Escaping from the lion

[Major Azul]

Hello, community! I'm new to Bitcoin self-custody and would like some help to better understand some issues.

I currently use the Bipa app to buy Bitcoin BTC and then transfer it to my personal wallet (BlueWallet), as I believe that "neither your keys nor your coins". However, with the new 17% tax rule on cryptocurrency profits in Brazil, I'm concerned.

My questions are:

Self-custody vs. Taxation: Does keeping BTC BTC in my own wallet really protect me from being tracked by the IRS?

Legal strategies: Are there ways to not declare or structure transactions to reduce impacts, since the government already collects a lot of money and it all goes to politicians' pockets?

Privacy: Should I migrate to wallets like Wasabi or Samourai (CoinJoin) to increase anonymity?

I appreciate any guidance or experience you can share!

[Rashlyowl]

I read the news, it seems the regulators in Brazil want to take everything they can from their people who are in crypto.

- Brazil’s 17.5% crypto tax: How the new rules hurt small investors most

Our country also imposes taxes, but it is limited to trading activities that occur on our local regulated CEX platforms. Unlike you where your government also wants to reach what should not be their domain.



Increasing pseudonymity of your address may be a solution for you, but if the Brazilian government is serious about tracking you, I don't think you can avoid them. You can try it first, using CoinJoin or a mixer service, hopefully it will work as you expected. If that doesn't work, the only way you have is to store Monero, your government probably won't be able to track it.

Maybe you'll like these lists:
(1) BitList
(2) BitMixList

[Despairo]

I check bipa.app require KYC, so they already know you and your coins. Even you move your coins, in the end they still know how much you own at that time.

A Bipa tem KYC?

Sim, a Bipa tem KYC. KYC significa "Know Your Customer" ou "Conheça Seu Cliente". É um processo que visa identificar e verificar a identidade dos nossos clientes, seguindo as normas regulatórias do mercado financeiro e de criptomoedas.

O objetivo do KYC é prevenir e combater crimes como fraudes, lavagem de dinheiro e financiamento ao terrorismo. Todas as informações enviadas pelo cliente são confidenciais e protegidas pela nossa política de privacidade e Lei Geral de Proteção de Dados.

So, you need to separate between KYC coins and non KYC coins. You need to comply with regulations with your KYC coins, then for the next one, you start buy Bitcoin through no KYC exchange. Check kycnot.me

Don't forget if you want to sell your coins, you have to convert your coins in cash, not through banks.

[Ronsbit]

These are some reasons why one needs to keep their assets in their self-custodial wallet outside the exchange, because once you get involved with a centralised exchange, just know that you will definitely not be able to escape any regulations and government activities as well. This is why enthusiasts are advised not to always hope to keep their assets and funds with a third party, but rather their own self-custodial wallet, which provides them with better and safer security and access to their funds without any third-party actions.

I will advise you not to use any centralised exchange to store your assets. currently, there are decentralised exchanges coming up that do not require your identity, you can do your trade with them and go your way. How about you check the  CCE CASH, here is their announcement thread, and they have a campaign going on and it is managed by icopress.

[Doan9269]

Self-custody vs. Taxation: Does keeping BTC BTC in my own wallet really protect me from being tracked by the IRS?

Yes, you can be tracked because you make use of a centralized exchange to buy before sending to your personal wallet, also all they have to do is to use the blockchain in tracing your transaction made and they already have your KYC information with them, but if you don't want to be traced, avoid centralized exchanges and use a decentralized one, you can also make use of enhanced privacy mediums in cryptocurrency like bitocincore, and so on.

Privacy: Should I migrate to wallets like Wasabi or Samourai (CoinJoin) to increase anonymity?

They are not bad, but here are most recommended for this same purpose.

