Bitcoin Attorney Will Answer All Questions:

[TheGodson]

I don't suppose I could use a charity to offset the gambling issue by any chance. I'm guessing probably not.


I've thought of an alternative idea which I'm pretty sure wouldn't have any legal issues, but maybe I'm missing something:

I build a website with a virtual tree. People interact with the tree to get it to grow. If you are a top contributor to the growth of the tree you get access to place a message on one of the branches (this could be a friendly simple message or even an advertisement). Soon people start to realize that paying money/bitcoin is the quickest way to get treegrowth points and get a message on a branch. The short term plan would be to get interaction. The long term plan would be to make money.

To run a game like this would I be required to have some special license or permit? Anything illegal that I'm overlooking?


On a side note, I really must say that creating this AMA thread was a brilliant idea. If I ever get into Bitcoin legal trouble I'll know who to go to  ... Actually since you're in Nevada, which is a ways across the country for me, that probably won't happen. Good idea though nevertheless. Thanks for your help.

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[AttorneyBitcoin]

I like the tree idea. It is clever and creative. There is not much marketing to female crypto enthusiasts, this might be something they enjoy.  It does not look like gaming to me. It needs some more work but you are on the right track, keep working and thank you for the kind words.

Best:

George D. Greenberg, Esq.

www.attorneybitcoin.com

[KGambler]

Gonna repost in case this was overlooked.  Hopefully it's not a case of being too state specific...


Thank you for doing this.  Free information from a knowledgeable professional is much appreciated.

I have read that many states require that a bitcoin seller be licensed and bonded as a money transmitter.  With regards to my particular state, New Jersey, my googling has failed to turn up any such information. 

My questions:

1.  Assuming that NJ does not yet require a seller to be a licensed money transmitter, does this mean that anyone who meets the Federal standards could set themselves up as a buyer/reseller?

2.  How would you recommend going about finding out what the relevant laws are for my state?  What type of agency would have the information?

3.  On the Federal level, is my understanding correct that I would have to register with FinCEN, and follow all AML and KYC protocols?  Would this be sufficient or is there more to it?

Thanks in advance.

[AttorneyBitcoin]

Dear New Jersey:

As to FinCEN, yes, you are on the right track. Register as an MSB and make a reasonable good faith effort to follow their requirements. This will take some research on your behalf. You can hire a professional to summarize it for you and to help you set up a plan.

Money Transmitters. Every state that has these licenses has a division that oversees them. In Nevada it is under the Department of Business and Industry. You will have something similar in New Jersey. Look under banking regulations or money service business regulations for your state as a start.

They may or may not require you to have a M.T. license. If they do it won't be cost effective for a small business. You can write the proper state agency or have an attorney write them and state your business plan and ask if they consider it a M.T. activity that requires a license. Send the letter certified mail return receipt requested. It is known as a "no action letter." Meaning that you hope there is no action required by you and that they will take no action against you.

It will carry greater weight if sent by and attorney. I have sent many of these to many states.

Really, the biggest problem is banking. But that is another story.

Best:

George D. Greenberg, Esq.
www.attorneybitcoin.com

[KGambler]

Thank you for the informative reply.  You've been a big help and it is much appreciated.

[AttorneyBitcoin]

Dear BTC/Crypto Legal Forum:

As an experienced BTC attorney I'm happy to answer all questions here.

I have noticed some misinformation in some answers here. When it comes to taxes, laws and regulations, guessing or opinions are not helpful and can easily lead to problems. Most solutions to all the questions here can be summed up in a few short answers.

I can only give legal advice to laws in the United States but can discuss other countries in general terms. I've been involved as an attorney and a miner in BTC and Crypto's for 3 years. During that time I have represented many client's involved in our crypto world. Happy Mining!

George D. Greenberg, Esq.
AttorneyBitcoin
Las Vegas, Nevada, U.S.A.
www.attorneybitcoin.com

COINBASE AND BCC

I would like to comment and get comments on BCC and Coinbase. Coinbase may not have given a full and fair warning as to the implications of leaving BTC in Coinbase at the recent fork. If a user had transferred his BTC to say Bittrex, he would have been given BCC on or after August 1, 2017. If a user left his BTC in Coinbase he receives no BCC. I have seen talk of legal action. Now I have nothing against Coinbase. I have a wallet there and they are an industry leader; however it seems they have perhaps missed the boat on this one. The question looms, what happened to the BCC that was awarded to to Coinbase? What's missing here? Have I misunderstood?

Comments from Dev's would be greatly appreciated. I think there are many people affected by this. Thousands?

