Bipartisan support for cryptocurrency regulation is growing

By Greg S ยท 14 replies
Feb 19, 2018
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  1. The speculative nature of cryptocurrencies has caught the attention of gamblers and investors alike in hopes of chasing elusive quick cash. Aside from causing a shortage of graphics cards, using mass amounts of power globally, and making it difficult to track criminals online, the danger of speculation still remains. Congress may make it much more difficult to engage in speculative cryptocurrency trading.

    One of the main reasons that Congress is taking a closer look at cryptocurrency is due to the adverse effects that speculation can lead to. Much like Black Thursday in 1929, consumers are putting a lot of money into assets that are expected to rise in value, but have no backing. There have been many massive rises and falls among all major digital currencies, but there is no safeguard in place to prevent a flash crash.

    Most recently, Bitcoin took a tumble from its high of almost $20,000 all the way down to the $6,000 range. Over $200 billion of market value was eliminated between December 17, 2017 and February 6, 2018. Due to the common swings in value, Congress is concerned that consumers could be risking more than they are aware of.

    Over the next several weeks, hearings will be held by the House Financial Services Subcommittee on Capital Markets. Committee Chairman Bill Huizenga says that "the marketplace has changed," now that there has been such extreme growth over a short time period.

    In addition to the risks of speculation and ever changing values, hacks of exchange sites are a large problem as well. There have been billions of dollars stolen from exchanges over the past five years with little recourse for users of sites that have been hacked. So far, government interaction with cryptocurrencies has been slow and not very restrictive. One of the most influential decisions has been the crackdown on initial coin offerings by the SEC to attempt to prevent fraud and funding of malicious organizations.

    According to Senator Chris Van Hollen of the Senate Banking Committee, "the goal here is to have rules of the road that protect consumers without trying to squash innovation." This stance shows that it is understood that blockchain technology has uses far beyond just trading and speculation. Digital currencies themselves are likely to change and continue to evolve just as the rules and regulations surrounding them are created.

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  2. Uncle Al

    Uncle Al TS Evangelist Posts: 3,586   +2,154

    The real problem is that the government couldn't care less about the depositor; their interest is tracking for the purpose of control and taxation ....... nothing new there ......
    SirChocula likes this.
  3. yRaz

    yRaz Nigerian Prince Posts: 2,475   +1,581

    I have to file for an extension because I can't find a CPA that wants to deal crypto. The tax laws are so rediculois that people are literally unable to pay taxes on it which many people feel is intentional. Treat it like a stock or any other asset and make paying taxes easier. All the IRS is doing is turning people into criminals by making tax laws so bizarre that the eventually commit tax evasion whether they want to or not.

    I talked to a tax attorney about this and he basically just said, "file your taxes normally, let them audit you and I'll handle it from there".
  4. davislane1

    davislane1 TS Grand Inquisitor Posts: 4,857   +3,874

    As Uncle Al said, this is about taxes, not "protecting" anyone. The speculation/exchange hacking talk is a smoke screen intended to cover up what they really want: stricter accounting practices for exchanges servicing American accounts, requiring said exchanges to furnish the appropriate tax forms for said accounts, and cut down on non-reporting.

    Why they don't just come out and say that... It isn't good for optics.

    The one exception to this may be ICOs, where there is a legitimate concern. Every day there's some dev claiming to 30x someone's money if they buy coins now.
  5. yRaz

    yRaz Nigerian Prince Posts: 2,475   +1,581

    ICOs are the biggest scam in crypto right now and they, in my opinion, are stunting the progress of legitimate cryptos.

    And, yes, I would love for the tax man to be honest about what they're doing. I WANT to pay taxes on what I feel is the easiest money I've ever made. They make this so complicated that CPAs and even tax attorney's don't want anything to do with it.

    The attorney I talked to actually joked that the IRS is going to spend more auditing people under their own tax laws than individuals would have paid if they hired CPAs
    davislane1 likes this.
  6. davislane1

    davislane1 TS Grand Inquisitor Posts: 4,857   +3,874

    Would not surprise me. Been researching their regulations over the past several months to prep for taxes. Their language makes it a pain in the *** to get the correct figures. Cap gains/losses is easy enough, but God help you if you're a miner.
    yRaz likes this.
  7. yRaz

    yRaz Nigerian Prince Posts: 2,475   +1,581

    I bot, I trade and I mine. I run bots on several exchanges but due to a power outage my trade file was corrupted and I lost 6 months worth of trade records. Only 1 of the 4 exchanges I bot on keep trade records.

