you're putting too much trust in the rule of law, and china's respect for it.

consider the recent case of okex---an exchange that left china, incorporated offshore in malta, and stopped offering CNY markets after china banned exchanges in 2017. 3 months ago, the CEO was arrested and held by chinese police. and then for a 5-week period, okex completely shut down all crypto withdrawals.

that's the kind of power the chinese government has. mining hardware companies and pools that have a physical presence in china, with executives/admins who have a physical presence and family/financial assets held there---they are not safe from chinese government influence.

because it was deducted from your ADA position. notice the discrepancy between the amount of ADA you bought and the amount you sold.

so you really bought 570 ADA for $88.7283---that's your actual cost basis, the price you originally paid. the fee is factored into the price.


in general, yes. exchanges charge fees on the currency you convert to, so when you buy ADA, your total price paid already includes the fees paid. the ADA gets deducted from your ADA balance, which doesn't affect the USD amount you paid. your cost basis is the USD amount you paid.


like ADA/BTC? the same idea applies---when you convert to ADA, your fees are taken in ADA. when you convert to BTC, your fees are taken in BTC.

trading against BTC involves an extra step too. you need to calculate the fair market value (USD value) of your cost basis and sale proceeds, even though those are denominated in BTC. trading against USD or stablecoins is much easier for tax purposes.

her real problem is that she banks with a small credit union who was declining all her transactions. that is not the typical experience at all---pretty obnoxious that she is framing it like this.

she also lives in NY (bitlicense) and is listing off services like blockchain.com and binance.us that would never have served her in the first place. none of that applies to the rest of the USA. things are definitely worse in NY than anywhere else in the country, with the exception of maybe hawaii.

there are more options than ever now. when i first arrived, the only real options were mt gox, bitstamp, btc-e, and bitfloor. it took weeks to fund an exchange account. bank wires only, intermediate banks, delays...

it's a whole new world now. we've got cash app, robinhood, paypal.....not to mention all the exchanges. ACH transfers posting within a couple days, same-day bank wires. localbitcoins may be useless to me without in-person cash listings but for mainstream folk, there's plenty of offers there too.

she definitely didn't try hard enough. small credit unions are great for the loan rates, but come on now---get an account at a real bank who isn't gonna leave your banking capabilities in the 20th century.

yes, technically you need to report capital gain/loss for every time you sold BTC to USD.

even if you're holding 100% BTC now, that just means your current gains/losses are unrealized. that doesn't erase all the capital gains you made earlier in the year.


cost basis = $88.7283
received from sale = $90.5963
capital gain = $1.87

*i am not a lawyer. this is not legal advice.

are you saying your login credentials at https://wallet.btc.com/ work---but the wallet it decrypts is empty? are you unable to log in?


what do you mean by "original transaction receipt"?

how did you acquire the bitcoins originally---a bitcoin ATM or something? is that what you mean by "receipt", a paper receipt?

when you say the address doesn't register on a block explorer, can you specify what the first few characters of the address are? don't share the whole string yet, and definitely don't share anything that says "private key".

both, but technically you're not claiming a deduction, which generally means a separate line item.

what you do is:
1. add the fees charged when acquiring your coins to the purchase price. purchase price + acquisition cost = cost basis.
2. subtract the fees charged when selling your coins from the total sale price. sale price - selling costs = amount received from sale.
3. amount received from sale - cost basis = capital gains.

https://finance.zacks.com/stock-transaction-fees-taxdeductible-8284.html


when you buy coins and they deduct the fee in coins, your cost basis is literally just the total purchase price.

example: you buy 1 coin for $38k. they take 0.001 BTC in fees, which is 0.1%. you're cost basis is still $38k (for 0.999 BTC) because that's the original purchase price + fees paid.


