoin trader. This in spite of not being a money transmitter. After I had registered I received a call from a man in "Internal Revenue" in Boston about my registration. He asked me about my bitcoin trading and then he said he had to consult with a supervisor. About 15 minutes later he returned my call and told me, "You are not a money transmitter, so I don't need anything from you." A couple months after that, I received a call from Key Bank's compliance office in Cleveland. They had detected my registration as a money transmitter with Fincen and wanted to ask me a few questions. After questioning me, the lady told me that she previously worked for fincen and that I was not an MSB. Key bank had me sign an affidavit that I wouldn't perform any money services businesses activities such as cashing checks for profit, transmitting money, issue money orders, or create gift cards. This compliance officer understood that I was not an exchange in any way and that I only purchased and sold bitcoin of my own account. She understood I didn't hold funds for customers to trade with each other of their own accord like Bitstamp, Kraken, or Gemini. In the years that would follow, I would have many bank accounts shut down due to this registration as a money transmitter. Most banks simply looked and said, you are a money transmitter. After all, you registered as one. I called Ficen and asked if I could un-register. "No, you cannot". The banks wouldn't even listen to the facts and make a decision. The only other business to actually study my investment model and grant me user status was Gemini. They also agreed I was a user. I think years later they came under pressure to terminate all localbitcoins accounts because many were terminated and at the end of those, mine was too. Was it a coincidence? Or could one of my customers have sabotaged me? It is possible for a user to lie about his wallet address and give out one belonging to a site such as Alphabay. I had one customer do this to me when I was selling him coin from Alphabay. Coinbase questioned me about the transaction and I informed them that someone I was sending money give that wallet out as his own. They reinstated my account since I had years of history with them and it was only one transaction. After that I was careful not to send to customer wallets directly from coinbase. I guess my point is here, if you don't register as a money transmitter they want to harass and prosecute you; but if you do register as a money transmitter they still want to harass and shut down your business. I have recently been engaged in conversations with Fincen by email and by phone and other traders. I haven't been able to speak with many compliance people who are knowledgeable about bitcoin. When I do, for example I've spoken with BitAML on this subject, they agree with me about being a user as a trader. Other compliance people won't even answer my emails or call me back. Now I'm on the verge of either retiring or going the whole money transmitter route and even following the $3,000 ID requirement that only applies to money orders, traveler's checks, and money transfers, but not virtual currency. So my question to you is, do you have the same kinds of problems in your country? Is it better, or worse where you are? Tell me your stories. From my perspective now at least, it seems like the USA has the most malfeasance and harassment of the simple bitcoin traders, excluding those who commit crimes. Thanks for reading
I am a tax attorney, here are my answers to common questions about bitcoin losses and the rule against wash sales.
Introduction Hey guys, you might remember my post on bitcoin taxation last year, and a couple follow up posts I made on 1099s, FBARs, and the IRS Notice. I've been getting a lot of questions about losses on bitcoins and other virtual currencies. So, I thought I'd share some answers here with all of you. I hope this post is helpful given that bitcoin is hovering around 12 month lows and you might be holding bitcoins that have dropped substantially in value or have already sold those coins and realized a loss for the year. Keep in mind this post is intended for a layman audience. If you are a tax professional or want a detailed examination of this topic, you find this post lacking. Please don't nit pick this post with technicalities or narrow exceptions, I purposely excluded such nuances for the sake of readability. Legal Disclaimers This post was created for general guidance on matters of interest only, and does not constitute legal advice. You should not act upon the information contained in this publication without obtaining specific advice from a tax professional. No representation or warranty (expressed or implied) is given as to the accuracy or completeness of the information contained in this post, and I do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this post or for any decision based on it. CIRCULAR 230 DISCLOSURE To ensure compliance with requirements imposed by the IRS, I inform you that any U.S. federal tax advice in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein. THE AUTHOR Tyson Cross is a tax attorney licensed in California and Nevada. He represents individuals and businesses with tax issues related to Bitcoin and other cryptocurrencies , including tax return preparation, tax planning, and FinCEN compliance. He can be reached at Tel: +1 775-376-7306 or Email: [email protected]. (this information is required by attorney advertising rules). Topic 1: Losses Beginning Assumption: This post deals only with "capital losses." If your bitcoin losses are characterized as "ordinary losses," then these rules wouldn't apply. However, very, very few people will have "ordinary losses" from bitcoin. Unless you qualify as a "day trader" (which is not easy to do) and have elected to use the mark to market method for determining your gains/losses, it's very likely that your bitcoin losses are "capital losses." If you're unsure, talk to a tax professional to determine whether your losses are ordinary or capital. #1 Do capital losses offset capital gains? Yes. We'll get more into the mechanics of calculating gains and losses below, but for now all that matters is that capital gains are determined on a net basis. This means that all your gains and losses for the year are added against each other to reach either a "net gain" or a "net loss." So, yes, losses do offset gains. Example: Bob owns three bitcoins and sells all of them in 2014. He had a gain of $600 on coin #1, a gain of $400 on coin #2, and a loss of ($900) on coin #3. Bob has a net gain of $100 for the year. #2 What about long-term vs. short-term? Do these apply to losses also? Yes. This is where the mechanics of the calculation start to come into play. Remember that when calculating gain or loss, all gains and losses are sorted into either "short-term" or "long-term" depending on whether the underlying bitcoin was held for more than one year. So, this means that there are actually four categories of gains and losses: (1) short-term gains, (2) short-term losses, (3) long-term gains, and (4) long-term losses. The short-term gains and short-term losses are added together to reach a net short-term gain or a net short-term loss. The long-term gains and long-term losses are also added together to reach a net long-term gain or a net long-term loss. Finally, the long-term and short-term gain/loss are added together to reach one final number: your "net capital gain or loss." #3 So what does that even mean? Can long-term losses be used to offset short-term gains? Or visa-versa? Yes. The above calculation boils down to one important point: If you end up with a net loss in one category, that loss will carryover and offset your gains in the other category. So, yes, long-term losses can be used to offset short-term gains. Keep in mind that this is all handled by your tax preparation software, so if your head is spinning a little bit, don't worry about it. All you need to remember is that losses offset gains of the same character first, and then any excess will carryover to offset gains of the other character second. Example: Bob sold 2 bitcoins in 2014 that he's owned for 2 years. He had a gain of $1,000 on this sale. Bob also sold 3 bitcoins that he's owned for 13 months. He had a loss of ($1,500) on this sale. Finally, Bob sold 1 bitcoin that he's owned for 9 months. He had a gain $750 on this sale. Bob has a long-term loss of ($500).Bob has a short-term gain of $750. * *Bob will report a net capital gain of $250 on his tax return (characterized as short-term). note: For the sake of simplicity, I'm going to purposely disregard the short-term/long-term distinction for the rest of this post since it has very little impact on the issue of losses and would unnecessarily complicate the examples. #4 Can bitcoin losses offset gains from other types of assets? Yes. Bitcoins are a capital asset (except in a few limited circumstances), and therefore gains and losses from bitcoins are mixed together with the gains and losses from other capital assets. Example: Bob sold 2 bitcoins in 2014 for a total loss of ($1,000.) Bob also sold shares of stock in Apple Corporation for a gain of $600 and shares of stock in Netflix for a gain of $400. Bob has zero capital gains in 2014.Note: Bob still needs to include a Schedule D with his tax return, which will show these transactions and the calculation of his $0 net capital gain. #5 What happens if my losses exceed my gains? If you had more losses than gains during the taxable year, then the above calculation will result in a "net capital loss." A net capital loss is reported on your tax return as a negative number. However, there is a ($3,000) limitation on capital losses. No matter how big your capital loss ends up being, you can only use $3,000 of it on your tax return. Example: Bob decided that he made a bad investment in bitcoins and decided to cash out entirely. He sells all of his bitcoins for a loss of ($12,000) at the end of the year. Bob also sold some shares of stock for a $2,000 gain earlier in the year. When Bob calculates his capital gains for the year, he ends up with a ($10,000) net capital loss for the year. However, he can only take ($3,000) of the loss on his tax return. The remaining ($7,000) of losses are put on hold and again carried forward to future years. #6 What do I do with carried losses in the future? Can I use them to offset future gains? Yes. Any losses in excess of the $3,000 limitation are carried forward and included in the net gain calculation in future years. There is no limit to how long you carry your capital losses. *Example: Bob has ($7,000) of carried losses from 2013. In 2014, Bob sold shares of stock for a gain of $7,000. * Bob will include his carried losses of ($7,000) in the calculation of his net capital gain for 2014. So, Bob has zero capital gains for 2014.Remember: bitcoins are a capital asset, and therefore gains/losses are combined with other capital assets like shares of stock. Suppose instead that Bob had carried losses of ($15,000) from last year. When Bob's carried losses are included in the calculation of his net capital gains, he'll end up with a capital loss of ($8,000). Bob can report ($3,000) of this loss on his tax return, and the remaining ($5,000) becomes a carried loss and will be carried forward once again. #7 Can I carry losses backwards to earlier tax years? Unfortunately, the answer is no. Capital losses can only be carried forward. So, for example, losses realized in 2014 from the price collapse in bitcoin cannot be used to offset gains in 2013 (when bitcoin hit all-time highs). Topic #2: Wash Sales #8 What is a Wash Sale? A wash sale is a transaction where an investor sells stocks or securities for a loss, but then repurchases the same stocks or securities within 30 days. The investor gets to claim a capital loss for tax purposes, but he or she is in essentially the exact same economic position. The loss really only exists on paper, nothing else about the investors position has changed. Wash sales are prohibited by Section 1091 of the Internal Revenue Code. If a transaction qualifies as a "wash sale," it is essentially disregarded and the investor is not allowed to use the loss it generated (I'm choosing to skip the mechanics of the wash sale rule and how exactly it disallows the loss for the sake of simplicity). This led to a lot of gamesmanship over the years to get around the rules, with the result that Section 1091 and the Regulations cover just about every possible trick you can imagine. Example: Bob owns 100 shares of Apple stock. On May 1st, Bob sells 50 shares for a loss of ($500). Three weeks later on May 21st, Bob purchases 50 shares of Apple stock. This second purchase of Apple stock triggers the wash sale rule under Section 1091 and Bob will not be allowed to use the $500 loss when calculating his gain/loss at the end of the year. Note that the rule also applies backwards. So, if Bob tried to get around the 30 day rule by buying the 50 shares of replacement stock ahead of time on April 15th, the wash sale rules would still apply. #9 Do the wash sale rules apply to bitcoin? Probably not. The wash sale rules under Section 1091 apply only to "shares of stock or securities." Therefore, they do not apply to bitcoins unless bitcoins (and virtual currencies in general) qualify as "shares of stock or securities." This qualification would seem highly unlikely. There's just really no argument that bitcoins are "shares of stock or securities." The definition for these terms (taken from Section 1236, for example) is "any share of stock in any corporation, certificate of stock or interest in any corporation, note, bond, debenture, or evidence of indebtedness, or any evidence of an interest in or right to subscribe to or purchase any of the foregoing." Bitcoins would not appear to meet this definition. So, as it's currently written, it does not look like Section 1091 applies to bitcoins and other virtual currencies. That could change in the future of course, but for the moment it seems to be the case. #10 So can I use a wash sale to generate losses on bitcoin? Yes. If bitcoins do not qualify as "shares of stock or securities" under Section 1091, then the rules do not apply. This mean that you can sell bitcoins to realize a loss, and then buy them back again to preserve your investment. However, that's not the end of the story. The IRS can attack this transaction with the "economic substance" doctrine, discussed below. Example: Bob has capital gains from the sale of stock in Apple. He also has some bitcoins that he purchased for $1,200 each last November, but are worth only $300 currently. In order to offset the gains on his shares of stock, Bob sells his bitcoins for a loss of $900 each. He immediately repurchases the same amount of bitcoin, thereby creating a tax loss but not actually giving up his investment in bitcoin. #11 What is the Economic Substance Doctrine? The "economic substance doctrine" is a doctrine in US tax law that says a transaction must have economic significance aside from it's tax effects. Basically, a transaction that does nothing else but generate tax benefit is invalid under this doctrine. The parties to the transaction must actually incur some economic benefit or suffer some economic loss in order for it to be recognized by the IRS. A transaction that does neither, but still manages to generate some kind of tax benefit, will be invalid under this doctrine. It's become a very powerful tool for the IRS in attacking tax shelters and the courts are generally pretty supportive of the doctrine. Because a bitcoin wash sale leaves you in the same economic position, but has generated a tax loss for your benefit, I wouldn't be surprised to see the Economic Substance Doctrine used to invalidate wash sales of bitcoins that would otherwise avoid Section 1091. Example: The IRS audit's Bob from the previous example and discovers that he sold bitcoins in order to generate a tax loss, and then immediately repurchased the same amount of coins just moments later. The IRS will claim the transaction lacked economic substance and will disallow the loss. #12 Is it possible to generate tax losses without running afoul of the Economic Substance Doctrine? It's possible, yes. There is a tried a true principle of the Economic Substance Doctrine under which a transaction has "economic substance" if it exposes the parties to "market risk." This is true even if the market risk doesn't end up doing anything to change the economic position of the parties. As long as the parties put their economic interests at risk, the transaction has economic significant apart from the tax benefits it created. So, this means that you can avoid the economic substance doctrine by waiting to repurchase your bitcoins. This waiting period exposes you to market risk due to the fact that you might be forced to repurchase at a higher price, and therefore it adds economic substance to the transaction. **** Continued Below ****
The ticking time bomb of crypto exchanges and compliance
I believe the next "black swan" event for bitcoin is when the US comes down hard on almost all the exchanges out there which are brazenly flouting the regulations. Some common fallacies: Fallacy 1: Exchange is based in [some remote country], so they don't have to worry about US laws. Fact 1. Most people don't realise, it's not sufficient to be based outside of the US to be free of their jurisdiction. If an exchange is serving US citizens they must comply with the regulations, regardless of which country their exchange is based in. Fallacy 2: Exchange XYZ doesn't accept fiat and it's crypto to crypto only. Therefore it doesn't need a money transmission license. Fact 2. Fincen has issued multiple statements very clearly stating that a business which exchanges a virtual currency in exchange for another virtual currency is a money transmitter and thus requires a money transmission licence. Similarly for fiat to crypto. Some sources: (http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.htmlhttp://globalcryptonews.com/fincen-ruling-on-cryptocurrency-exchanges-explained-part-1-definition-of-money-transmitter-and-msb/). Here fincen publishes a redacted letter to a crypto exchange telling them they are a money transmitter: http://www.fincen.gov/news_room/rp/rulings/pdf/FIN-2014-R011.pdf Fallacy 3: Exchange XYZ is a money service business and is therefore compliant Fact 3. It's actually a piece of piss to get registered as a money service business and I wish people wouldn't look at it as a symbol of authenticity. If the exchange doesn't have the money transmission licenses and is serving customers in most states of america it's only a matter of time until they get a knock on the door. Fallacy 4: Most other exchanges aren't compliant so we have safety in numbers. Fact 4. That is not a robust legal defense. Exchanges which aren't compliant and therefore are NOT safe places to leave your money at:
Poloniex (particularly high risk since they are based in the US and don't have the licenses)
Bittrex (particularly high risk since they are based in the US and don't have the licenses)
Btc-e (based in a country which may not comply with the US authorities, but still)
And probably almost all of the others! I've listed the above as they are exchanges which qualify as money transmitters and are operating without the correct licenses. An exchange I am fairly certain has no licenses is:
If someone can prove me wrong, let me know. Exchanges that are doing things by the book:
tldr: Use Coinbase or Kraken if you don't want to run the risk of an exchanges funds being seized.
