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Thread: Future U.S. IRS Tax regulations on Cryptocurrencies, Bitcoin, etc

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    United States Avalon Member ThePythonicCow's Avatar
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    Default Future U.S. IRS Tax regulations on Cryptocurrencies, Bitcoin, etc

    .
    It is looking like the U.S. tax, regulatory, securities and financial institutions will be incorporating Digital Currencies, both existing cryptocurrencies, and the anticipated Federal Reserve issued Central Bank Digital Currency (CBDC) into their existing framework:
    • Most existing digital currencies on blockchains or other such distributed ledgers would become "securities", and regulated like stocks and bonds.
    • A few cryptocurrencies, perhaps just Bitcoin and Ethereum, would become "commodities", and regulated like pork bellies, petroleum and frozen orange juice.
    • The Federal Reserve would issue its own Digital Currency, fundamentally changing the US Dollar monetary system from a debt-money basis (new US Dollars have been are currently created through banks lending them into existence) into directly issued Federal Reserve digital dollars.
    This would result in an unending series, over decades, or more likely centuries, of laws and regulations effecting the buying, selling, taxing, transfer, and creation of these assets and of various contracts, securities, futures, and derivatives formed from, based on, or interchangeable with them.

    The following article lays out what one apparently well informed author, Wesley Thysse, of THE DECENTRALIZED LEGAL SYSTEM, anticipates.

    If you are involved with U.S. taxes, laws or regulations, and if you are involved with cryptocurrencies, you might want to give this article a close read. You might want to put on a pot of coffee first ... it's not an easy read.

    This article can be read as a web page at: New US Crypto Regulation Far More Invasive Than We Thought. -- Review of US Digital Asset Regulation – September 2021.

    Or it can be read as the following pdf:



    https://decentralizedlegalsystem.com...ember-2021.pdf
    Last edited by ThePythonicCow; 7th October 2021 at 22:13.
    My (sometimes rather dormant) blog: theMooster.net

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    United States Avalon Member ThePythonicCow's Avatar
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    Default Re: Future U.S. IRS Tax regulations on Cryptocurrencies, Bitcoin, etc

    .
    The above article is potentially the tip of a huge iceberg - the replacement of the debt-money system of the last few centuries with Central Bank issued digital currencies.

    This would be the biggest change to our civilization's monetary system in centuries.

    History tells us that one of the ways that the Elite Bastards get us deplorable humans to accept such radical changes or intrusions into our lives is to create a big problem, then come into "fix" it, to "save" us.

    In this case, perhaps the incredible gains in cryptocurrencies over the last decade have been the "cheese", in a "big trap", to catch the more "digitally fluent."

    Perhaps when all of us who are delighted at our great gains in cryptos are then devastated by seeing it vanish, when some major crypto exchange (e.g. Coindesk, Binance, Gemini, ...) blows up and vanishes, as Mt Gox collapsed in 2014, or as banks runs collapsed many local banks the U.S. in the 1930's, we will be more amenable to increased crypto exchange regulation.

    Perhaps at the same time, a little bit of "free crypto" in everyone's new Federal Reserve Digital Currency account would attract those who hadn't tried crypto already.

    Beware of keeping any more money on crypto exchanges than you can afford to lose.

    Treat crypto exchanges as my father, who lived through the Great Depression, learned to treat banks.

    === ===

    P.S
    . -- It's not just the crypto currency exchanges that risk collapsing, in order to "motivate" dramatically increased regulation. It's also the debt-money system itself. This suggests that the U.S. Treasury market, the foundation of the global debt-money system, is due for a catastrophe. This might show up as a default in the U.S. Treasury market, and/or a collapse in the market value of Treasury bonds (which would show up as a huge spike in U.S. debt interest rates).

    Such is the level of "chaos" that might be engineered to "motivate" replacing the debt-money system with central bank digital currencies.
    Last edited by ThePythonicCow; 8th October 2021 at 00:22.
    My (sometimes rather dormant) blog: theMooster.net

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    Default Re: Future U.S. IRS Tax regulations on Cryptocurrencies, Bitcoin, etc

    .
    For an easier read of Wesley Thysse's article that I posted in the opening post of this thread, goldfix (VBL, Vincent Lanci) has posted this excellent overview, which he posted at Bitcoin's Regulatory Future.

    I'll quote VBL's entire overview below. Enjoy the read!

    === ===

    SPECIAL NOTE: Gold people will recognize this pattern of regulation immediately.