    I'm trying to transfer my botting over to forex but I think I will still mine and trade crypto.

    This stuff is easy money and I am 100% willing to pay taxes on it. Fact of the matter is that the IRS is making it impossible for me to do that.
  8. mbrowne5061

    mbrowne5061 TS Evangelist Posts: 809   +394

    I would imagine that the simplest and fairest solution to miners would be to just ignore their profits until they try to cash out into the relevant government currency (USD, in this case), then put the tax at the moment of exchange.

    But this tax would be simple, fair, and easy to calculate - so it probably won't be what will happen.
  9. yRaz

    yRaz Nigerian Prince Posts: 2,475   +1,581

    Not really, you have the cost of the hardware and the cost of electricity. Profits aren't realized in mining until both the hardware and electricity have been paid for. Unless you have something to calculate exactly how much power your hardware has been using then the taxes will be unfair.
  10. davislane1

    davislane1 TS Grand Inquisitor Posts: 4,857   +3,874

    There is also the property tax, whether or not your are mining sufficiently enough to qualify as a hobbyist or a business (subjecting you to self-employment tax liability), whether you count as a contractor or employee with whatever mining pool you may be associated with (which carries potential payroll tax, social security tax, and about three other liabilities)....all areas the IRS regulations are blatantly vague with. If you only tax the cash-out (capital gains, losses), you can amass tens of thousands or even millions of dollars without paying a cent in taxes.

    The simplest solution is to 1) come up with specific definitions and 2) shift the heavy lifting to the exchanges and mining pools (as it's done elsewhere in the financial industry) and require non-business tax payers to record property tax and cap gains.

    As of now, most of the complicated stuff is left to miners/traders/their accountants... Which is why most professional tax and accounting providers don't want to deal with crypto. It's cheaper and saves more time to simply let the IRS find a problem then address it how they want. Theoretically, anyways.
  11. hood6558

    hood6558 TS Addict Posts: 285   +74

    I think coin mining will soon be regulated out of profitability. governments (and banks) are allowed to generate money out of thin air, and they are probably mad about miners cutting into their hustle. Mining may also have the potential to crash economies, like any speculation that's not backed by anything.
  12. captaincranky

    captaincranky TechSpot Addict Posts: 13,343   +2,887

    Behind every bitcoin, or other recently created crypto-currency, there is a potential Bernie Madoff.

    I don't think our (US) government, or any other government with any sense, is going to declare "xxx" crypto-currency is, "too big to fail".

    There's a very real downside to cryptocurrency, which none of its proponents here are willing to acknowledge

    By the way that's all I had the time or ambition to link for now.

    EDIT: There's something else. Since block-chain currencies, (allegedly), can't be counterfeited, shouldn't you be able to trace said same coins back to their original locations, and be able to identify the stolen coins and who their current owners are?

    Not to mention, these exchanges have had as much as a half billion dollars worth of coins stolen.
    Boilerhog146 and hood6558 like this.
  13. QuantumPhysics

    QuantumPhysics TS Addict Posts: 198   +118

    The LACK of regulation is what attracts so many to cryptocurrency.
    I already knew long ago the government would get involved - if for nothing more than to tax it - but to also stop people who wanted to launder money.

    I bought into bitcoin at $2000 and pulled out when it hit $19,000.

    Had I waited, I'd be stuck in the $10,000 range like they are now.

    I also got Litecoin and Ethereum a while ago.

    Once people realized that so much money was moving through, the scammers got their scams going.
  14. yRaz

    yRaz Nigerian Prince Posts: 2,475   +1,581

    The dollar is still the preferred method to launder money.

    I think the exchanges need regulated and that ICOs should be banned outright. I have not seen a single ICO that can be thought of anything other than a scam.

    However, the currencies themselves shouldn't be regulated. There are also multiple coins that cannot be regulated at all so I'd like how governments handle that
  15. Solar Flair

    Solar Flair TS Enthusiast Posts: 25   +24

    I don't think government can do much if a person want to buy digital stuff with their own money.

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