-$100 + $1 = $101 cost basis, correct.
-$200 - $2 = $198 received from sale.
-$198 - $101 = $97. that's what i get as well.


that capital gain is not yours to report---you did not own it.

consider my example above. your position is for 0.999 BTC, not 1 BTC. the 0.001 BTC deducted as a fee belongs to the exchange, so you are not receiving any gains from it. the description of your property on form 8949 would be 0.999 BTC, and the cost basis would be $38k. when you sell at $40k and another 0.1% fee is deducted:

-$39960 - $40 = $39920 received from sale
-$39920 - $38000 = $1920 capital gains

exchange exports can make things seem a lot more complicated than they are. the key is to view each "position" (lot of coins held) as an all-inclusive dollar amount.

the IRS doesn't mind a big mess. the more complicated these transactions are, the more likely you are to violate the tax code. then they collect fines and penalties.

if you go by the book, the tax implications are a massive deterrent from spending crypto. absolutely! it's gonna suck once KYC becomes more integrated. i'm praying the $3k threshold for KYC on domestic transactions is upheld because they're proposing to lower the international threshold to $250. https://www.fincen.gov/news/news-releases/agencies-invite-comment-proposed-rule-under-bank-secrecy-act

that's insanely low and i reckon it's partially intended to make this sorta tax avoidance difficult.


with the visa conversion method, the sending bank has all your KYC information. that seems like it should be sufficient, but what do i know?

this is the registration portal: https://www.fca.org.uk/firms/connect
general info about what you'll need to do: https://www.fca.org.uk/cryptoassets-aml-ctf-regime/register

it looks very invasive and tedious.

fortunately, it looks like you only need to register if your trading would be categorized as a commercial business. this is what that determination comes down to:



unfortunately, i doubt there's much info out there establishing exactly what they consider to be "regular/frequent" activity. i'm struggling with the same thing with american/FINCEN regulations---there is a frequency element, but they don't tell you what triggers it.


binance, kucoin, bybit..... none of them are really based in or registered in singapore. more like the seychelles or cayman islands. they just say stuff like that to appear legitimate.

chinese people casually moved $50 billion in crypto outside the country last year: https://www.cnbc.com/2020/08/21/china-users-move-50-billion-of-cryptocurrency-out-of-country-hinting-at-capital-flight.html

a big chunk of that was bitcoin miners.

the government recently cracked down on shadow banks and foreign real estate schemes as avenues of capital flight. bitcoin must be a big thorn in their side as it soaks up the demand from those channels.

in theory, if they control the mining network, they could freeze/censor transactions they believe are linked to capital flight. it's quite a paranoid theory but it makes slightly more sense than just outright 51% attacking the whole network or something. there's no point in that, as hash rate would just leave china and the compromised pools.

i've been perusing the regulations for clues and found a couple more nuggets of info in their 2019 guidance. https://www.fincen.gov/sites/default/files/2019-05/FinCEN%20Guidance%20CVC%20FINAL%20508.pdf


so this sets 2 standards. one can engage in money transmission without being considered an MSB by FINCEN if you do so 1. infrequently and 2. not for profit.

this second point brings me back to klein's case cited in the OP. from the DOJ press release:


so it would appear there is a clear distinction between just cashing out some bitcoins, and exchanging as an ongoing for-profit activity. that's the good news.

however, that still leaves the frequency standard. i'm still tripping on how the feds took him down for 5 transactions over a 1.5 year period. that's 1 trade every 3.5 months. how does that constitute money transmission on a "frequent" basis? that makes me wonder if the charges would have held up in court. he plead out so we'll never know....

there's obviously a short term benefit if long term mining incentives turn out to be insufficient: kicking the can down the road. but given that it doesn't address the underlying problem---that miners would either need more inflation or more fee revenue to maintain adequate security---it just doesn't seem worth the ethical baggage of stealing peoples' coins.

i actually like the idea of a requirement to move coins every x blocks (could be years) and having that rule baked into the consensus system. it would make certain transitions (like dropping ECDSA for a quantum resistant signature) so much easier. it would also make for a much more predictable supply because it would be audited periodically (with non complying coins burned and/or recirculated), rather than having us perpetually ponder how many millions of lost coins there are.

ethically and re network consensus, it's much too late to do that sort of thing in bitcoin, but if i were to design a consensus system from scratch this is something i'd consider.

took down the loser's final.

