KYC Requirement Getting Stricter Under the umbrella Of Tax

[wiss19]

Excellent insights. Honestly, I feel that it was inevitable. Crypto was largely anonymous because governments didn't see it as a threat in its initial days. Now that the market is big, they are obviously trying to control everything because they want taxes on it. They have been doing it for decades. Sites like Liberty Reserve were a good example. They let it become big enough to be worth taking over. I'm not sure what happened with BTC-e, but it might be the same.

Good thing that DEX exist but unfortunately, even they can't stay unregulated for long. Once the government sees that it's a thorn for them, they will easily take over. Honestly, anything that exists on the web is controllable for them, so how far can you really run?

[Abiky]

This is just how it is.

The government will do anything to put KYC requirement for tax purpose because they know crypto has huge volume and most of the activity are taxable event.

They are most likely to pursue it until you're fully compliant about taxes, right now it's cex, in the future maybe dex that supposedly non KYC. So, expect more to come.

Some countries even already require you to write the self custody addresses you used for tax purpose.

Non-KYC DEXs becoming KYC-compliant? Good luck with that. If there's a DEX that does such a thing, it can't be called a true DEX. More like a hybrid exchange combining centralized and decentralized infrastructure. I understand governments want to prevent tax evasion. But too much regulations will ultimately hinder the growth of the industry as we know it. Privacy and freedom will be literally non-existent in crypto.

Thanks goodness we have truly-decentralized and private alternatives to almost everything. With Monero and atomic swaps, what more can we ask? It'll be impossible for governments to mess this up. I hope more people get to use non-custodial and decentralized solutions to help tackle governments' attempts to ruin privacy and freedom. We'll see what happens in the future.

[Satofan44]

Privacy is already a mythical for most people. We just did not notice because the transition was slow, but then all at once. CARF is the all at once part. 48 Countries starting in 2026, another 27 in 2027.

It is not due to the absence of options and tools, it is primarily due to the ignorance and stupidity of the majority. That is the cold truth, you are probably surrounded by many stupid people like most of us are.

This is just how it is.

The government will do anything to put KYC requirement for tax purpose because they know crypto has huge volume and most of the activity are taxable event.

They are most likely to pursue it until you're fully compliant about taxes, right now it's cex, in the future maybe dex that supposedly non KYC. So, expect more to come.

Some countries even already require you to write the self custody addresses you used for tax purpose.

These kinds of generic statements of acceptance are completely worthless and serve no purposes. Things are not "just how they are", things develop due to many complicated reasons. One primary reason for which things are "how they are" is due to the ignorance and inaction of people like you. The issue with humans in general is that a huge portion of the population is very dumb and is unable to learn lessons from abstract thinking, instead they may only learn that fire is dangerous if someone throws them into a big fire pit. The dark side of democracy is that others will suffer the consequences because of the stupid majority, but hey don't let that stop you from telling yourself that you're a good person and that democracy is great. 

Non-KYC DEXs becoming KYC-compliant? Good luck with that. If there's a DEX that does such a thing, it can't be called a true DEX. More like a hybrid exchange combining centralized and decentralized infrastructure. I understand governments want to prevent tax evasion. But too much regulations will ultimately hinder the growth of the industry as we know it. Privacy and freedom will be literally non-existent in crypto.

You are being too specific and are completely missing the point. All DEXes that currently exist operate mostly through a centralized interface. There are 2 reasons for this:
1) UX. Using it through CLI tools, or having to develop your own interface is too costly, slow and difficult.
2) Lack of technical skills. 99.9% of the users would not even be able to manually craft a transaction to interface with the exchange, let alone to develop some tools.

This is the part that will be under attack, and it does not change anything about whether the DEX itself is decentralized or not. Just by getting rid of the GUIs since they are centralized, the governments would reduce the traffic and usage of these exchanges by 99%.

Thanks goodness we have truly-decentralized and private alternatives to almost everything. With Monero and atomic swaps, what more can we ask? It'll be impossible for governments to mess this up. I hope more people get to use non-custodial and decentralized solutions to help tackle governments' attempts to ruin privacy and freedom. We'll see what happens in the future.

Either you are joking or you are just shitposting. Very few people use those things, they are very rudimentary and not suitable for the wider population at all.