A little late, but as promised here is Part 2 of the Beginner’s Guide to Exchanges. I would like to sincerely thank everyone for their support and feedback in making these. Link to Part 1 This time I also made a Google Docs survey in the hopes of sharing the results with the community. I thought we could share what we use as a whole and why redditors choose the exchanges they do. For skeptics (as you all should be), I assure you that I am not collecting personal information. This is for recreation and if you are still wary, then by all means abstain! Link to Survey In Part 3 I will be wrapping up this series by covering decentralized, semi-decentralized, and derivative exchanges. Here it goes!
00 – Concepts and Definitions (Continued)
What is FinCEN? This is an agency within the US Dept. of Treasury that collects and analyzes information about financial transactions. It is meant to prevent financial crimes and money laundering both by businesses and individuals. In 2011, FinCEN defined digital currencies as fiat and started cracking down on those in the crypto world. Since then, every exchange serving US citizens has been trying comply with regulations otherwise they face severe penalties. Thank them when exchanges as for your Address and an ID.
What is the ICO (UK Regulatory Body)? This stands for the Information Commissioner’s Office and it is the UK counterpart to FinCEN - a regulatory office that reports directly to Parliament. ICO oversees compliance of the Data Protection and Freedom of Information Acts. It is meant to help companies and individuals keep their private information private, and can enforce this with penalties up to £500,000 when personal information is recklessly stored or leaked.
What is APR? Stands for Annual Percentage Rate.
What is Arbitrage? Arbitrage trading means to take advantage of price differences between markets. For example, say Poloniex lists ETH at $400, while Kraken lists it at $500. Buy low at Poloniex and then sell high on Kraken and you just made yourself a hundred bucks. Simple!
What is a Coinswap/Crypto-converter? Basically, a coinswap is a broker. If liken an exchange to a marketplace where buyers and sellers meet to agree on a price, then a Coinswap is a person who goes to the market on your behalf. Give them what you want to sell, and they will come back with what you want to buy. They take a small commission, give you a fair market rate (or close to it), and sometimes don’t even ask for your identity. Coinswaps are popular because they are convenient and offer coin pairs that exchanges sometimes cannot.
Overview: Founded in late 2013 by Gerald Cotton in Vancouver, Quadriga should be a source of national pride. While 4 major Canadian exchanges suddenly closed between 2015 and 2016, Quadriga survived. Then In 2015, Quadriga became the first exchange to attempt being listed publicly by enrolling for enlistment on the Canadian Stock Exchange (CSE). However, it ultimately failed to do so after being confronted with restrictions and regulations.
Withdrawal/Deposit Fees: Low deposit and withdrawal fees in comparison to other exchanges. A little unorganized on their official site
Linked Bank Transfer
Deposit 1%/ Withdraw Free
Free (Withdraw Only)
1% (Withdraw Only)
Free (Withdraw Only)
Security: Quadriga was quite notably lost of 67,000 ETH earlier this month, after an expensive mistake involving the Geth 1.5.9 upgrade. Apparently, outgoing addresses were incorrectly entered without 0x at the beginning of addresses and the sent ETH became trapped. Yet Quadriga has taken full responsibility and reassured customers that it will not affect their accounts.
Google Authenticator or Email 2FA Available
Undisclosed amount of funds in cold storage
3rd Party Security provided by CloudFlare
Expired $50 bounties
Verification: Quadriga CX enables alternative instant verification with an Equifax Credit Score Report.
Digital only, Limits Vary
Customer Service: Negative reviews are hard to come by, but perhaps that is due to the smaller size of this exchange. The FAQ is a little disorganized with a lack of tabs or categories on the site. However, support offers a direct phone line and email support. Also u/QuadrigaCX seems very active and responsive in the Bitcoin CA subreddit.
Bottom Line: The handling of the ETH loss was handled professionally and quickly. And as a Canadian, lower deposit and withdraw fees are probably impossible to find somewhere else. Trading fees are a little high, but that is the trade off. It seems they have weathered some ugly storms other Canadian exchanges could not and are a trustworthy exchange going into the future.
05 – Fiat Exchanges – Europe
Overview: CEX.io is started in London in 2013 both as an exchange and a cloud mining provider with its acquisition of Ghash.io. In 2014, Ghash was the largest Bitcoin mining pool contributing to over 42% of the mining power and mining over $200 million in BTC. In October of 2014 Ghash closed yet CEX.io lived on as an exchange.
Verification: With a lot of backlash from the Bitcoin community, CEX has registered with FinCEN and ICO in the UK, while also implementing Anti-Money Laundering (AML) and Know-your-Customer (KYC) policies. Once these policies came into effect and ID verification was requested, many original Ghash users abandoned the exchange. Exchange allows for linking of Facebook and Google+ accounts. Not a good option IMO.
ID + Photo
$10,000 Daily/$100,000 Monthly
Customer Service: Customer complain are abound here, and for justified reasons with hidden deposit and withdrawal fees. However it seems the company is quick about inquiries and verification, stating that most inquiries are filled in 24 hours. The FAQ is comprehensive which you should come to expect from established exchanges. Despite some unhappy customers, tt is good to see that they care about their reputation and their product.
Bottom Line: If you are already invested in crypto, CEX.io has some of the lowest trading fees in the game. However, they are clearly taking advantage of inexperienced users and those looking to exchange fiat for the first time. When purchasing with their FOK buying service (using instant credit card transactions), not only is the buy rate not at market price, but a 7% fee is added. This is price-gouging, this is FOK-ing unreasonable. I understand that this service offers something not found elsewhere, but additionally 1% crypto and $50 USD withdrawal fees makes these actions questionable if not just plain greedy.
BTC-E / XBTC-E
Overview: BTC-e is has been operating out of Russia since 2011 and provides language support in English, Chinese, and Russian. Perhaps due to this flexibility, it has high volumes of BTC, LTC, and ETH. It has an unclear connection to xBTCe, but both link to each other in the FAQ of the respective sites. A feature that is provided by BTC-e not seen elsewhere is software for trading called MetaTrader 4. This software seems a little clunky, but includes some TA features.
Security: BTC-e was hacked way back in 2013/2014 and reportedly $35,000 of BTC was stolen. Since then it has had a relatively clean record. This Digiconomist review is a thorough and detailed read, but unsure.
Google Authenticator Available
Must be changed every 6 months
3rd Party Security Services provided by CloudFlare
Verification: Since late May, there have been a shit storm of reports claiming BTC-e is locking funds for previously unverified users. In the FAQ users are asked to register at XBTC-e and within 10 days the account will be unblocked. It is unclear how the websites are connected or related to each other and 10 days is eons in crypto time.
No Stated Limits
Customer Service: Live Chat is supported during operating hours and the FAQ is listed in Russian and English. Resources are a little unorganized, but complete none-the-less. Bad reviews and complaints are plentiful with the long history of the exchange and the recent troubles with account verification for some long time users.
Bottom Line: I’ve got to be honest that I personally despise the interface at these 2 sites. Both give Yahoo! GeoCities and the original SpaceJam website a run for their money in terms of web design. Perhaps it makes up for it with some free TA software and a large daily volume. But it comes to say that the longevity of this exchange is its biggest strength.
Overview: Liqui is based out of Kiev, Ukraine. As a digital exchange, it does not support fiat currencies and is competing with the likes of Bittrex and Poloniex as it lists dozens of altcoins. The feature that differentiates Liqui is its ‘Interest’ feature which was introduced to increase traffic and volume to the newer exchange. It works similarly to depositing money into a savings account - deposit ETH into an account and earn 24% APR (or .066% daily interest) which is deposited every 24 hours. There is some fine print about deposit limits and interest calculations, but how it is presented is clear and straightforward. Unfortunately the limit of 1000 ETH needed by Liqui is currently full, so you will need to wait until others withdraw ETH or the limit is increased to participate.
