Topic: FBI seized coins sold = bitcoin legal in USA? (Read 2663 times)

The discussion has derailed.

The question was not "is bitcoin better than dollars", it was "will the FBI auction convince the banks that bitcoin is legitimate, so that they stop closing accounts of bitcoin ventures".

My answer was "no, because bitcoin's stated goals include (1) to take away a significant slice of their revenue, and (2) to bypass all the controls on money flow that governments have set up to prevent crime, and they don't want to be charged with helping people bypass those controls."

i was there when the internet started to depart. i thought it wasn´t a big deal. just the usual hype. i had no understanding what digitalization really meant. those geeks, you know. hype...

healthy slap in my ignorant face, i´d say.

i went back to university and studied modern history. one important branch of my studies was history of technology. and here the digital age was covered and it was right in one of those seminars when the astonishing impact of this transformation finally and fully hit me. what ever becomes digitalized changes completely the way we use it. communication and photography are good examples.

cryptocurrencies will change everything...

To which we say no.

Every form of currency will have benefits and drawbacks, and some people will use it for illicit activities. I think the pros outweigh the cons in the case of BTC. Can't say the same for fiat currencies though.

no, they announced it is not relevant for this year,the current tax season

This seems to be their note about bitcoin: http://www.irs.gov/pub/irs-drop/n-14-21.pdf?utm_source=3.31.2014+Tax+Alert

The IRS instructions about bitcoin were issued very recently.  I don't know whether they were relevant for this year's tax filing.  Again, you had better ask a tax preparer.
EDIT: If I recall correctly, one implication of their rules is that you must keep records of when you bought and sold your bitcoins, because the tax rate depends on how long you kept them, like for stocks.

I don't know, you had better ask a tax preparer... But it is definitely viewed like property of some well-established type -- like stocks, or like real estate, or like something else.

If your total income (including gains in/from bitcoin) qualifies for exemption, you are safe.   Bitcoins are not special in that way.

Definitely.  The US IRS and their equivalents in several other countries have issued instructions on how to report income in bitcoins or from bitcoin trading.  Omitting those gains from your tax reports would be as illegal as omitting any other source of income.

IIRC, the US IRS in particular has decided that bitcoin is property, not a currency, and so gains from it must be reported like gains from property buying and selling.  The UK has exempted it from VAT, but not from other taxes.  And so on.

Look around in this forum, there must be whole threads about taxation. 

if you live in america yeah, you've had to pay capital gains taxes since they classified it last year.

Because of all the bitcoin's "qualities" that are supposed to make it better than cash: it can be instantaneously transferred all over the world, address owners need not identify themselves,  transactions cannot be stopped or reversed, transactions happen in no particular country and hence under no particular jurisdiction, ...

These features of bitcoin are intentionally and explicitly meant to avoid the controls on money flow that governments have built into other payment methods over several decades, to fight all those crimes (and tax evasion too, BTW).

Obviously a site like SilkRoad could not work with cash or credit cards.   Need one say more?

Stop you there, bucko. Fiat has been used for all of those reasons, for centuries, and 24/7. How does dollars --> Bitcoin change that? I understand your point, but, really?

I am afrait it won't.

First of all, bitcoin is supposed to take away some of their businesses.  Why would they like it, or help it in any way?

Moreover bitcoin exchanges and other companies that convert between dollars and bitcoins are easily used for money laundering, bribing, financing terrorists, paying for drugs and child porn, bitcoin ponzis, internet gambling, etc. -- perhaps even without their owners being aware of it.  So, if banks were to provide dollar input/output services to those companies, they would risk being charged with aiding those crimes -- especially if they have been warned that such crimes are probably taking place.  That, in my understanding, is the main rationale behind the PBoC restrictions in China, the bans in other countries, and the "spontaneous" bank account closures in Japan, Australia, USA, etc.

(1) The FBI did not held the auction to "profit" from it.  They had in custody some valuable property (bitcoin) that, after the court declared the seizure legitimate, belonged by right to all the citizens of the US, equally.  As such, the government could not destroy that property, and was morally bound to distribute it in some way to the citizens, or use it in their benefit, equally.  So the government (not a particular agency) held an auction with the sole purpose of exchanging that property for an equivalent amount of dollars -- because dollars are much easier to spend in benefit of the people etc. than rolls royces, mansions in Alaska, frozen chicken livers, or bitcoins.  The dollars will go to the Treasury, or perhaps to some specific agency, but always with the presumption that they are ultimately distributed to the citizens, normally in the form of public service.

(2) The coins were "dirty" (from the USG point of view)  while they were in possession of SilkRoad/DPR, because they were the profit from illegal activity and could be used by a criminal organization or person.  Once the coins were seized, they became the rightful possession of the people of the USA, in the government custody, so they obviously became "clean" at that point.

Likewise, banknotes stolen from a bank or paid for ransom are in principle "dirty", but if the police seizes them, or returns them to the rightful owner, of course they become "clean" again.  Moreover, if a pizza parlor accepts a stolen banknote without being aware of its source, the banknote naturally becomes "clean" too; but no one else would know about that.  This is basically why databases of "dirty" banknote numbers are perpetually out-of-date and have limited use.

(3) Stuff being "dirty" is distinct of it being "illegal".  The cocaine sold by a drug peddler is an illegal substance, while the cash that he collects is only "dirty", and would remain dirty if passed on t o accomplices; but is obviously not "illegal stuff".  The government is supposed to destroy illegal stuff, like drugs or explosives, because it has no legal way of converting it to dollars or using it for public good.  On the other hand, cars  and bitcoins can be legally owned and traded if they are "clean", therefore they can (must) be auctioned once seized, even though they were "dirty" before the seizure.

i mean in my state it takes as much effort as going to the airport and using the atm. sure not exactly a short trip to logan but theres going to be more and more bitcoin ATMs soon.

not sure about the etf, since the little roadbump with the bank a while back. but the winkdex (price index) made it on bloomberg, so could be a step in right direction.

http://winklevosscapital.com/posts/88996772661

Any news when tthe etf will hit? Right now it still takes considerable effort to buy BTCs... with the ETF we will have an influx of cash money.

That was my point. They will create common law. BIG federal agency can legally accept cash from bitcoin sell. Previously there were voices (from politicians, bankers etc.) that bitcoin is bad and it's position is unknown and everybody for safety should avoid it. FBI selling those coins just admits that bitcoin is in bounds of law and there's no fear