[Abiky]

You are being too specific and are completely missing the point. All DEXes that currently exist operate mostly through a centralized interface. There are 2 reasons for this:
1) UX. Using it through CLI tools, or having to develop your own interface is too costly, slow and difficult.
2) Lack of technical skills. 99.9% of the users would not even be able to manually craft a transaction to interface with the exchange, let alone to develop some tools.

This is the part that will be under attack, and it does not change anything about whether the DEX itself is decentralized or not. Just by getting rid of the GUIs since they are centralized, the governments would reduce the traffic and usage of these exchanges by 99%.

Yes. I am aware of that. It's much easier to just use a centralized interface for a DEX than relying on CLI tools or a decentralized CDN provider (eg: IPFS). People won't have the time to learn how to interact with the command line or connect to an alternative network to start using a DEX. Because of this, making a DEX that's 100% decentralized is nothing but impossible. At least, governments can't stop the revolution. If they successfully manage to take down a DEX, many others will take its place. That's the beauty of open source.

Either you are joking or you are just shitposting. Very few people use those things, they are very rudimentary and not suitable for the wider population at all.

I'm just saying sarcastically. You and I know most people don't care about their privacy or freedom, so they will continue to use conventional cryptocurrencies and centralized exchanges as usual. Only a small minority will support truly-decentralized and censorship-resistant protocols. I'm not worried about this. As long as that small minority remains loyal to the "crypto cause", nothing else matters.

[Satofan44]

Yes. I am aware of that. It's much easier to just use a centralized interface for a DEX than relying on CLI tools or a decentralized CDN provider (eg: IPFS). People won't have the time to learn how to interact with the command line or connect to an alternative network to start using a DEX. Because of this, making a DEX that's 100% decentralized is nothing but impossible. At least, governments can't stop the revolution. If they successfully manage to take down a DEX, many others will take its place. That's the beauty of open source.

Good, we are in agreement but perhaps you conclusion is wrong. Since shitcoins have different levels of centralization, they are able to try to do some things that we do not want to do with Bitcoin for any number of good reasons. Therefore, it is not entirely possible that someone develops an extension or a complete browser which can explore websites that are completely hosted on a blockchain. Sure there are also angles of attack here, but it could mean that the website UI code is hosted on the blockchain too and when used with the extension or browser it could be viewed as a regular website. This would limit this vector attack. Anyway, there are some ideas and attempts at building an entirely decentralized internet. All of this is very complicated, but I would not completely rule out the possibility of completely decentralized solutions as much. Remember, if Bitcoin was not created we would not even have 1% of the people interested in decentralization that are now, nor 1% of the tools and projects that we have.

I'm just saying sarcastically. You and I know most people don't care about their privacy or freedom, so they will continue to use conventional cryptocurrencies and centralized exchanges as usual. Only a small minority will support truly-decentralized and censorship-resistant protocols. I'm not worried about this. As long as that small minority remains loyal to the "crypto cause", nothing else matters.

My bad for misinterpreting, some people do sarcasm here in ways that are not detected by me. When it comes to the minority that you talk about, the important thing here is to retain that base of people and even to try to grow it. I am not so confident with the new generations that are growing up online and on social media, they are addicted consumers of the system. Therefore it is very vital to pass down the key lessons, otherwise we may come to a future where you will need to do KTC and a body scan whenever you want to exit your home. All for the sake of combating crime and protecting the children of course! 

[Rain1620]

I believe there is an argument concerning the unfairness about salary earners paying 20% tax and a crypto trader paying nothing because of certain privacy, but then, private economy was built not minding the risk and the energy it consumed, now this private economy has grown to an extent And the government is demanding for ransom coated as tax which feels predatory.

Demanding for exchange of every transactions made feels like a crypto trader don’t have any right to private financial life, a finance built by same individual? Honestly the society is not being true nor fair because the government are not supposed to intrude into one’s finances without a warrant or a cause that is note worthy.

In a society where the unemployed is majority over the employed, and the government are still interested in the unemployed’s finance when there is no form of fraud is typical robbery. If everyone are to pay tax then everyone should be employed because the level of complexity in crypto is nothing compared to the normal banking that any parasitic activity should be practiced.