Verification: There are no deposit/withdrawal limits and no verification levels. In order to start trading, all that is needed is an email address.
Customer Service: Searching for user reviews shows mixed results about Liqui’s customer service. The fact that it supported on several platforms, is reassuring. Contact Support@liqui.freshdesk.comBy Twitter@Liqui_ExchangeBy Telegram@Liqui
Bottom Line: The design and simplicity of Liqui stands out in my opinion. It is like what Poloniex could be if they just cleaned the UI/UX a bit. I like that it immediately gets into the trading charts without having to click around and if you miss the trollbox then this is your site. Like other smaller exchanges there are doubts over the reputation and reliability due to the opaque nature of the operations and development team. If you are looking for an alternative to Bittrex or Poloniex, this exchange may be worth investigating.
06 – Fiat Exchanges – South Korea
안녕하세요 여러분! 혹시 우리 한국인 친구 이 보고서를 한국어로 읽고 싶어한다면 알려주세요. 관심이 많이 있다면 간단한 한국어 보고서도 만들 수 있습니다. This year, ETH has taken off like a rocket in the Land of the Morning Calm. With a population of just 50 million, South Koreans account for almost 30% of daily ETH trade volume. Even more surprising is that currently the daily volume of ETH is about 5 times higher than that of Bitcoin on Korean exchanges. Since demand is high, ETH is trading at a premium on Korean exchanges. Some users have been talking about capitalizing off this imbalance by trading on arbitrage between exchanges. For those who have no connection to Korea and hope to do so, I have bad news – all Korean exchanges require a National ID number and access to a Korean bank account. This makes Korean exchanges virtually closed to Korean nationals and those with long-term visas. Sorry everyone.
Overview: Bithumb has all the features of horrid Korean web design - pop-up ads, flashing side-banners, disorganized pull downs, links to cafes/blogs, and generic stock images with embedded text. You can’t even see the exchange before making an account with your email or mobile number. It does support 4 languages, but reveals only poor translation done by Google Translate. In the face of this, this exchange has been trading a daily volume only second to Poloniex. On the bright side, they have the unique options to buy gift certificates/vouchers and remit money overseas.
Overview: Coinone is the second largest Korean exchange, and its design is a breath of fresh air compared to its rival. It offers service in English and Korean and allows for the trading of Bitcoin, ETH, ETC, and Ripple. It has a very comprehensive chart that is highly customizable, but sadly is only gear towards BTC currently. This makes it perfect for margin trading, and in the future I hope they add ETH. They also offer overseas remittance through their service Cross. Coinone support seems above average in their customer service with a PDF guide and an unprecedented landline number for direct support.
Overview: As the smallest of the 3 Korean exchanges, Korbit benefits from its simplicity. It by far has the best design and English support with clear links to services - including remittance, global payment, and their company bio. Like CoinOne they offer a direct phone line for customer inquiries and an extensive FAQ in 2 languages. Similar to the other exchanges, it has insanely low fees for deposits and withdrawals. This is largely thanks to the Korean banking system where wire transfers and mobile banking are commonly used. I recommend anyone interested in Korean exchanges to start here as they also have a reddit presence on u/korbitBTC
With a great deal of anticipation, major Chinese exchanges started trading ETH this summer. Since these exchanges deal huge volumes of Bitcoin already, naturally it was expected that they invest heavily into ETH as well. So far this hasn’t quite lived up to the hype with many exchanges still favoring Bitcoin, Litecoin, Altcoins, and even Ethereum Classic (Gulp). Three of these exchanges underwent inspections by the Peoples Bank of China earlier this year and will be working closely with the government to ease fears of money laundering and market manipulation. There are a lot of Chinese sites, and since my Chinese is non-existent this list is basically just for name recognition. In many ways these sites are very similar in regards to security, verification, and fees compared to their western counterparts; just marketed at a different audience and currency. If users are seriously interested in these exchanges and making reviews, please contribute or ask!
Overview: Number one in Chinese ETH trading, currently overtaking the volume of exchanges like GDAX and Kraken. CoinOne is very accessible with a mobile app, PC trading software, live chat customer support, and wallet services. OK Coin has English for the basic interface, but no detailed information in the FAQ.
Overview: Second in Chinese ETH volume, Huobi mirrors its rival OKCoin in many ways. It has a solid interface, a mobile access, and even the same rumors of faking trading data! Huobi also started with the ambitious motive of having zero trading fees, only to introduce them in January of this year.
Overview: ShapeShift is the leading Coin-converter site and has been since 2014 when it was founded. With great effort put into to eliminating verification requirements and allowing for the exchange of dozens of altcoins, ShapeShift provides a relatively seamless and simple service. The big buttons and bright color scheme immediately differentiates it from other exchanges.
Trading Fees: From the website ShapeShift does not charge a specific fee. Instead, we offer an exchange rate for each coin which changes every 30 seconds with market conditions. We try to earn revenue by offering a profitable exchange rate, and typically we earn in the range of 0.5% (50 basis points). You receive exactly what the exchange rate shows, there is no additional fee (except the tiny miner fee). There are complaints about the fees not being calculated fairly, but no one is forcing any of these users to exchange at the unbalanced rate. Or you could just read what CEO u/evoorhees has to say about it over at the Ethereum subreddit.
Security: After losing $230,000 from a possible internal hack in 2016, ShapeShift contracted the Canadian Security firm LedgerLabs. Afterwards they permanently hired Michael Perklin as Chief Security Information Officer. ShapeShift claims the only information stored during exchanges is the logs of wallets and the transfers between them. This is protected by storing the data across servers in multiple countries with none based in the US.
Customer Service: Customer service is necessary for the inevitable ‘entered the wrong wallet address’ problem from new users. Along with complaints about slow transfers, a simpler platform does not exempt ShapeShift from dealing with tons of angry customers and their problems. I take many of the complaints about unfair exchange rates with a grain of salt, because the problem could have been avoided by the customer. It does seem however that ShapeShift is very responsive, with a presence on almost every social platform imaginable. Even right here on reddit at shapeshiftio
Bottom Line: Especially after the release PRISM, it is obvious that no one is better at simplifying than the ShapeShift team. In order for crypto trading to become mainstream, it need to be easy enough that your grandma could do it. Erik Voorhees understands better than anyone. Instead of being confronted by esoteric graphs, unfamiliar ticker symbols, and a list of registration requirements, ShapeShift differentiates itself from other exchanges in both its interface and ease of use.
Overview: Changelly is a prototype project that was created by developers associated with MinerGate 2013. It has a slightly less sleek interface than ShapeShift, but is still quite intuitive in terms of its pull down exchange bars and other information. Changelly offers Credit Card services like CEX.io, but the fees are currently so expensive that it is hardly worth it. Another downside is the recently introduced email requirement.
Trading Fees: 0.5% Commission Fee with .00042 ETH Network Fee.
Security: It offers 2FA with Google Authenticator and HTTPS protocol.
Verification: A confirmed email address is all that is needed to start trading. You could easily use a throwaway email if there are concerns over privacy. There are also links to your Google+ or Facebook Profile, which seems a little uneccessary.
Customer Service: Like ShapeShift, Changelly suffers in its reviews due to inexperienced users. Those using Credit Cards especially will feel ripped off despite a clear disclaimer stating that rates are high. They have an extensive FAQ, but do not appear to have a ticket system for complaints and their social media pages are more geared for press releases than support. Their subreddit is a similar story in changelly, but their support staff u/changelly_com runs circles trying to solve issues. Because of the honest effort, I believe they can do better and can improve.