    Intro: We are fans of thorough analysis and have written some amateur legal stuff in the past on: Gold, Crypto, and market structure manipulation. We have also been consulted in more than one Gold manipulation case that was newsworthy. But this lengthy piece on Crypto legislation pending is something both thorough and readable. It had to be shared. It is quite long and in depth. Therefore it may be best digested in pieces. Expect to see this posted in parts. Today's part is the overview on what was analyzed. Should you have the time to read more, the link to the full article will be at bottom of each installment. This feels like s a legal brief, but reads like to business analysis written by someone who has a foot in both the crypto world as well as the legal regulatory one. We cannot verify if it is 100% accurate of course. But the stated regulatory moves described are completely what we'd expect from regulatory agencies and are not outside historical regulatory normalcy. The trick is how will you as an investor behave knowing this could happen. Because right now companies are jockeying for positions to make sure they can take advantage of whatever comes of the rules put in place. That said, the wild west in the USA will get tamed whether we like it or not. No opinions or "takes" will be added here. Any emphasis we add will be noted.- VBL

    US Crypto Regulation Far More Invasive Than We Thought

    US Congress intends to regulate crypto on a level far deeper than currently understood―They will:
    • Designate Bitcoin, Ether, and their hard-forks as commodities and regulate their transactions accordingly;
    • Create legal uncertainty for all other crypto projects and ICOs by allowing them to be labeled as securities;
    • Ban the use of (unauthorized) stablecoins;
    • Introduce prison sentences for the use of mixers and privacy coins;
    • Rebrand smart-contracts that take longer than 24 hours to deliver as futures contracts and regulate them accordingly;
    • Re-define legal tender and change the way money is created by the Federal Reserve; and authorize the issuing of a digital USD of which all transactions are recorded;
    • Introduce foreign regulations into US law for all virtual asset service providers in the US (and with US clients).

    In short: Congress wants to bring crypto-currencies under full oversight and control.

    These new regulations introduce massive regulatory burdens on existing projects, ban and criminalize current normal activities, restrain innovation and free enterprise, and even introduce a transparent central bank digital digital currency that redefines money as we know it!

    According to United States representative Don Beyer, congress should incorporate “digital assets into existing financial regulatory structures.”1)“Press Release: Beyer Introduces New Legislation To Regulate Digital Assets,” (United States Congressman Don Beyer, Washington, July 28, 2021), accessed on September 6, 2021, https://beyer.house.gov/news/documen...ocumentID=5307 As you will see, they intend to do just that.
    And it will change the way things are done for crypto forever…

    What This Article Is About

    This article provides an overview of the crypto legislation currently (September 2021) being put through US congress; it does not just look at the proposed bills, but rather at the wide range of laws that are to be amended.

    Once all the puzzle pieces are put together, the big picture reveals shockingly strict regulations of crypto and a complete overhaul of the idea of “money.” This could have serious effects not only on the crypto sector, but also on the financial system as a whole.

    Behind the excuses of preventing money laundering and ensuring investor protection, the use of crypto is transformed in something it was not supposed to be. Especially delicate is the fact that part of this legislation is drafted outside the US.

    Disclaimer: This report provides a high-level overview of the US laws that are to be introduced/amended by two new bills. Its depth is limited by the inadequate knowledge of the author of the large body of US law involved, and given that these bills are subject to amendments and have not even passed into law yet, none of this information can be considered legal or financial advice.

    What Is Going On?

    On April 06, 2021, a “must pass” bill was introduced called the “Infrastructure Investment and Jobs Act”2)“H.R.3684 – Infrastructure Investment and Jobs Act, 117th Congress (2021-2022),” (US Congress, Washington, April 6, 2021), version EDW21A09 WG9, https://www.congress.gov/bill/117th-congress/house-bill/3684/ (“Infrastructure Bill”). It passed in the House of Representatives and, after fierce debate, the Senate. Hidden in this bill, an amendment to the Internal Revenue Code was added. It introduced new reporting requirements and obligations for record keeping.

    While this bill created a lot of public outcry, more recently, a real game-changing bill was introduced in the House on July 28, 2021, namely the: “Digital Asset Market Structure and Investor Protection Act”3)“H.R.4741 – Digital Asset Market Structure and Investor Protection Act, 117th Congress (2021-2022),” (US Congress, Washington, July 28, 2021), https://www.congress.gov/bill/117th-congress/house-bill/4741/
    [author: there is so far on September 17, 2021 only one version of the bill]. (“Digital Asset Bill”).

    This bill proposes amendments to the Federal Reserve Act, the Bank Secrecy Act, Securities Exchanges Acts, and the Commodity Exchange Act. It changes the definition of legal tender, and it introduces international crypto regulation into US law.

    This article looks at each of these amendments…

    Commodities or Securities?

    The main take-away is that two different bodies of law will apply to crypto projects: commodities and securities laws. So far, only Bitcoin, Ether, and their hard-forks are confirmed to be commodities (see below). All other cryptos are subject to future guidance by market regulators:

    “Not later than 150 days after the date of the enactment of this section, the SEC and CFTC shall jointly publish, for purposes of a 60-day public comment period, a proposed rulemaking that classifies each of the major digital assets.

    Not later than 270 days after the date of the enactment of this Act, the SEC and CFTC shall jointly publish a final rule that classifies each of the top 25 major digital assets by (i) highest market capitalization and (ii) highest daily average trading volume as—

    (1) a digital asset; or
    (2) a digital asset security.”4)“
    H.R.4741 – Digital Asset Market Structure and Investor Protection Act,” SEC. 104. JOINT SEC AND CFTC RULEMAKING ON MAJOR DIGITAL ASSET CLASSIFICATION, page 7.

    Interpretation:

    Cryptos will be subject to two different regulatory regimes: commodities and security regulations.

    Services engaged with both digital assets (commodities) and digital asset securities (securities) could be subjected to both regulatory regimes.
    My (sometimes rather dormant) blog: theMooster.net

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