Topic: FATCA (Read 4038 times)

You ( and others ) will probably like this → http://www.ted.com/talks/simon_sinek_how_great_leaders_inspire_action.html

One of the most likely consequences is that many banks and other financial institutions will simply avoid the problem by refusing to deal with US citizens effectively making US citizens financial pariahs abroad. Others may also limit the products and services they make available to US citizens. You can open a basic chequing account but not buy units of that high performing hedge fund.

As for Bitcoin I can see:

1) Bitcoin exchanges refusing US Citizens. By the way this is already happening. Ever wonder why Virtex requires Canadian Citizenship is order to open an account?

https://www.cavirtex.com/terms

2) Ex-pat US citizens being forced to used Bitcoin to avoid what can become an effective worldwide banking blockade against them.

Thanks for posting this Legal Eagle, very interesting and relevant.

I don't know how many points of so called "gold" that Freeciv uses as currency those billions would come out to but I would expect players to be wondering how many military units or nuclear units they could field for a similar cost.

Presumably though the U.S. would have already figured that out and deliberately made the cost of compliance lower than the cost of fielding sufficient such units to discourage the U.S?

-MarkM-

Looks like it in the UK they aren't big fans of it:


 - http://www.investmentweek.co.uk/investment-week/news/2215771/tax-havens-jersey-guernsey-and-isle-of-man-sign-up-to-fatca

Yes, 100 times. Also, any intimation of that threat by any establishment entity will only increase Bitcoin's viability and further decrease the value of their paper. For them to counter Bitcoin at all would require a scorched earth policy on the net. I don't think they're willing to do that yet.

Great job on Wenzel's show, btw. I think he'll come around if he hasn't already.

Yes indeed. One of the interesting things about FATCA is it sidesteps national governments entirely by using a recursive withholding tax. Banks that have US assets or operations have to comply or be punished with what are effectively massive fines (called "taxes" but they are actually proportional fines). But once a bank comes into compliance, they then have to impose the withholding tax on any non-compliant financial institution they deal with, even if that institution has no links with the USA at all and doesn't want them!

As the financial system is so interlinked this trick effectively makes every financial institution in the world subject to arbitrary US laws, or indeed the laws of any country with a big enough economic footprint that has the balls to try and do it.

It's really one of the most horrible laws I've encountered in a long time, in that it is basically a way to subject everyone to US law without national governments even being able to stop it. If you think about it, surviving without a bank account these days is extremely hard in most western countries. So if the US can control foreign banks, which FATCA is proving they can, then they can effectively control anyone by changing the requirements around who can or cannot have bank accounts.

It's just one small step away from global empire.

I disagree and think the impact is material. Bitcoin is moving the Freeline in all three areas of cost (money, time and privacy) and therefore currently in charge of the currency market change.



FATCA increases the cost of using USD for both tax compliant and non-compliant by (1) increasing privacy and time costs by having to spend time filling out reports of foreign financial accounts and disclosing the balances. These costs are born by both the tax compliant and non-compliant.

In terms of money, for those that are non-compliant the penalties and increased probability of being caught evading taxes raises the cost or risk adjusted cost in terms of money. But even for the tax compliant Bitcoin reduces the money costs in terms of processing fees and risk adjusted counter-party risk (bank failure, MF Global type embezzlement, etc.).

Because Bitcoin is moving the Freeline and is in control of the currency market change therefore it will continue pulling in capital and increasing the network effects which increases the probability that you could 'live your retirement largely within the Bitcoin economy'.

Economics guides behavior and behavior shapes culture. Bitcoin has fundamentally changed the economics of the currency market and is begininning to have an effect on individual behavior. As network effects take place and individual behavior begins changing on an increasingly exponential scale this will result in a change of culture. And it is this fundamental change in economics that is the real threat from Bitcoin to the establishment.

@The_Duke

yeah uh... that was fractal wrongness fail to do it yet again. I'd rather not even count how many that was... Let's not speak of my fail (in this thread / perhaps the off-topic forum sections needs cats or something. feel free to talk about my fail there I guess?) I'm blushing so hard my face hurts.