Bottom Line: When it comes to criticisms of Changelly, the apple does not fall far from the tree with MinerGate. Users rightfully have some distrust about the lack of opacity in the management and operations of this exchange. I feel that they are more honest and fair in the Credit Card services than CEX.io, but still should cut the service as it generates a ton of bad experiences. If you are looking to convert coins, it seems to be an acceptable service, but some of the benefits are lost with having to verify an email address. In this way it is hard to compete with ShapeShift.
The Problem with North Carolina bitcoin legislation, and how we can prevent that from happening in California
In North Carolina, due to the enactment of bill H289 on June 30, 2016, the sale or issuance of any payment instruments or stored value primarily for personal, family, or household purposes, or even receiving of money or monetary value primarily for personal, family, or household purposes (including bitcoin or any cryptocurrency) is considered a crime unless you have a permit from the state or fall under one of very limited exemptions. As such, H289 in North Carolina was very similar to California's proposed AB 1326, but the difference was that California's bill failed twice due to overwhelming opposition from both residents of the state and EFF, and H289 (North Carolina) seemed to slip through the cracks and get passed by the Governor despite that the content of the bill makes it so horrible (not to mention unenforceable). Perhaps the only redeeming quality of H289 was that it stated that "For the purposes of this Article, a person is considered to be engaged in the business of money transmission in this State if that person solicits or advertises money transmission services from a Web site that North Carolina citizens may access in order to enter into those transactions by electronic means," so you'd have to advertise a service on a website in order for the act to be applicable to you. However, that also meant that North Carolina residents would be unable to put up a website and advertise that they are accepting bitcoin as payment for goods or services, without running the risk of having someone from the State demand they get a license for money transmission (the cost of which is at least $1,500 for the application, and there are likely other costs for the applicants). Altogether, H289 is a horrible bill, yet it managed to get enacted. So let's examine how we can prevent such a bill from being passed in California. We managed to kill AB 1326 the first time it was brought up, and the actions of people across California, the EFF, the Bitcoin Foundation, and many others, helped kill AB 1326 the second time it reared its ugly head. But despite all this, Assemblymember Dababneh in California plans on bringing a similar bill back in January 2017. So, what are we going to do about this? Really, what are you going to do about this? We can't let the likes of Dababneh create financial censorship for everyone. It's already happened in New York and arguably in North Carolina as well. We have to draw the line here in California or else it will happen everywhere. Here's my suggestion: 1) Don't wait until January 2017, when Dababneh's legislation comes out. If you are in California, start contacting not only Dababneh, but your state legislator now to tell them what you do and don't want. How to contact your California Legislator on this issue As a bit of a backgrounder, it seems there is always talk about the "necessity" to provide certification of one's identity (in a traditional sense, using government-created identification methods) in order to maintain "security" when using exchanges. This notion leads to a false sense of security and actually exposes users to a larger possibility of attack due to the scope of data that might be granted to a service provider in these circumstances. It is important to remember that the notion that a user should provide some form of identity to a service provides absolutely no additional security to that service. The underlying structure of the service remains just as secure or as vulnerable as it was before. And if it was vulnerable in any way, the additional data you provide if you consent to a request to provide identity of some form, means that this identity information will one day soon be divulged to someone else. It may even happen instantaneously before any hack even occurs, due to provisions relating to how third parties are treated in US law. As many people have conveniently forgotten, the passage of the "cromnibus" bill in December 2014 included a sneakily passed provision of financial surveillance which allows the government to basically do full surveillance on any transaction routed through a bank, credit card company, or any associated 3rd party service to which your data is passed in the process of financial transactions, SARs, or any related processes really. This is one more reason why you should not use web-based exchanges, and should not use web wallets also, but rather should use fully decentralized exchanges and wallets which are installed on your computer and give you full control over both the application and your keys (no service, no corporation, no login required, etc.). 1) As a user, who has no control over what the exchanges will and will not do, and assuming for a moment that the exchanges make no improvements in their security practices, you can nonetheless approach the market in a way that will protect you (and your friends, colleagues, family, etc.) simply by using more secure tools. I've detailed some ways to do this in a recent post here. You'll note that the above recommendation doesn't require (if you do it right) that you provide anyone with any identification (with the exception of certain circumstances where there is a dispute which would require moderation, I believe) but it will allow you to exchange one currency for another. 2) Now let us assume that you wish to try to make a dent in what exchanges will do. You can write them of course and encourage them to improve their security practices in different ways, but in reality the number of exchanges and the variation in the security practices each one utilizes would make this task meaningless. Fortunately, with the defeat of AB 1326 (CA), twice, the worst possible legislation (which could have been used as a model for the nation, actually) was stopped in its tracks, but similar legislation may be revived in new proposals in California in January, because in California, legislators do not learn. They understand only fascism, and how to oppress and tax people until people flee the state (which has been occurring in California more or less since 1990 in a process of outmigration). So then, what can you do in the legislative front on this issue? It's actually rather simple. If you are writing California legislators (because CA legislator Dababneh has promised to bring back something like AB 1326 in January 2017), and you should be writing them now on this subject, remind them of the first two attempts they made to pass this bill ended in giant flaming failures, for good reason, because a bill that proposes to add permitting requirements to exchanges, startups / startup accelerators, bitcoin businesses, and individuals, merely for them to use their currency of choice, simply has no chance at passage, ever. Instead, when they next try to pass a cryptocurrency bill (and they will), they should simply pass a minimum security standard that exchanges would have to meet in order to operate. (The requirement would be applicable to web-based exchanges, which function as MSBs and are already required to be licensed in the US by the US Treasury / FINCEN. There's no need for state level licenses... but if the state passes additional legislation, it should focus only on specifying security requirements for web-based exchanges. The regulation or standards would be required for MSB / FinCEN licensed exchanges and advisory (voluntary only) for decentralized exchanges and exchanges that are not web-based exchanges, because there are limits to enforceability of a security standard. This would not require any permitting or fees, but simply setting of standards for consumer safety.) Wait, you say. This would be impossible to set a standard. Each state would want to have its own standard and say that its own is best! We'd simply be back in the same situation as we are now, right? Well, maybe not. Why? Because some of the best minds in bitcoin, including Andreas Antonopoulos and others, have already made some security standards. So those standards could be worked up a bit by the Cryptoconsortium folks who made them, tailored for the purposes of securing web-based exchanges, adopted by states and that could be what the basis would be for protecting consumers. If it proved inadequate (and no doubt any standard will be tested by someone trying to break it) then someone can always improve it. Also, you can propose your own changes to the Cryptoconsortium standards. Here are a couple (1, 2) that I've proposed. (My proposed changes mostly suggest distinguishing between government-issued ID and background requirements for exchange operators, versus standard users of exchanges who should not be required to provide government-issued ID, but rather should be able to utilize pseudonymous or decentralized (blockchainMe / blockchain ID) identification options. Again -- How to contact your California Legislator on this issue Don't wait until January 2017 when Dababneh comes out with his own version of how he thinks you should live your life. Tell legislators now what you want (and don't want) now. Remind them that legislation like AB 1326 won't work and we've defeated it twice -- and that applying new licensing requirements for use of cryptocurrency to individuals and businesses has no benefit for the public. Tell them that security standards for exchanges are what any new legislation in the area should focus on, and they should rely upon experts who have developed open standards such as the Cryptoconsortium model. Thanks for reading this long ramble.