George D. Greenberg, Esq.
www.attorneybitcoin.com

[lnternet]

I understand you are focused on US law.

But which country would you recommend investigating to move to to avoid a tax point for realizing crypto gains? Both for US and non-US citizens.

[maeusi]

If one earns bitcoin f.e. via signature campaign, when should he pay tax? At the moment he cashed in Bitcoin or when he cashes out to fiat? In Japan its clear, he should pay taxes for the date, he earned the BTC, but other countries f.e. in Europe or USA ?
Many thanks for your awesome thread.

[AttorneyBitcoin]

I understand you are focused on US law.

But which country would you recommend investigating to move to to avoid a tax point for realizing crypto gains? Both for US and non-US citizens.

I vote for staying in the United States and paying taxes as a Citizen. We are all in this together and choose to live here.

[AttorneyBitcoin]

If one earns bitcoin f.e. via signature campaign, when should he pay tax? At the moment he cashed in Bitcoin or when he cashes out to fiat? In Japan its clear, he should pay taxes for the date, he earned the BTC, but other countries f.e. in Europe or USA ?
Many thanks for your awesome thread.

I am not a tax expert but I do understand how confusing taxation is for Crypto-Currencies. There are 2 different taxes. Income tax and capital gains tax.

Income, to the best of my understanding, happens when you turn BTC, into fiat. It is considered income for that year and claimed in that year as part of your entire income, for income tax return purposes. 

Capital gains is a bit more complicated. It has to do with the gains you have made on investments. This type of tax is one of the most disliked. It's basically the difference between what you bought an asset for and what you sold it for.

The calculating of capital gains in the crypto-world can be quite complicated. If you buy a coin  and it increases or decreases in price, did you keep track of the price you bought it at and the price you sold it at? Is your trading platform tracking that? Then you use that coin and buy a different coin, then you sell that and buy another coin and so on and so forth; then you add some more funding to the account at the trading platform; are you tracking the added funding separately? Then you continue buying and selling the same coins which are all then grouped together in their own trading platform wallets. You get the drift.   

A C.P.A. will understand these things and be able to answer more specifically.

I hope that helps.

George D. Greenberg, Esq.
www.attorneybitcoin.com   

[maeusi]

If one earns bitcoin f.e. via signature campaign, when should he pay tax? At the moment he cashed in Bitcoin or when he cashes out to fiat? In Japan its clear, he should pay taxes for the date, he earned the BTC, but other countries f.e. in Europe or USA ?
Many thanks for your awesome thread.

I am not a tax expert but I do understand how confusing taxation is for Crypto-Currencies. There are 2 different taxes. Income tax and capital gains tax.

Income, to the best of my understanding, happens when you turn BTC, into fiat. It is considered income for that year and claimed in that year as part of your entire income, for income tax return purposes.  

Capital gains is a bit more complicated. It has to do with the gains you have made on investments. This type of tax is one of the most disliked. It's basically the difference between what you bought an asset for and what you sold it for.

The calculating of capital gains in the crypto-world can be quite complicated. If you buy a coin  and it increases or decreases in price, did you keep track of the price you bought it at and the price you sold it at? Is your trading platform tracking that? Then you use that coin and buy a different coin, then you sell that and buy another coin and so on and so forth; then you add some more funding to the account at the trading platform; are you tracking the added funding separately? Then you continue buying and selling the same coins which are all then grouped together in their own trading platform wallets. You get the drift.  

A C.P.A. will understand these things and be able to answer more specifically.

I hope that helps.

George D. Greenberg, Esq.
www.attorneybitcoin.com  

.
Many thanks, your answer helped me really. Although it is very complicated, your answer clarified the both taxes for income and capital.
So as soon as we change btc or cryptocurrency income to fiat, we have two kinds of taxes.
 But would exchange to another cryptocurreny already be handled like exchange to fiat, so that already also income tax for that amount would be calculated? Lets say one earns 1 BTC and exchanges half of BTC to ETH. Has he now half BTC also income or only as soon as he pays out to fiat?

[magneto]

Hello and thanks for having this little section.

My main question is about capital gains tax on bitcoin transactions.

Say you are holding bitcoins for business purchases(importing goods, buying goods in bitcoin, etc.), but in the process of holding these bitcoins the price of bitcoin rises. Will there still be a capital gains tax on your bitcoin holdings?

This is an usage case for bitcoin as a currency, not as an investment.

Also, is there an age minimum for capital gains tax to apply? For example, 18 y.o.'s or below don't qualify for CGT?

Thanks in advance?

