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you guys stop trolling meow
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Would operating outside the US and not accepting any US customers make you exempt from MSB rules and regulations?
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I love how the head counsel for the BitCoin foundation is incompetent. He said all miners are MSB's when FinCen made it clear they are only MSB's when they convert into Fiat. I would be scared if I was the foundation right now lol.
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None of that has anything to do with money transmitter or a license. Your are simply 100% wrong in your statement that large transfers require a money transmitter license. You also are wrong in stating you know the reason for the C&D and you are wrong in claiming a MY license in needed in all 50 states. There is no way to fudge that. This are false statements. Banks are required to file SARs and CTRs and may close accounts if they deem them high risk. None of that has ANYTHING to do with Money Transmitter laws or licensing. Banks routinely close non Money Transmitters for being high risk. especially if its over $1000 in one go. 99%+ of B2B commerce is >$1000. Not sure what kind of childhood lemonade stands you have been running but hopefully $1000 is insufficient for weekly payroll much less inventory purchases. Of course none of that has anything to do with Money Transmitter laws. If you are a Money Transmitter you must be licensed to transmit even a single penny. If you are not a Money Transmitter there is no special "I buy lots of stuff license" even when making seven figure deals. One does not get a MT license simply because they make large purchases/payments. One ONLY gets a Money Transmitter license if they are a Money Transmitter. You are simply throwing stuff against the law and trying to see what sticks. If BitCoin foundation converted BitCoin into Fiat, that is the reason for the C&D according to FinCen guidance which makes them an MSB. If this did not happen than who knows why, but from my understanding of reading the posts here, is they converted BitCoin into Fiat. |
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My hope is that an exchange needs a license only in the state where it's headquartered, and nowhere else.
If you're on the East coast, you should be able to run a web-based business with customers from California without any license from CA. This used to be a principle, and it should not be different with BTC.
Most states require a License even if you don't have a physical location in there State. http://moneytransmitterlicense.blogspot.com/2010/01/money-transmitter-license-information.html |
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I read their blog but the points they highlighted don't mention when BitPay takes that BitCoin and exchanges it for Fiat. Let's use PayPal as the perfect example. PayPal has MSB's licenses because they can convert your local currency into another local currency therefore besides acting as a payment processor they are also facilitating an exchange. Like mentioned above an exchange is taking place, unless it can be argued that that exchange is occurring on a regulated MSB licensed exchange and their regulatory power is being used, which would take liability away from the "User"whether it be BitPay or the Merchant acting individually as a Money Transmitter. Here is a list of all of PayPal's State Licenses: https://www.paypal-media.com/licensesYou can see most of them are MSB Licenses for the States requiring them, I doubt PayPal got them for no reason if they weren't needed. Also it might be that PayPal got them to umbrella it's users under their MSB licenses, if the responsibility falls on the Users since they are facilitating the activity through PayPal, but this would not make logically as that means PayPal is classified as an MSB to have any of those benefits apply to it's users. |
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The question is does this apply for equal barter income? Even if they do, is there any tax liability if you exchange $2000 worth of BitCoin for $2000 worth of Gold there is no profit therefore shouldn't be any taxes.
Or I guess the taxable event already has occurred when you barter so the income is realized when the exchange occurs. For example:
1. You exchange $100 of BitCoin for $100 dollars of Silver.
2. You pay tax on $100 of income.
3. If you sell your Silver for Fiat for $100 as you have already claimed the $100 in income. You should theoretically only pay tax on any gains above $100
If there are any accountant's/lawyers here can you please clarify this?
The taxable event there occurred before #1. Gaining the Bitcoin can be taxable, and you can deduct your costs (mining, electricity and etc) if you kept good records and itemize. The other exchanges are no more taxable than exchanging dollars for euros (they are not income, they are exchange). Income tax applies to earned income. #3 may be taxable if there is a gain, and it would be at capital gain rates, however depending on the type and amount of silver, it may or may not have a reporting requirement. (The New Liberty Dollars do not trigger such a reporting requirement as they are outside the CFTC list) The gain incurs tax liability either way though. But don't rely on my advice, listen to your own (paid for) tax lawyer. It makes sense, but I'm not 100% sure. With your example a mining company that mined 1000oz of gold would list profits on that 1000oz even if they didn't sell any? But it could very well be that way. Or another example it's like a company producing shirts, they produce 100 shirts but haven't sold any, that is not income. The difference being that Gold is classed as a currency, and as of this year's guidance, so are virtual currencies. Where did you get this information? Gold is a commodity or a physical good. The only metals that are classified as currencies are ones physically produced as legal tender from the treasury. Neither can a digital currency be classified as legal currency, unless it is produced from the Treasury. |
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Bitpay claims to operate as a payment processor: a business that only facilitates payment by customers to a merchant for that merchant's goods and services. Payment processors are exempt from MSB regulations at the federal level.
On that model, a merchant using Bitpay would never handle BTC, assuming they opt for payment from Bitpay via a wire transfer in USD. The merchant in this scenario would not be an MSB either.