Where do I buy bitcoin? The Tax and Regulatory Situation for Bitcoin in the US is a Nightmare
Retrieved from: https://roguecrypto.com/2018/08/18/the-tax-and-regulatory-situation-for-bitcoin-in-the-us-is-a-nightmare/ A lot of us invested in cryptocurrency because we believe the technology behind it as well as the hope for the decentralization of monetary power. It has a great potential to create equality in terms of wealth generation, asset possession, and ease of use. The idea behind bitcoin is all about not having to ask permission. Bitcoin also offers hope for many of the unbanked across the globe. However, the US Internal Revenue Service (IRS) seems to be blocking at least part of humanity’s chance for greater development through faster and more accessible financial transactions. Instead of promulgating rules that could ease the ownership of cryptocurrencies, the US government even makes it more complicated to own and use digital coins. To make matters worse, each agency promotes its own set of extra-legislative rules (that is making law or “regulation” without actually voting on it in Congress). According to the 2014 guidelines issued by the IRS, cryptocurrencies are considered property. It falls under the same category as houses, stocks, bonds gold or silver. For this particular arm of the government, cryptocurrencies are convertible virtual currencies that have equivalent values in real currency. This designation is mostly because they don’t want to treat it as currency. No one wants to admit that bitcoin is a currency yet, unless it serves them for some other purpose. Wait until you see the FinCen rules. What do the guidelines imply to us? Since cryptocurrencies are property, The IRS basically wants us to record all the transactions that we have made using virtual currencies. We need to compute the losses and gains that we have acquired by using the digital coins that we have. If we intend to pay a night of hotel accommodation using Bitcoins, then we shall record the amount of BTC used, convert the value according to existing exchange rates, and subtract the cost basis in BTC from the price. We will all have to pay taxes from such transaction if it resulted in gains and of course deduct loses How does that sound to you? It would be much easier to treat it like a currency. For example, you pay taxes on the USD that you put in the market such as when you trade it for Euros on vacation, but you don’t pay taxes every time you spend it if the market is up. Life is easier this way because you do not need to keep track of every soda or beer you buy in Euros and the corresponding exchange rate at the time. To do so would stifle free trade. Maybe this is the goal? However, the IRS does not provide comprehensive guidelines on the methods of recording retail transactions using bitcoin and other altcoins. This has resulted in a lot of confusion concerning individual tax obligations related to cryptocurrency ownership and use. No one has yet to sue over this issue. I think that should be forthcoming. Our job as citizens is not to serve the state, but vice versa. Rest assured, the State will not choose to control itself and most of its employees are detached from real market conditions with their guaranteed salaries and pensions. They can make a mistake (hopefully not with your life or estate) and suffer little if any negative consequences. What happens to you in the process is inconsequential. To put it lightly, they will take your money, but they don’t represent you, nor do they care about you. In fact, your objects are a nuisance to them. They have more important things to do. Apart from the IRS, there are also other government entities that propose restrictions and limitations on the liberty of cryptocurrency use based on archaic laws from the 30s and 40s. The SEC is starting to consider some digital coins as a security though no law has been passed allowing them to do so. They are interpreting existing laws in a way that gives them maximum authority. The US Commodity Futures Trading Commission also proposes to include virtual currencies under commodities. At least when it comes to bitcoin there is a consensus regarding its commodity status between the SEC, IRS and CFTS. Here is where it gets rich and dodgy to be polite: The US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has provided a statement that convertible virtual currencies constitute money transmissions. Now isn’t that rich? It’s not currency when you want to use and spend it, but when it comes to stapling your better parts to the floor in complete submission… it is now a currency, but only for the purposes of calling it a money transmission. All of these, by the way, are extra-legislative in nature. All of these bodies have been asking Congress to clamp down on your freedoms to no avail. The banks lobby day and night. They have recruited the likes of Diane Feinstein and even a few Republicans to take away our financial choices. The real question the courts need to answer is this: If FinCEN and the other entities really intend to regulate cryptocurrencies in the country, how are they supposed to do this without any legal basis or continuity? The US is not a nation of people that is supposed to ask for permission to transact. With differing and contrasting views on cryptocurrency coming from the federal government, everyone is faced with extreme dilemmas concerning crypto investment and business compliance. The incoherence of policies among bodies of government can negatively affect the realization of the crypto world’s purposes for the middle class and poor. Maybe this is the goal after all?
FinCEN says BTC-e handled stolen Mt.Gox BTC. Does this mean that after they've taken their fines the will pass something back to the Mt.Gox trustee?
https://www.fincen.gov/sites/default/files/enforcement_action/2017-07-27/Assessment%20for%20BTCeVinnik%20FINAL2.pdf FINCEN states: BTC-e processed transactions involving funds stolen from the Mt.Gox exchange between 2011 and 2014. BTC-e processed over 300,000 bitcoin of these proceeds, which were sent and held at three separate but linked BTC-e accounts. BTC-e failed to conduct any due diligence on the transactions or on the accounts in which the stolen bitcoin were held. Moreover, BTC-e failed to file any SARs on these transactions even after the thefts were publicly reported in the media.
Among the four pooled-account Bitcoin Exchanges eligible for inclusion in Winkdex, domicile, regulation and legal compliance varies. Information regarding each Bitcoin Exchange may be found, where available, on the websites for such Bitcoin Exchanges, among other places. BitStamp is a Slovenian Bitcoin Exchange that maintains an office in the United Kingdom and operates the website www.bitstamp.net. Information regarding the parent company of BitStamp, BitStamp d.o.o., is limited; however, the company has publicly stated that it is not subject to United Kingdom anti-money laundering and combating the financing of terrorism regulation. BitStamp requires verification of user identity for all accounts and claims to have instituted an anti-money laundering policy that meets the requirements of anti-money laundering and counter terrorist financing regulations in the United Kingdom. BTC-e is a Bitcoin Exchange with anonymous founders operating the website www.btc-e.com. It is purported to be based in Bulgaria, but has operational ties to Cyprus and uses banks in the Czech Republic. Its terms of service are governed by the laws of Cyprus. Information regarding the corporate structure and ownership of BTC-e is not readily available, nor is any information regarding any compliance with regulation in any jurisdiction. BTC-e generally does not require verification of user identity for transactions, but does require identity verification for fiat currency withdrawals. BTC-e’s website indicates it no longer accepts wire transfers from US citizens or US banks, but it has not prohibited US citizens from using its website. CampBX is a US Bitcoin Exchange that operates the website www.campbx.com. CampBX is operated by BulBul Investments LLC, a US limited liability company formed in the State of Georgia. CampBX has registered as a money services business with FinCEN and claims to be in compliance with the regulations set forth by the State of Georgia’s Department of Banking and Finance and Department of Treasury. CampBX requires verification of user identity for certain transactions.
(side note, is CampBX even still around?)
Bitfinex is a Hong Kong Exchange that operates the website www.bitfinex.com. Bitfinex is operated by Bitfinex LLC, a Hong Kong limited liability company. Information regarding Bitfinex’ compliance with regulation in any jurisdiction is not readily available; provided, however, that Bitfinex states that it files suspicious activity reports to jurisdictions that require such reports when a user’s activity requires such reports. Bitfinex requires verification of user identity for all transactions denominated in fiat currencies such as US Dollars.