Wasabi wallet
https://wasabiwallet.io/

wallets security and privacy mega threads
https://bitcointalk.org/index.php?topic=5509759.0

Open Source Hardware Wallets
https://bitcointalk.org/index.php?topic=5288971.0

wallets for security and privacy
Bitcoin Core
Passport
Electrum
Sparrow
Bluewallet

[Sticky Bomb]

I believe acquiring Bitcoin through DEX and sending it to your non-custodial wallet unlinks it to you directly, but it's not fool proof since if you've sent coins to that address from CEX, or in anyways received coins that was traced back to CEX, the address can be linked back to you.

It is best to create a new address in a bid to stay more anonymous, it's also safe to declare your taxable  assets to the government so that you don't face the law in the future while avoiding taxation.

Wassabi wallet no longer offers conjoin features from last year, electrum and Trezor can be a good option if you want to pursue more anonymity.

[BitGoba]

Hello, community! I'm new to Bitcoin self-custody and would like some help to better understand some issues.

I currently use the Bipa app to buy Bitcoin BTC and then transfer it to my personal wallet (BlueWallet), as I believe that "neither your keys nor your coins". However, with the new 17% tax rule on cryptocurrency profits in Brazil, I'm concerned.

My questions are:

Self-custody vs. Taxation: Does keeping BTC BTC in my own wallet really protect me from being tracked by the IRS?

Legal strategies: Are there ways to not declare or structure transactions to reduce impacts, since the government already collects a lot of money and it all goes to politicians' pockets?

Privacy: Should I migrate to wallets like Wasabi or Samourai (CoinJoin) to increase anonymity?

I appreciate any guidance or experience you can share!

If you want to buy BTC anonymously, use peer-to-peer exchanges like HodlHodl, RoboSats, Bisq, etc. Alternatively, you can use a global Bitcoin exchange like Strike check if it’s available in your country. I don’t believe that Strike, Bull Bitcoin, or similar bitcoin  exchanges would easily hand over your personal data to government authorities.
It’s wise to get a hardware wallet like Coldcard or Blockstream Jade. BlueWallet is still a hot wallet and doesn't offer top-level security, since the phone is connected to the internet and your keys can potentially be extracted. With a hardware wallet, on the other hand, the seed and private keys never touch the internet.

[EluguHcman]

I currently use the Bipa app to buy Bitcoin BTC and then transfer it to my personal wallet (BlueWallet), as I believe that "neither your keys nor your coins". However, with the new 17% tax rule on cryptocurrency profits in Brazil, I'm concerned.

My questions are:

Self-custody vs. Taxation: Does keeping BTC BTC in my own wallet really protect me from being tracked by the IRS?

I know Bitcoin and cryptocurrencies to be comprehensively integrated there in Brazil, so do you intend to outsmart the RFB by scaling away from giving your trade reports to the affirmative tax jurisdiction?

However, Bipa is a regulatory Fintech that facilitates on crypto transactions, if you buys your Bitcoin there and transfers it to any other wallet whether non custodial, you wont stay fully anonymous to be off track because you would still have to give record about the Bitcoin you bought therein.
Though the asset after sent to a self custodian wallet will be safe and privately secured under your custody but due to public ledger of the Blockchain, the RFB can still have you on track in reference to your buying history with the Bipa.
Not to have the regulations get you on track you will have to acquire your Bitcoin in a decentralized network.

[Nwada001]

You will need to consult a tax lawyer who will explain the tax law well to you and what the consequences of invading it will be. I don't think it's right to advise you on how to escape taxes in your country, whereas when there is time to pay for the crime, I won't be there to face it with you.

If you want to increase the anonymity of your involvement in crypto, you should avoid using a centralized exchange by all means, as that's the first mistake you will make.

As soon as you give them your information to third party, they will track wherever your coins are sent to, and even if you move your coins from a centralized exchange and use a privacy tool to break the chain, when you are contacted by your authorities, you will have questions to answer.