Yes that makes sense that the Merchant never physically accepts the BitCoin. Wouldn't BitPay though fall under the category of exchange and therefore a MSB? BitPay says that is has contractual agreements with the Sellers. Can't it be argued that BitPay is acting on behalf of the Merchant, and therefore the merchant is actually exchanging BitCoin into Fiat? If BitPay received Bitcoin from client and transferred said BitCoin to merchant than it's perfectly fine, but when they take that clients BitCoin and exchange it for USD, an exchange has occurred. Would they be considered a Money Service Business under FinCen guidance? An exchanging from digital currency to fiat is occurring, the issue is who is liable for these actions occurring, it would seem that BitPay is acting on behalf of it's merchants who order it to facilitate the exchange and the merchant can be considered an MSB? It seems one or the other has to be considered an MSB as an exchange is occurring. Also, re-reading what you wrote even if they are exempt of MSB regulations at the federal level, that necessarily does not mean that they are exempt from the State level. |
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The question is does this apply for equal barter income? Even if they do, is there any tax liability if you exchange $2000 worth of BitCoin for $2000 worth of Gold there is no profit therefore shouldn't be any taxes.
Or I guess the taxable event already has occurred when you barter so the income is realized when the exchange occurs. For example:
1. You exchange $100 of BitCoin for $100 dollars of Silver.
2. You pay tax on $100 of income.
3. If you sell your Silver for Fiat for $100 as you have already claimed the $100 in income. You should theoretically only pay tax on any gains above $100
If there are any accountant's/lawyers here can you please clarify this?
The taxable event there occurred before #1. Gaining the Bitcoin can be taxable, and you can deduct your costs (mining, electricity and etc) if you kept good records and itemize. The other exchanges are no more taxable than exchanging dollars for euros (they are not income, they are exchange). Income tax applies to earned income. #3 may be taxable if there is a gain, and it would be at capital gain rates, however depending on the type and amount of silver, it may or may not have a reporting requirement. (The New Liberty Dollars do not trigger such a reporting requirement as they are outside the CFTC list) The gain incurs tax liability either way though. But don't rely on my advice, listen to your own (paid for) tax lawyer. It makes sense, but I'm not 100% sure. With your example a mining company that mined 1000oz of gold would list profits on that 1000oz even if they didn't sell any? But it could very well be that way. Or another example it's like a company producing shirts, they produce 100 shirts but haven't sold any, that is not income. |
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it's based off on profitability at that time which is retarded. They calculate 2-3 months in advance how much money you should make a month and charge that. For example if 2 months from now it's calculated that you should make $5,000/mo they will charge you 5k.
The problem with this approach as been mentioned before does not take into account BitCoin price, how do they know if BitCoin will not go down in price, to pretty much push your profitability to nothing. It's actually a greed tactic deployed by these assholes to lock in high margins for their products.
They don't lose anything if the price goes up besides potential higher margins, but they protect themselves if price of bitcoin goes down. These guys are making hundreds of % in profits, they don't want to be a normal company who charges double the cost of production, they wan't to charge people 10X 100X the cost of production, so hence they use their bullshit tactics.
but they pass it off as a fair way to price things. The proof is in Batch #1 they charged around $1,300, so at $1,300 they were profitable, batch #2 with their "new fair pricing" when bitcoin hit peaks, they were charging $15K for the devices! A profit of 1500%
Moral of the story their pricing is based on trying to charge people as much as they can get away with, therefore scumbags, that's why no one will know about these assholes in the future, they made millions though so I'm sure they could care less, it's just pretty stupid though they could of made hundreds of millions if they were honest and treated their customers right, but hey crooks only think short term.
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There is no taxable event If I trade you my car for another car. It's like saying I gave you 10 tomatoes and you gave me 5 potatoes in return there is no income event. They clearly are only talking about services rendered as that would of been income earned. Wrong. In your example, you have earned income equal to the dollar value of 10 tomatoes and I have earned income equal to the dollar value of 5 potatoes. Each one of us is required to report this income as additional income on our income tax returns, although in practice nobody does and it's virtually impossible to enforce. Depending on the circumstance we may or may not be able to deduct as business expenses the costs of obtaining the tomatoes and potatoes and in that case we'd effectively only owe taxes on the profit of that trade. I found the actual IRS guidence: Topic 420 - Bartering Income Bartering occurs when you exchange goods or services without exchanging money. An example of bartering is a plumber doing repair work for a dentist in exchange for dental services. You must include in gross income in the year of receipt the fair market value of goods and services received in exchange for goods or services you provide or may provide under the bartering arrangement. Generally, you report this income on Form 1040, Schedule C (PDF), Profit or Loss from Business or Form 1040, Schedule C-EZ (PDF), Net Profit from Business. If you failed to report this income, correct your return by filing a Form 1040X (PDF). Refer to Topic 308 for amended return information. A barter exchange or barter club is any organization with members or clients or persons who contract with each other (or with the barter exchange) to jointly trade or barter property or services. The term does not include arrangements that provide solely for the informal exchange of similar services on a noncommercial basis. The Internet has provided a medium for new growth in the bartering exchange industry. This growth prompts the following reminder: Barter exchanges are required to file Form 1099-B (PDF), Proceeds From Broker and Barter Exchange Transactions for all transactions unless they meet certain exceptions. Refer to Bartering in Publication 525, Taxable and Nontaxable Income, and the Form 1099-B Instructions for additional information on this subject. Persons who do not contract a barter exchange but who trade services are not required to file Form 1099-B. However, they may be required to file Form 1099-MISC (PDF). If you are in a business or trade, you may be able to deduct certain costs you incurred to perform the work that was bartered. If you exchanged property or services through a barter exchange, you should receive a Form 1099B. The IRS also will receive the same information. Please refer to our Bartering Tax Center page for more information on bartering income and bartering exchanges. If you receive income from bartering, you may be required to make estimated tax payments. Refer to Publication 525, Taxable and Nontaxable Income, for additional information. The question is does this apply for equal barter income? Even if they do, is there any tax liability if you exchange $2000 worth of BitCoin for $2000 worth of Gold there is no profit therefore shouldn't be any taxes. Or I guess the taxable event already has occurred when you barter so the income is realized when the exchange occurs. For example: 1. You exchange $100 of BitCoin for $100 dollars of Silver. 2. You pay tax on $100 of income. 3. If you sell your Silver for Fiat for $100 as you have already claimed the $100 in income. You should theoretically only pay tax on any gains above $100 If there are any accountant's/lawyers here can you please clarify this? |
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Hi Santori,
This was what I was wondering also where it mentions any user that exchanges coins for fiat is an MSB. Does that mean that businesses who accept BitCoin and then exchange them for Fiat are MSB's?