[endut15]

This feels like a natural next step once crypto became too big to ignore. Governments aren’t suddenly worried about users, they’re worried about lost tax revenue and lack of visibility. The problem is that pushing everything into centralized reporting just increases risks — data leaks, hacks, and misuse of personal information. KYC and taxes aren’t going away, but the way this is being implemented looks rushed and short-sighted, especially for privacy and security.

[betswift]

This feels like a natural next step once crypto became too big to ignore. Governments aren’t suddenly worried about users, they’re worried about lost tax revenue and lack of visibility. The problem is that pushing everything into centralized reporting just increases risks — data leaks, hacks, and misuse of personal information. KYC and taxes aren’t going away, but the way this is being implemented looks rushed and short-sighted, especially for privacy and security.

It's a double-edged sword some are willing to take in order to think less going forward.

Eventually, they may feel the consequences of it, but it will be too late for that..

[Abiky]

Good, we are in agreement but perhaps you conclusion is wrong. Since shitcoins have different levels of centralization, they are able to try to do some things that we do not want to do with Bitcoin for any number of good reasons. Therefore, it is not entirely possible that someone develops an extension or a complete browser which can explore websites that are completely hosted on a blockchain. Sure there are also angles of attack here, but it could mean that the website UI code is hosted on the blockchain too and when used with the extension or browser it could be viewed as a regular website. This would limit this vector attack. Anyway, there are some ideas and attempts at building an entirely decentralized internet. All of this is very complicated, but I would not completely rule out the possibility of completely decentralized solutions as much. Remember, if Bitcoin was not created we would not even have 1% of the people interested in decentralization that are now, nor 1% of the tools and projects that we have.

As far as I know, there aren't any browsers or extensions which let you explore websites built on decentralized infrastructure. However, there are domain name services which allow you to browse decentralized TLDs (like ENS domains or Unstoppable Domains). For instance, a service such as Peername allows you to browse websites with .bit domains (domains running on the Namecoin blockchain). Of course, websites with a decentralized TLD are usually built on centralized infrastructure. The perfect combination would be to have a decentralized domain, alongside a decentralized CDN or network (such as the SAFE Network, ZeroNet, etc). It's difficult and time-consuming for developers to come up with something like this. But not impossible.

For now, let's just stick with what's easy and most convenient for us. DEXs in their current form are still better than CEXs. Privacy/freedom-wise, anyways. Most people don't have a problem with KYC, so they will continue to use CEXs for buying/selling Bitcoin. To each, their own.

[BlackBoss_]

The worst part is that they never admit that it is only to fill their pockets with taxation (aka mafiosos with baseball bats coming to your shop saying "we want our cut"). Instead they always sell it to the population as a necessity to battle crimes like drug trafficking, money laundering, terrorist funding,... Worst part is that they do nothing about the crimes and crime rate is on the rise, not to mention all these crimes are either going through the baking system and have nothing to do with crypto-world or are state sponsored like the international drug trafficking and its money laundering that is performed by the US government and its spymasters in CIA.

Doing anything on behalf of fighting against crimes is very easily and most convincing way to execute things even in harshest ways. Like KYC, AML have been used by many nations, not only the USA, but we know KYC and AML are useless to protect us. It's more helpful for governments and their benefits while with citizens - who don't need to be criminals - they have more bad and adverse effects than benefits.

Why KYC is extremely dangerous – and useless.

[Achalugo BTC]

This simply explains that government will always find a way to earn money from something that they can't control like Bitcoin so they will create or force a platforms to do KYC and later on get tax from it. In my opinion, the government is clearly wanted to lessen the decentralized platforms that's why many people have no choice but to complete KYC rather than having to use different methods and isn't easy compared to using centralized exchange platforms which is not hard to use.

Absolutely, the government have their way of taking their share in our funds, since they cannot be in control of it as they have always wanting to.
But, no matter how the government try, the adoption of Bitcoin will still increase, which people will not change their mindset on that, as its becoming an alternative to traditional systems. So the government will only regulate it just to take a part in it, which they can't exceed more than this because of how decentralised Bitcoin is.

[Somegory]

Here is the thing.