[Ucy]

If you don't want to be taxed in that manner, just make sure you are completely independent of the government. That will mean you self-custody and take responsibility of your bitcoins rather than depending on exchanges licensed and supported by your government.
The idea behind taxations is to enable governments fund things people who pay the taxes will benefit from. So if you don't want to be part of it then you make sure you don't benefit from things funded with taxes. One of the best way to ensure this doesn't happen is to live seperately in places where you are unlikely to benefit from tax funded services, infrastructures, etc. That would likely be remote communities where people provide for all their personal needs and sometimes contribute money to fund public infrastructures/services.  Same is applicable in cyberspace, you can just join a opensourced, decentralized communities where people provide all their needs and are independent of typical governments.

It's not ethical or moral to dodge taxes when you are supposed to contribute. But if you selfcustody without relying on government in anyway it becomes moral. If you are worried about governments abusing this in the name of penalizing you for not paying taxes, even though you don't benefit from tax funded services/infrastructures, you could simply go fully decentralized and don't pass through governments licensed platforms. There is nothing wrong in doing this as long as you are completely independent of the government.

[pancelot]

Hello, community! I'm new to Bitcoin self-custody and would like some help to better understand some issues.

I currently use the Bipa app to buy Bitcoin BTC and then transfer it to my personal wallet (BlueWallet), as I believe that "neither your keys nor your coins". However, with the new 17% tax rule on cryptocurrency profits in Brazil, I'm concerned.

My questions are:

Self-custody vs. Taxation: Does keeping BTC BTC in my own wallet really protect me from being tracked by the IRS?

Legal strategies: Are there ways to not declare or structure transactions to reduce impacts, since the government already collects a lot of money and it all goes to politicians' pockets?

Privacy: Should I migrate to wallets like Wasabi or Samourai (CoinJoin) to increase anonymity?

I appreciate any guidance or experience you can share!

1. Self custody is a way to protect account ownership (bitcoin), not a tax obligation. While many people store Bitcoin in personal wallets that allow them full control and access to the assets, this doesn't exempt you from tax, even though your country may have recently lifted the tax cap. You can read about it here: https://www.ccn.com/education/crypto/brazil-crypto-tax-explained/?utm_

2. The safest strategy, legally speaking, is to hold Bitcoin itself, possibly for the long term.

3. Privacy wallets, such as Wasabi or Samourai, can actually increase anonymity, but they are not a solution for tax avoidance. There is a lot of controversy surrounding this, which you can read about here: https://arxiv.org/abs/2109.10229?utm_

[Odusko]

Why not infact in my country you are taxed automatically when you make transactions from the bank to buy those Bitcoin on Centralized exchange and for sure regardless if you transfer to blue wallets all your transactions are there in your Bank accounts, this is why paying of taxes m must be done accordingly but then seeking the advice of a tax auditor can help you regarding taxation a d personal income.

[adaseb]

That tax rate is considered low compared to other countries, so consider yourself lucky.

I don’t advise trying to game the system. There are harsh penalties if cough in the USA, I can imagine in Brazil they are much much worse.

The wallet just holds your crypto. You are only taxed when you sell, typically at a profit. If you have a loss you offset your other profitable investments.

[melinoe]

There is still a gain tax whether you are hodling on your self-custody wallet or somewhere else, you may try to rig the system, but there will be ways to make you think about it if you will be caught (for example< fines starting from 0,33% a day of delay for reporting about your info and potential audits).

[Ruttoshi]

Buying from Bipa app has exposed your identity already and you cannot prevent paying tax on those coins that you have already bought. Don't try to act smart, if not you will face the wrath of the law in Brazil.

When next, you plan to buy, you should use a decentralized exchange to buy bitcoin, convert it to monero and send it accross three different exchanges before converting it back to bitcoin and send to your noncustodial wallet. However, if you don't sell your bitcoin, you wouldn't pay taxes which is the reason why you need to hodli for long. Nobody knows maybe, in the future Brazil will reduce the tax on cryptocurrency.