For example businesses using BitPay are having BitPay do this on their behalf therefore they would still be considered MSB's. Maybe FinCen doesn't really care about users but just about the Exchanges.
Is it possible you being a lawyer to ask for some clarification on this specific paragraph of FinCens guidance? Can users who exchange their currency through an exchange are they exempt from MSB laws, or are they covered under MSB's licenses of the exchanges?
Also send you a PM about another topic
Thanks and this Thread as been wonderful to read, makes me think sometimes I should become a lawyer haha.
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Under FinCen regulations a user who sells bitcoin for fiat is a MSB. Does that make a business using Bitpay fall under MSB laws? Since they are effectively having BitPay on their behalf cash out their BTC for Fiat.
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I'm wondering how does BitPay offer to exchange BitCoin for local currency? I know they can sell BitCoin on Mt.Gox for USD but what about what about other local currencies? Do they just then convert the USD into another local currency?
Does anybody know how it's done?
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there is taxing on bartering, but the argument above seems to point at services and "profit-generating activity". In the above they are exchanging services for a specific dollar amount. There is no mention of exchanging a good for equal value of another good. For example if you take 4BTC and convert it into equal value of 24 Silver Coins, you did not earn any income you just converted value. It's like exchanging cheese or knives, even if the act itself is taxable since you are exchanging for an equal value there won't be a taxable event. Not to mention that exchanging goods is not mentioned at all. Think about that for a second. If the IRS enforced the tax code using your interpretation there would be no such thing as taxable income. When a dealership trades you a car worth $20000 for $20000 in dollars that is an equal value trade yet the IRS very clearly demands a cut of the transaction. Regardless of whether you think your definition is correct they'll still throw you in jail and confiscate your property if they catch you trying to use it. What they actually do is treat all received value as profit and then let you subtract certain types of expenses from that in order to calculate your income. In the plumber and carpenter case if the IRS scrutinized the transaction the auditor would assess a dollar value for each service and then allow each person to claim the expenses they incurred by performing their respective portions, and the difference would be expected to be accounted for as income. If you ever want to know which interpretation of the tax code is the one the IRS won't kidnap you, throw you in a cage, and steal your property for, just assume it's the interpretation that gives them the most money. your example isn't correct. The dealer is giving you fiat money in return, he is not exchanging for example a pick up truck for a car. There is no taxable event If I trade you my car for another car. It's like saying I gave you 10 tomatoes and you gave me 5 potatoes in return there is no income event. They clearly are only talking about services rendered as that would of been income earned. |
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Ok, but does that mean I don't get to write off my mining equipment? I spent a little over $1900 for my mining rig. If I have no income to report this year for all my mining because I don't cash in any of my mined coins, does that mean I can't write off the $1900? I would have a $1900 expense and no income? My tax accountant was telling me that I would add up the dollar value of all my coins at the end of the year and use that to offset the cost of the mining rig.
I think it's better to talk to your accountant, about this. Secondly, why would you add up your coins at the end of the year? Are you going to report the value of the coins? Last time i checked there is no requirement to report your assets. |
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x-crowd.co.uk is up and running btw in case you guys missed it.
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Well technically I had a dream that KNCminer shipped extremely early! Who shares these dreams with me!? Preach brothers preach!
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Actually current encryption standards will be obsolete when quantum computers come out, everything is encrypted today is stored on an NSA hard drive somewhere waiting to be decrypted. The only way to fight it surveillance is stop using your fucking phones/email/forums/computers for private matters. It's very simple.
If you want to continue to use these things then new forms of encryption need to be developed to defeat quantum computers, and even then your communications are only encrypted until they are broken again.
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