*clears throat*

---

FATCACTUS is really screwed up. Will cost more to implement than it brings in as revenue, and much of the implementation cost will be paid by foreign entities. I do not like this. Even more, it makes the US look like nosey overreaching bullies more than we already do. bitrustica (virtual country) wouldn't even provide protection from this sort of nonsense even in the event of renunciation of US citizenship. it's a really yucky law.

@OP

Thanks, I'll watch this law closely (or at least closer than my previous level of "zero")

I loled. Kudo's for such a great comeback after earlier epic sillyness

Edit: Oh, just saw the update. So basically you just exponentially increased your fail? Well, extra kudo's for that tbh!

aww damnit, really?

FATCACTUS - Foreign Account Tax Compliance + Act of 2010 (in the  US)

Oh damnit.  Sorry, and thanks for pointing out that my google-fu is weak (and also, thanks for linking to the appropriate "newer, actually new new law" in question)

... Bloody dyslexia.

---

Edited to add:

more easy-good to remember more-better and fun-like if we call it:

FATCACTUS: Fair and Accurate Credit Transactions... (FATC) + ACT + US

As a US expat living in Belize, I can say that this is explicitly not true.  The banks here are already asking US customers to provide updated documentation or face closure of their accounts. They are complying.  And I'm terribly disappointed in my adopted country.

You reversed the letters.

Not FACTA - Fair and Accurate Credit Transactions Act of 2003
FATCA - Foreign Account Tax Compliance Act of 2010

 The US has so many laws they are running out of abbreviations.

http://www.irs.gov/Businesses/Corporations/Foreign-Account-Tax-Compliance-Act-(FATCA)
http://en.wikipedia.org/wiki/Foreign_Account_Tax_Compliance_Act

An interesting factoid.  Belize has refused to comply with the provisions of FATCA.  They also don't respect the authority of any foreign courts when it comes to subpoena of financial information.

I don't think Romney would be pleased 

The legislation applies to banks worldwide dealing with US Citizens.  Theoretically of course, other nations don't fall under US jurisdiction and wouldn't have to comply, but the USA has been strong arming countries around the world into compliance.  They've hit nearly every "tax haven" and convinced them that it's better to cooperate.  They have agreements from Switzerland, Panama, Belize, Caymans and most other well known offshore banking jurisdictions.

I just tried to fact check your statement about facta:




^ So uhm... cool story, bro.

When did you say this was going into effect?      


Edited to add:

Actually no, wait... Is there some other law you're referring to? I'm confused now Already bummed out about the GLBSE situation and don't think my ability to fact check random laws that screw up my fun even EXISTS right now

Given the tremendous costs of compliance for even one countries FACTA-like laws, the chances of reciprocity actually happening seems very low to me.

Firstly, most countries don't have the ridiculous citizen-based taxation the US has, so there's nowhere near the same level of issues with foreign tax evasion. Secondly when US banks realize they've been signed up to figuring out the citizenships of every single one of their customers, they will squeal and the USG will let them off the hook. This will not violate any of the agreements that are being signed because they merely "allow" for information sharing, not actually require it, and agreements signed by the US Treasury have no force of law. Congress won't pass any laws that require US banks to give information to foreign governments, and other countries won't try the viral withholding tax trick either given the lack of incentive (point one).

At any rate, the impact of these sorts of tax issues on Bitcoin (and vice versa) is almost zero. You can't really hide assets in Bitcoin unless you plan to live your retirement largely within the Bitcoin economy, which would make you probably the most optimistic risk taker in the whole world.

The US just wants to squeeze as much money out of people as it can, even if it means spending federal money.
More incentive for people to dump fiat and go Bitcoin if you ask me. Bitcoin isn't a financial institution, unless Gavin fucked that one up for us with TBF.

John Matonis just wrote an article and addressed FATCA in it:

 - http://www.forbes.com/sites/jonmatonis/2012/10/04/bitcoin-prevents-monetary-tyranny

Forbes- "Bitcoin Prevents Monetary Tyranny"
 - https://bitcointalksearch.org/topic/forbes-bitcoin-prevents-monetary-tyranny-115445