[Plaguedeath]

When next, you plan to buy, you should use a decentralized exchange to buy bitcoin, convert it to monero and send it accross three different exchanges before converting it back to bitcoin and send to your noncustodial wallet.

So @OP need to buy Bitcoin using cash/altcoins, buy Monero using Bitcoin, then split to three portion, buy Bitcoin using Monero and send to the non custodial wallet? there are too many process rather than just mix the coins instead.

However, if you don't sell your bitcoin, you wouldn't pay taxes which is the reason why you need to hodli for long. Nobody knows maybe, in the future Brazil will reduce the tax on cryptocurrency.

Then for what @OP buy Bitcoin? are you kind of person who support hold for forever.

From my observation, the government almost never reduce the tax, instead they mostly increase the tax.

[michellee]

If you buy Bitcoin from the P2P exchanges or DEX, you may not be tracked by the IRS. But they can be suspicious of the transaction from your bank account so they may ask you for the details. If you lie to them, they can catch you and put you in jail.

But if you buy fraction to fraction time to time, I think the transaction can be considered as a daily transaction. You may be imposed tax based on the transaction so you can keep your Bitcoin in a private wallet.

If you buy Bitcoin on CEX, they will see the transaction and like I said before, they may ask you for the details. Nowadays, it is difficult to hide something private we have because the government will do many things to make sure their citizen pay the tax.

I am afraid privacy will disappear in the future as we can no longer protect our private lives from the government. They will do all they can knowing what their citizens have.

[buwaytress]

Welcome Azul!

I'm not going to say much except that, I'm usually of the opinion that if you're thinking from a tax perspective, then your argument is valid anywhere in the world (to varying degrees). I pay tax where I reside or where I come from, I'm happier with one more than the other, and while I definitely think overall I pay more than I get, I appreciate the idea of society caring for itself and contributing when able (if I'm paying tax that means I'm more comfortable than most).

So, in short. Pay your tax =) If you're not happy then move/reside in a place where you feel the tax is fair and pay it there.

It's unlikely that your government will ever discover about your Bitcoin in self (and sole) custody unless you're swimming in satoshi, so I wouldn't worry about that. I would try to find p2p methods (buying Bitcoin from another person) though.

[Donneski]

I think the first step is  moving your BTC into self-custody. Exchanges are the easiest place for tax authorities to track because they’re regulated and report transactions. When your coins sit in your personal wallet, you gain control and some privacy.

That said, self-custody doesn’t mean invisible custody. The government can’t “see” your wallet directly, but if your BTC came from a KYC exchange, that link already exists and can be used to track your private wallet. Tools like Wasabi or Samourai can help break the trail but they're don't work like magic, you need to understand how they work and deal with the higher fees that comes with them.

For now, the best balance is probably learning how Bitcoin transactions are traced on-chain, practicing better privacy habits and deciding how much risk you want to carry in relation to your local laws. Self-custody is freedom, but freedom comes with responsibility.

[d5000]

I'd also advise against to try to evade taxes. However, I'm also uncomfortable with a government knowing my crypto holdings. Governments can be corrupted, or their databases hacked by criminals.

Thus, my suggestion would be if you don't want to get on the "KYC radar" instantly when you buy your first BTC, doing instead one of the following options:

- Sell privately some good or service for BTC.
- A variant: Sell virtual goods like disk space, domains, (re)-selling hosting space. There are even crypto platforms to do that, like Storj.
- Mine Bitcoin with a solar panel. Brazil is almost completely in the tropics and there's no winter with very low earnings, so while you will struggle to make a real "profit", you may get these Bitcoins for a decent price, all costs taken into account. And you can use the panel to lower your house's electricity bill.

P2P isn't always the best idea. You buy often with a bank account or a e-wallet, and this means, that your counterparty will see your account number. It may be even an IRS officer wanting to know what you're doing ... (even if I don't think this would happen in Brazil, at least not yet ....)