When every single thing becomes so excessively regulated, rebels will appear.  People like Cypherpunks.  People who knew the world before the regulations and the world after will understand there is no real change other than how much information we have to give and how much Privacy we have.  We used to give up little information while having a lot of Privacy.  Now it is the opposite and yet the crime does not stop.  In fact, it seems to some how almost get worse while regulations get tougher.  There is some thing that does not make sense at all.

They can end up punishing people for simply being Developers only because they had the IDEA of making some Privacy oriented Wallet or Exchange or what not.  But the more they fight against Privacy, there will be a point where things will become irreversible enough that Anonymous Developers will start appearing.  Open Source will probably start getting more popular and developed than ever before and it will cause some kind of 'war' between Governments and Anonymous entities who want their rights back.

This can not and will not work for ever.  I believe we are still in a stage of disbelief where Developers still do not want to believe that simply being a code writer may end you up in jail.  But when this starts happening often, they will have no choice but to start hiding their faces while continuing their work.

This is why the present developers are not smart.

They want to wait for all this to happen before they change their motives? Why not now? Satoshi built something that will tackle centralisation in the future, he wasn't building based on what was happening in the present, they should all learn from the founder of Bitcoin .
I know Bitcoin is not a privacy coin but it's close with that decentralisation utility, if he can do something like that our developers can also do better and like youve said it seems their hands will be forced in the end.

My point is they should be able to saw this coming and already be prepared for it.

[Abiky]

This is why the present developers are not smart.

They want to wait for all this to happen before they change their motives? Why not now? Satoshi built something that will tackle centralisation in the future, he wasn't building based on what was happening in the present, they should all learn from the founder of Bitcoin .
I know Bitcoin is not a privacy coin but it's close with that decentralisation utility, if he can do something like that our developers can also do better and like youve said it seems their hands will be forced in the end.

My point is they should be able to saw this coming and already be prepared for it.

Today's developers are mostly driven by greed. Gone are the days where developers actually care about the tech or utility aspects of a cryptocurrency. The fact that "meme" coins are flooding the market, says it all. Most crypto projects are now speculative, aiming to attract investors (particularly whales and influencers) for a short-term capital boost. Finding a developer with Satoshi's ideals, is nothing more than a rarity. Because many developers disclose their identities online, it's easier for governments to enforce the rule of law.

KYC is now all over the place, resulting in a huge attack vector for crypto users. Why you may ask? Because KYC data is stored on centralized servers, becoming vulnerable to hacks. The private nature of crypto is more of a feature than a bug, to help protect users' identities from hackers and other malicious actors. Even though Bitcoin itself is not private, it doesn't require you to submit your ID or personal documents to use it. Centralized exchanges with KYC defeat such purpose. At least, we have decentralized exchanges and atomic swaps. It's better something than nothing, right?

[Rustam Meraj]

In my point of view such huge storage of private information, such as names, addresses, and complete history of deals, has given very dangerous kind of trap for hackers and has made exchanges big target to them, as now one can steal complete map of financial life of user in one attack. I think this is leading to two tier market, Tier 1, which is strictly ruled and looks like old banking, and Tier 2, underground, where original spirit will find risky survival using person to person networks and self held tools which are starting to be called bad by rule makers as evil. In the end, privacy is going to be rare treat and reward and punishment plan of telling on yourself is only last warning before world removes global cover of secrecy forever in 2027.

[Catenaccio]

In my point of view such huge storage of private information, such as names, addresses, and complete history of deals, has given very dangerous kind of trap for hackers and has made exchanges big target to them, as now one can steal complete map of financial life of user in one attack. I think this is leading to two tier market, Tier 1, which is strictly ruled and looks like old banking, and Tier 2, underground, where original spirit will find risky survival using person to person networks and self held tools which are starting to be called bad by rule makers as evil. In the end, privacy is going to be rare treat and reward and punishment plan of telling on yourself is only last warning before world removes global cover of secrecy forever in 2027.

When you are online, you have risk of losing your identity information, anonymity, privacy and many data that can be used to attack you in the future. It's not only about your risk of losing your accounts and funds stored somewhere online but you will be able to do something for covering your loss in the past, at the present by doing something for your future profit. I don't say it is easy to get enough profit in the future in order to cover your loss in the past or the present but it is still possible to do.

The bigger risk is with your privacy and anonymity, when you lost it, you lost it forever.
Why KYC is extremely dangerous and useless.