Vault of Satoshi Ceasing U.S. Operations Due to “Increasingly Hostile” Regulatory Environment
It is with great regret to inform you that we will be ceasing our US operations effective today. If you reside outside the United States this does not affect you. We’ve made this decision not because of any specific legal challenge or threat, but because we feel the regulatory environment in the US is becoming increasingly hostile toward Bitcoin, and more specifically toward exchanges trading in digital currencies. We’re heeding the warnings of Bitcoin Foundation and BitInstant founder, Charlie Shrem, who recently conducted a troubling interview with “Let’s Talk Bitcoin.” If you want to hear more about the situation exchanges face operating in the US, we recommend you listen to episode 87 of “Let’s Talk Bitcoin” here . We’ve made repeated attempts to comply with FinCEN regulations, but their online form submission process will not allow us to post reports from our headquarters in Ontario, Canada. They refuse to accept printed paper reports, and their drop-downs don’t include Canadian options, making it impossible to the file the required documentation properly in order to comply. Despite repeated inquiries into how to properly file reports from Canada, we have yet to receive a satisfactory response. They’ve literally made it impossible for us to run our business in compliance with their regulations. We make this decision with a heavy heart, and will be revisiting it as we continue to monitor the regulatory and legal position of the US government (and all of its individual States) towards digital currency exchanges. Each State has their own requirements for how to handle a business like ours, and the setup and compliance costs are astronomical. We’d like to get back into the US digital currency exchange market as soon as possible, but cannot do so until the regulatory situation is clarified and settles down. We will be exploring re-launching on a state-by-state basis, but we do not yet have a timeline in place. If you are a US-based customer, unfortunately your account will soon be demoted to level 1, and you will be limited to coin-to-coin trading, which will be launching within the coming weeks. Any dollars currently in your account will be refunded to you via check, which you should receive within 2-3 weeks’ time. Please make sure your address is correct. If you’re a US-based customer and have recently submitted documents for verification, unfortunately, we will not be able to verify your account at this time. To all of the amazing American users who have helped us build Vault of Satoshi into what it is today: we value you tremendously and we hope that we have not lost your trust and support. We deeply regret that we can no longer service your cryptocurrency exchange needs, and we’ll do everything we can to re-gain your business and re-launch in your country in the near future, stronger than ever before. To Canadian and International users, we’ve got exciting plans ahead and are continuing our to expand and cement our position in this industry. Stay tuned for more amazing innovations from our team here in Canada. Thank you once again for your incredible and humbling support.
Wtf is this Coinbase? This is more info than my bank needs. My account isn't even high volume...
Subject: An Important Message from Coinbase SEP 03, 2014 | 02:36PM PDT Hi, We noticed your account has conducted a high volume of transactions with Coinbase. While we appreciate you using Coinbase, we are a regulated Money Service Business under the FinCEN division of the U.S. Treasury Department and as such, we are required to review accounts with high volumes to ensure compliance with regulations. With that said, can you please provide us with the following information in the next 7 days in order to avoid disruption of service to your account: - Please describe the primary use case for your Coinbase account - Please describe the source of the bitcoin being deposited into your account - Please tell us the source of funds for your bitcoin purchases - Please elaborate on the nature of your outgoing transfers and what, if any, services they are related to We thank you for your understanding and your cooperation. Coinbase is dedicated to promoting and progressing Bitcoin and part of this progression is compliance with standing regulations. If you have any trouble fulfilling this request, please contact us at [email protected] and we’d be happy to assist you in completing the process. Respectfully, Coinbase Compliance Team Sincerely, Pierce Coinbase Support EDIT: This is legit it shows up on my Coinbase account when I sign in. They haven't answered what they consider high volume.
If anyone gives a damn about my opinion, here's what I've pieced together in this MtGox saga. The following is speculation and all info I've gathered from public sources and reddit speculation. Early 2013 and prior, MtGox was solvent and 'above the law'. March 2013, FinCEN issued guidance stating Bitcoin Exchanges, such as Mt Gox, who had business with customers in the US had to register as a "money services business" (MSB), lest they be subject to law enforcement. On 15 May 2013, Mt Gox, had their US bank accounts seized for failing to register as MSB in the US. We've learned that this seizure was ALSO due to investigations into links with Silk Road (SR). Lack of MSB license made FBI's job much easier. Added:http://thegenesisblock.com/mt-gox-seizures-linked-silk-road-fed-testimonies/ After May 2013, it's my opinion that MtGox was running a fractional reserve exchange. Why? Because the FBI seizure included, not JUST their bank account, but also assets containing the cold storage private keys for MtGox customer's deposits (744,000+ bitcoins). At this point, we can presume FBI was monitoring ALL MtGox internal trades, and external deposits and withdrawals. The FBI would also be receiving ALL MtGox customer verification information. Without exception. Including me (grrrr) MtGox were likely told to continue operating normally so that the FBI had an opportunity to catch SR-related and money laundering activity. FBI issues a gag-order against Mark Karpeles/MtGox. Utter a word about this and go to jail. This in itself is the reason for recent horrible Psilence. MtGox could continue operating because the FBI didn't confiscate the hot wallet running on the servers, since this would prevent them from operating 'as normal'. October 2013, U.S. law enforcement officials from the FBI shut down Silk Road, following the arrest of Ross William Ulbricht, the site's alleged proprietor. MtGox were likely told to continue operating so the FBI can continue to monitor and catch SR users, or those of SR2.0 The run up in Bitcoin price and increased deposits from October to December 2013 resulted in MtGox returning to some kind of solvency. Mark possibly saw light at the end of the tunnel. December 2013, alleged top moderators of Silk Road 2 forums are arrested in Ireland. Jan 2014, seeing the light at the end of the tunnel, MtGox create the 27 page business plan. http://www.scribd.com/doc/209535200/Business-Plan-MtGox-2014-2017 Jan - Feb 2014, Transaction Malleability/incompetence begin to drain MtGox hot wallet. The hot wallet, as we have learned in the leaked 'Crisis Strategy' doc, contains around 2000 BTC by the time MtGox stop BTC withdrawals in Feb 2014. http://www.scribd.com/doc/209050732/MtGox-Situation-Crisis-Strategy-Draft Now, instead of seeing the light at the end of the tunnel, Mark sees the writing on the wall. MtGox cannot operate 'as normal' as instructed by the FBI. Mark is desperate and needs a BTC injection. What happens next is possibly illegal and certainly immoral. This is speculation, although it's alluded to in the Crisis Strategy doc. Mark uses the lower MtGox BTC price for arbitrage, (ie, market manipulation), buying cheap coins on MtGox and selling on other exchanges for higher price. Bringing the $ back to MtGox to buy more cheap bitcoins, rinse and repeat. At the same time, Mark puts the feelers out for a buyer, someone, anyone to bail out or take over MtGox. Potential Buyer (dont know who) does their due diligence and starts deep investigation. They stumble across the Crisis Strategy doc and immediately notify the authorities and their colleagues in the industry (ie, dont bail out Gox, here's why, authorities notified) EDIT added: 24 Feb 2014, several businesses issue the joint statement regarding MtGox solvency and 'tragic violation of the trust'. They likely had seen the Crisis Strategy doc before @twobitidiot released it publicly. http://blog.coinbase.com/post/77766809700/joint-statement-regarding-mtgox end edit Now MtGox is closed. The FBI have seized fiat dollars AND cold storage private keys containing the supposed 744,000 BTC. Those 744,000 BTC could be argued by the FBI to be the proceeds of crime.
Did I forget something? Of course I did! By all means, please let me know in the comments and I'll add it in here! It's 9:40AM EST and we've found 96.95% of our first 100 Billion DOGEs -- only 3.05% remains until we hit our soft cap! Our Global Hashrate is up from ~1340 to ~1350 Gigahashes per second and our Difficulty is down from ~16829 to ~12615. As always, I appreciate your support! GoodShibe
[uncensored-r/Bitcoin] Bitcoin is fraudulent and nothing but insider Trading ...NO, Researchers find that one person lik...