[tavogi.com]

Where's the best place to incorporate a blockchain project these days? Some people say Singapore or Switzerland but I've heard both places are becoming less friendly to crypto lately. TIA

[AttorneyBitcoin]

If one earns bitcoin f.e. via signature campaign, when should he pay tax? At the moment he cashed in Bitcoin or when he cashes out to fiat? In Japan its clear, he should pay taxes for the date, he earned the BTC, but other countries f.e. in Europe or USA ?
Many thanks for your awesome thread.

I am not a tax expert but I do understand how confusing taxation is for Crypto-Currencies. There are 2 different taxes. Income tax and capital gains tax.

Income, to the best of my understanding, happens when you turn BTC, into fiat. It is considered income for that year and claimed in that year as part of your entire income, for income tax return purposes.  

Capital gains is a bit more complicated. It has to do with the gains you have made on investments. This type of tax is one of the most disliked. It's basically the difference between what you bought an asset for and what you sold it for.

The calculating of capital gains in the crypto-world can be quite complicated. If you buy a coin  and it increases or decreases in price, did you keep track of the price you bought it at and the price you sold it at? Is your trading platform tracking that? Then you use that coin and buy a different coin, then you sell that and buy another coin and so on and so forth; then you add some more funding to the account at the trading platform; are you tracking the added funding separately? Then you continue buying and selling the same coins which are all then grouped together in their own trading platform wallets. You get the drift.  

A C.P.A. will understand these things and be able to answer more specifically.

I hope that helps.

George D. Greenberg, Esq.
www.attorneybitcoin.com  

.
Many thanks, your answer helped me really. Although it is very complicated, your answer clarified the both taxes for income and capital.
So as soon as we change btc or cryptocurrency income to fiat, we have two kinds of taxes.
 But would exchange to another cryptocurreny already be handled like exchange to fiat, so that already also income tax for that amount would be calculated? Lets say one earns 1 BTC and exchanges half of BTC to ETH. Has he now half BTC also income or only as soon as he pays out to fiat?

To the best of my knowledge converting to a different crypto-currency does not trigger a taxable event. Please consult a CPA as I am not an expert in tax matters.

George D. Greenberg
www.attorneybitcoin.com

[AttorneyBitcoin]

Where's the best place to incorporate a blockchain project these days? Some people say Singapore or Switzerland but I've heard both places are becoming less friendly to crypto lately. TIA

I'm sorry I do not have an answer to your question. Look into the country that you are a citizen of. That way you can be accountable for your actions and pay taxes for the country you live in.

George D. Greenberg, Esq.
www.attorneybitcoin.com

[kissmarx]

If one earns bitcoin f.e. via signature campaign, when should he pay tax? At the moment he cashed in Bitcoin or when he cashes out to fiat? In Japan its clear, he should pay taxes for the date, he earned the BTC, but other countries f.e. in Europe or USA ?
Many thanks for your awesome thread.

I am not a tax expert but I do understand how confusing taxation is for Crypto-Currencies. There are 2 different taxes. Income tax and capital gains tax.

Income, to the best of my understanding, happens when you turn BTC, into fiat. It is considered income for that year and claimed in that year as part of your entire income, for income tax return purposes. 

Capital gains is a bit more complicated. It has to do with the gains you have made on investments. This type of tax is one of the most disliked. It's basically the difference between what you bought an asset for and what you sold it for.

The calculating of capital gains in the crypto-world can be quite complicated. If you buy a coin  and it increases or decreases in price, did you keep track of the price you bought it at and the price you sold it at? Is your trading platform tracking that? Then you use that coin and buy a different coin, then you sell that and buy another coin and so on and so forth; then you add some more funding to the account at the trading platform; are you tracking the added funding separately? Then you continue buying and selling the same coins which are all then grouped together in their own trading platform wallets. You get the drift.   

A C.P.A. will understand these things and be able to answer more specifically.

I hope that helps.

George D. Greenberg, Esq.
www.attorneybitcoin.com   

It's really a difficult issue about bitcoin and taxation on it.
Thanks for your explanation.
I will keep following your thread because it is very informative.

[rafanadal]

Hey, i have a question , so i bought a few bitcoins years ago
and basically forgot about them
but now they are worth a small fortune , as u know 1 bitcoin is worth 4,3 k today
i am not planning on selling them quite yet , u never know, they might be worth even more in the future.
but my question is , would that get me in trouble with the authorities ? do i need to pay taxes on them?
if i do sell them, how would the bank react ? does that breach some sort of money laundering law ? since i do not trade or anything
i've just been ''hodling'' the btc all this time. and what's your advice ?