i drew out on @steamtyme a couple times heads up---89 vs JT, hands like that. it was karma though for blinding me and @fmbet out when that crash happened. casually stole my chip lead with them shenanigans. lol!

is it just me or are the tourney lobbies inaccessible if you don't have the password? i can't even see the lobby of the final to see who's still in, let alone the actual table.

in the USA, you're allowed to sell bitcoins for cash without worrying about money transmission laws (AML/KYC)---up until the point that you are considered "a business":


does anyone know what frequency and volume thresholds might trigger FINCEN registration and reporting requirements? have there been any precedents set in the last few years? FINCEN's guidance is pretty vague.

take this case from 2017: https://www.justice.gov/usao-wdmo/pr/nixa-man-pleads-guilty-illegal-bitcoin-exchange


5 transactions over 1.5 years (for amounts as small as $1k) doesn't seem like very much. the press release highlights the fact that he advertised/represented himself as an exchanger---is that the more significant part?

going back to the quote from marco santori above, he says "you have to accept all comers". does that imply that if you are only contacting advertisers and not advertising yourself, and not representing yourself as an exchanger, that you won't be construed as a business?

interesting idea, but it sounds controversial and unlikely to gain consensus. lots of bitcoin users expressed dismay at the idea of burning unmoved coins in a hypothetical transition to a post-quantum signature algorithm: https://www.reddit.com/r/Bitcoin/comments/4isxjr/petition_to_protect_satoshis_coins/d30we6f/

this occurs to me as the same ethical dilemma---whether to deprive people of their coins in an effort to secure the system. it would be like charging a form of demurrage that users never agreed to in the first place.

you may be in luck. i dunno what the exact timeline for rollout is (supposedly sometime in q1), but erik voorhees just announced that shapeshift is phasing out its centralized market making activities and going 100% DEX.

once that happens, they are removing KYC requirements!

okay, let's say jpmorgan and some of the other big boys issue their own stablecoins---what's the end game for them? are they just trying to stay relevant in a context where SWIFT and ACH are becoming too slow/obsolete? stablecoins = faster settlement---is that all they're interested in? or are there possibly bigger plans in the offing that i'm not seeing?


i think banks accepting bitcoin deposits will represent a new era of retail adoption. most people are still stuck in the old way of thinking---they keep their money in banks, and they trust them. they don't trust bitcoin exchanges, or their ability to be their own bank.

the printed money definitely reached the markets and that's what matters. we have a central bank that wants the inflation rate above target, who has shown unprecedented willingness to prop up the bond market. that drove the markets out of "flight to safety" mode and into "risk on" mode. expectations of rising inflation and vaccine optimism are pushing everything into a rally.

i see bitcoin's rally as part of that overall push---the same one that just sent gold to a new ATH a few months ago. there's just so much damn cash in the markets and everyone is scrambling to put it into something that will perform. with bitcoin having recently emerged in 2017 as a new legitimate asset class (confirmed by CFTC regulated futures markets), and given its strong performance this year, it's only natural that some of that institutional money flow is entering bitcoin.

you can't just extrapolate into the future since the current primary component of the block reward (inflation) won't be there in the future. we can argue about how to properly account for that, but to assume the current price/hash rate dynamics will continue indefinitely as inflation is phased out---that's just not reasonable to me.


i'm not confident in that assumption. we need a deeper theoretical analysis of fee market dynamics before we can assume that. without fee pressure from restricted block size, fee revenue drops exponentially---that's all i know.

that implies an altcoin. it doesn't matter whether it's pegged. RBTC is a token on a different protocol with much weaker security guarantees. trying to claim that a merge-mined sidechain is "bitcoin" is insane.

it was actually paul sztorc (drivechains) who opened my eyes about this when he remarked that sidechains are altcoins---they are just interoperable with bitcoin too.


that prevents unintended inflation but it doesn't make RSK secure.

still true:

it technically uses an altcoin that is pegged to BTC---there is a difference.

no layer 2 protocol can ever provide the same security guarantees that bitcoin does. i think that's why interest in them has traditionally been lacking.


institutions want their bitcoins locked up in cold storage at fidelity, coinbase. how does that fit into that scenario?