The following post by Theguy3993 is being replicated because the post has been silently removed. The original post can be found(in censored form) at this link: np.reddit.com/ Bitcoin/comments/7qqmjt The original post's content was as follows:
Yeah ok keep pumping out the articles about this so funny I would bet the articles stating bitcoin went to 1000$ on fraudulent money is 100% posted by insider traders or Wall St.. And Its no secret Wall St is driven by insider trading. Heck you can watch a documentary that shows how they do insider trading using loopholes of having a couple people down the line get the info that they "donate" money to for information. But anyways I just wanted to post another rant and laugh... Also, if you want to claim bitcoin is fraudulent based on a couple people who traded 36 million dollars worth of a coin worth 250 Billion on average give or take 50 billion or 0.000144% of bitcoin then I guess all banks should close tomorrow since 90% of all money banks handle have traces of cociane on them and clearly came from fraudulent places. Again, I will state bitcoin will rise and fall like it always does pretty much only falling from fake news pumped in sync with sell offs to try to get more for cheap, and thats fine its so obvious to me also I have traded since before Mt.Gox and the coins never went to its peak and stayed there untill after the fall of Mt.Gox. The timeline may show that right before Mt.gox froze the price of BTC was going up. Until around that time but anyone who used MT.Gox knows that no one could move, trade or withdraw there funds long before it was froze and it finally froze from the lawsuits regarding this so essentially Mt.Gox was out of the game. And for those who like facts here you are I will include the links also https://en.wikipedia.org/wiki/History_of_bitcoin#2013 "On 15 May 2013, the US authorities seized accounts associated with Mt. Gox after discovering that it had not registered as a money transmitter with FinCEN in the US. On 17 May 2013, it was reported that BitInstant processed approximately 30 percent of the money going into and out of bitcoin, and in April alone facilitated 30,000 transactions, On 23 June 2013, it was reported that the US Drug Enforcement Administration listed 11.02 bitcoins as a seized asset in a United States Department of Justice seizure notice pursuant to 21 U.S.C. § 881. It is the first time a government agency has claimed to have seized bitcoin. In July 2013 a project began in Kenya linking bitcoin with M-Pesa, a popular mobile payments system, in an experiment designed to spur innovative payments in Africa. During the same month the Foreign Exchange Administration and Policy Department in Thailand stated that bitcoin lacks any legal framework and would therefore be illegal, which effectively banned trading on bitcoin exchanges in the country. According to Vitalik Buterin, a writer for Bitcoin Magazine, "bitcoin's fate in Thailand may give the electronic currency more credibility in some circles", but he was concerned it didn't bode well for bitcoin in China. On 6 August 2013, Federal Judge Amos Mazzant of the Eastern District of Texas of the Fifth Circuit ruled that bitcoins are "a currency or a form of money" (specifically securities as defined by Federal Securities Laws), and as such were subject to the court's jurisdiction, and Germany's Finance Ministry subsumed bitcoins under the term "unit of account"—a financial instrument—though not as e-money or a functional currency, a classification nonetheless having legal and tax implications. In October 2013, the FBI seized roughly 26,000 BTC from website Silk Road during the arrest of alleged owner Ross William Ulbricht. Two companies, Robocoin and Bitcoiniacs launched the world's first bitcoin ATM on 29 October 2013 in Vancouver, BC, Canada, allowing clients to sell or purchase bitcoin currency at a downtown coffee shop. Chinese internet giant Baidu had allowed clients of website security services to pay with bitcoins. In November 2013, the University of Nicosia announced that it would be accepting bitcoin as payment for tuition fees, with the university's chief financial officer calling it the "gold of tomorrow". During November 2013, the China-based bitcoin exchange BTC China overtook the Japan-based Mt. Gox and the Europe-based Bitstamp to become the largest bitcoin trading exchange by trade volume. In December 2013, Overstock.com announced plans to accept bitcoin in the second half of 2014. On 5 December 2013, the People's Bank of China prohibited Chinese financial institutions from using bitcoins. After the announcement, the value of bitcoins dropped, and Baidu no longer accepted bitcoins for certain services. Buying real-world goods with any virtual currency has been illegal in China since at least 2009." In fact I was trading the Down swings around this time and remember it quite clearly and the price most deffinatly did not shoot up with any relation to Mt.Gox if anything Mt.Gox was the reason for the fall from the news and panic! Also, WAKE UP PEOPLE. Wall St's total value is what 2.7 Trillion that took like 100 years to get. Does no one else realize the magnitude of Bitcoin to them. Bitcoin in 10 years or less including its many other Coins under it is worth 658-758Billion or 0.65-0.75T in 1/10th the time Wall St did it and its getting bigger all the time. I've said it before and Ill say it again there scared because Bitcoin, (and altcoin), traders are used to volatility, We can loose 70% of our gains or investment in a day or an hour and still keep on truckin. But that type of volatility scared the pants off the big traders because they also have investors to explain these situations to and they have no merits to base there explanations on since nothing in the real world short of good and bad news or money in and money out of coins affects the prices very much. And for this reason Wall St will never like it and the fact its outside of there nice controlled systems they designed that benefit the rich and rape the poor. And this new system which does not allow credit, or BS is a new realm to them. Sure there might be some insider trading some of the time but the order books and live stats are available to anyone and everyone equally, unlike stocks where you need crazy memberships just to get short 15 minute delayed stats on the live markets and only the top accounts with over 50,000$ invested can even dream about getting anything better. And you have to pay 6.99-24.99 Per trade the lesser being for the 50k investor, leaving no learning curve for the small guys. So in my opinion its still a way better system and anyone can easily do some research like I have today and not panic sell from every little BS article and simple trade for yourselves. And Bitcoin to Altcoin trades BTW will cost you 0.06-0.08% and Bitcoin/Altcoin to USD (Or your Currency) will cost you 0.18-0.24% on most exchanges or platforms. If you've read my rant this far I thank you for your time. Some article just really grind my gears :D PS - Below is some handy trading platforms and tools I would also like to take a moment just to say anyone interested in a FreeTrading Platform should check out Qt Bitcoin Trader from source forge. Or if your a bit more advanced there is a nice program you can try for free and the trial is the the same as the full version (I have used both since I bought it shortly after) and that is called LeonarDo by margin software a very talented German company. Qt Bitcoin Trader - https://sourceforge.net/projects/bitcointrade Leonardo - https://marginsoftware.de/product.html
5 FIN-2014-R001 “Application of FinCEN’s Regulations to Virtual Currency Mining Operations” - 01/30/2014, clarified that a user is a person that obtains virtual currency to purchase goods or services on the user’s own behalf. (emphasis added) 6 See FIN-2013-G001. FIN-2014-R001. Application of FinCEN’s Regulations to Virtual Currency Mining Operations. Issued Date. January 30, 2014. FinCEN understands that Bitcoin mining imposes no obligations on a Bitcoin user to send mined Bitcoin to any other person or place for the benefit of another. Instead, the user is free to use the mined virtual currency Notice 2014-21 . SECTION 1. PURPOSE . (FinCEN) Guidance on the Application of FinCEN’s Regulations to Persons Administering, Exchanging, or Using Virtual Currencies (FIN-2013-G001, March 18, 2013). resources to validate Bitcoin transactions and maintain the public Bitcoin October 28, 2014 FinCEN: Bitcoin payments must follow BSA. The Financial Crimes Enforcement Network issued an administrative ruling that says a company using the virtual currency Bitcoin for payments made to merchants in the U.S. and Latin America would be considered a money transmitter required to comply with the Bank Secrecy Act. Jan 31, 2014 at 00:17 UTC Updated Jan 31, 2014 at 20:58 UTC. Pete Rizzo. FinCEN Declares Bitcoin Miners, Investors Aren’t Money Transmitters. The US Financial Crimes Enforcement Network (FinCEN
http://thebitcointutor.com Learn how to buy bitcoins with Coinbase, step by step. Make sure you watch how to create a Coinbase wallet and connect it to your ... Brian Armstrong Live: Coinbase Trading, Bitcoin Mining, BTC Price Stay Home NOW Coinbase PROMO 7,046 watching Live now Floor Speech on FinCEN Funding H.R. 5016, July 14, 2014 - Duration: 4:02. A rough insight into Bitcoin's famous rise, fall, and rise again throughout its five year history. ... The value of Bitcoin 2009-2014 fizzzzaa1. Loading... Unsubscribe from fizzzzaa1? Cancel ... The Bitcoin Group, the American Original, for over the last ten seconds, the sharpest satoshis, the best bitcoins, the hardest crypocurrency talk. - Galaxy Digital CEO Michael Novogratz said that he expects bitcoin (BTC) to beat its all-time-high price of $20,000 within 18 months. Novogratz made his remarks during an interview with ...