[AttorneyBitcoin]

Hey, i have a question , so i bought a few bitcoins years ago
and basically forgot about them
but now they are worth a small fortune , as u know 1 bitcoin is worth 4,3 k today
i am not planning on selling them quite yet , u never know, they might be worth even more in the future.
but my question is , would that get me in trouble with the authorities ? do i need to pay taxes on them?
if i do sell them, how would the bank react ? does that breach some sort of money laundering law ? since i do not trade or anything
i've just been ''hodling'' the btc all this time. and what's your advice ?

I think it is a great set of questions. First of all good for you! Currently, just holding Bitcoin, to the best of my knowledge, is not a taxable event. There are no money laundering issues here. You are not going to get in trouble with any authorities. It is perfectly legal to own BTC.

My advice going forward though is that you diversify. Spread it out a little bit. ETH seems to be a worthy investment. There are other coins out there that have utility and a following such as CURE coin. Also, consider taking some profit, that is, sell a little, then you would declare that as income and it would be subject to income taxe but so what, pay them. It is wise to take some profit and foolish to think that BTC will go up forever.

I do want to caution all, BTC is speculative. Yes, it has been going up in price and everyone is excited, but it could drop in price as well. If you have been around for a few years you will know this to be true.

George D. Greenberg, Esq.
www.attorneybitcoin.com

[HippiePyro]

Hello. Thanks your for taking the time answer all these question. I have one I have been wondering about.
1.If I sell bit coin for usd, but the usd stay on an exchange, to be respent on more bitcoin, do I pay taxes on that capital gain? I wonder since the money never left the exchange and can't be used for anything but crypto unless I withdraw it.
2. Same scenario but instead of usd, I sell for usdt (tether) which is tied to the usd. Would this count as a capital gain? Or only when it is actual fiat USD?

3. I live in Arkansas. To your knowledge, what taxes would my profits be subject too. Is there any state laws here not found elsewhere pertaining to crypto currencies.

4.I know your not a tax attorney, but I'd appreciate your insight on these matters. Also, can you recommend a tax attorney in this area who deals with bitcoin?
5. What type of laws would apply to a bit coin investment and trading group? Many people I talk to would like to get into bit coin or invest, but don't have the time to monitor the market and reasearch. Several have asked if I could handle this for them. If I do this and charge a fee, what 
would/could I be liable for? What license's would be required and what license would probably be a good idea, if not yet required? Would these answers change if we started dealing with larger amount's of money? Like from 1000 invested to 100k invested.
Thank you once again
HP

[AttorneyBitcoin]

Hello. Thanks your for taking the time answer all these question. I have one I have been wondering about.
1.If I sell bit coin for usd, but the usd stay on an exchange, to be respent on more bitcoin, do I pay taxes on that capital gain? I wonder since the money never left the exchange and can't be used for anything but crypto unless I withdraw it.
2. Same scenario but instead of usd, I sell for usdt (tether) which is tied to the usd. Would this count as a capital gain? Or only when it is actual fiat USD?

3. I live in Arkansas. To your knowledge, what taxes would my profits be subject too. Is there any state laws here not found elsewhere pertaining to crypto currencies.

4.I know your not a tax attorney, but I'd appreciate your insight on these matters. Also, can you recommend a tax attorney in this area who deals with bitcoin?
5. What type of laws would apply to a bit coin investment and trading group? Many people I talk to would like to get into bit coin or invest, but don't have the time to monitor the market and reasearch. Several have asked if I could handle this for them. If I do this and charge a fee, what 
would/could I be liable for? What license's would be required and what license would probably be a good idea, if not yet required? Would these answers change if we started dealing with larger amount's of money? Like from 1000 invested to 100k invested.
Thank you once again
HP

1. It is my opinion that once you convert BTC to fiat, even if you leave the fiat on the exchange, it is still a taxable event both for income and capital gains. However, why would you leave fiat on a crypto exchange? Normally when BTC is converted to fiat it is with the intention of taking profit and withdrawing the cash.

2. I don't know much about usdt, but if the price is merely tied to USD then it is still a crypto-currency or token, and therefore you would not be converting BTC to fiat so not a taxable event.

3. I am licensed in Nevada. I do not know the laws of Arkansas and have never been hired to explore them.

4. I do not generally make public or private referrals on this site unless hired privately to investigate the same.

5. The questions in #5 are far beyond the scope of the free advice I provide on this site. In general the SEC, FinCEN and State regulators may  look into those who are acting as Brokers for others. This type of venture is much more complex than people initially assume. 

Best:

George D. Greenberg, Esq.

www.attorneybitcoin.com