Topic: Why Homeland Security might be the best thing to happen to Bitcoin - page 2. (Read 5163 times)

Yeah but the second life people said that any SLL purchased with BTC would be forfeited didn't they?

Really? Because Lindens have a HUGE Linden to USD exchange market, and business owners that have to pay for their land plots and expenses in dollars pay very close attention to the Linden <=> USD exchange rate before setting the prices they are willing to sell stuff to. Were you around during the Linden crash, when the currency hyperinflated over the course of a week or two?

I'd prefer no regulation, or if we must have regulation, how about regulation that helps the people of the country, not regulation that potentially compromises millions of their hard earned $$$'s.

If regulation is what you seek and desire why use Bitcoin at all. Why don't you stop using Bitcoin and just use fiat. Problem solved.

The fact is that people want to buy bitcoins, the govt should be helping us not get ripped off, not freezing foreign entities assets that actually belong to americans.

take palm, hit forehead.

This MS company is not a money transmitter. That claim is just ridiculous. Gox was just trying to accommodate its customers. If Dwolla didn't allow foreign companies to have accounts, then Gox set up a subsidiary in the US just to satisfy Dwolla. There's nothing wrong with MS then sending this money to its parent. MS doesn't send money to Gox "at customer request." It is owned by Gox. Where else would they send money? How many US companies send money abroad within their own corporate structure? Are they "money transmitter businesses" now too?

They know what Gox is and what it does. It's not a secret money transmitter trying to operate under the radar in the US. Give me a freaking break. You can't tell Gox to send USD to Aunt Mary in Idaho. What a joke.

I've talked to my tax accountant, and she's digging into the details. So far it looks like there's some question on whether we should treat it as barter or as an investment. The IRS isn't very clear on this yet, and the details will effect how to value the bitcoins. Also how you earn or even how you accept them can effect if any bitcoin profits are taxed as income or capital gains, and one or the other might be better for your situation. I'll post what we figure out. What I took away from the meeting is that anyone dealing with Bitcoin in the US should be keeping careful track of transactions and the value of goods or services traded just in case it goes in the barter bucket. It's also a good idea to keep track of an exchange rate from that day in case they are going to be treated as currency by the IRS.

Remember the whole blockchain is right there for the IRS to read, and in the US the burden is on you to prove your income taxes are correct.

There's an urban legend that one of the early miners (maybe Satoshi himself) bought a pizza for some crazy amount of BTC (1000?).  How's that for price theory?

This.

I'm alot more interested in Bitcoin on its own than I am in Bitcoin as a way to transfer and exchange other currencies. I wonder how things might have been different if Bitcoin had been introduced first as a game currency like Lindens. I've noticed that people really don't convert Lindens in their head, and most things in SL are priced in Lindens only. (not comparing Bitcoin to Lindens, just observing the different pattern of adoption).

When the government brings regulation into an industry / sector etc.. it also brings legitimacy which brings trust which increases adoption etc...

I don't see why regulating exchanges would be a bad thing - for example the SEC regulates the stock markets in the US and most of the rules they enforce - like insider trading - are meant to protect investors not the exchange. For example imagine this.

1) I create a new coin called the XYZCoin and premine it.

2) At the same time I setup an exchange which trades XYZCoin.

3) I prepopulate the exchange with a couple of fake trades showing that XYZCoin is worth $0.03 or something. Maybe I put ''Trades might be simulated' in fine print somewhere.

Who's to say that the coins aren't worth $0.03? What if people actually sign up to trade and somebody purchases my premined coins? What if after I sell my coins I just shut down the whole thing?

This is why regulation is needed - things like this, you shouldn't be able to create a virtual-currency and then turn around and run / influence an exchange - it's a clear conflict of interest. You can't report that a virtual-currency traded at a value when it hasn't. Right now I don't even think a virtual-currency like Bitcoin has legal status so it makes it impossible to enforce any existing laws (like theft).

As for taxes I have no comment The US takes it's tax laws very seriously so, yeah, you should always pay your taxes if you live there. I might be mistaken but I think that you only need to pay taxes on something like Bitcoin when you convert to USD - assuming you live in the US. In theory if you never converted to USD then there would be nothing legally to pay taxes on.

No.  In the absence of a fiat currency exchange reference, buyers and sellers of goods and services would have arrived at pricing for their goods and services in BTC completely independently.

Look up auction theory and price theory.

Um, no, speculation and fiat exchange was the best thing that happened to Bitcoin. It's the only reason that it's worth more than $1 per bitcoin right now, and is probably the only reason a lot of people, including you, have even heard of it, let alone taken it seriously. The idea that "if only we all used bitcoin without needing to exchange into fiat" is silly, since to get there, EVERYONE would have to be using bitcoin for everything already. That's the LAST step of bitcoin adoption, not the first, since even if you buy something with bitcoin, someone, somewhere, will have to trade those coins for cash to buy materials from suppliers, or food and room to sleep in.

Why should it be good? When crypto currency exchanges start to be regulated by the FED than they will introduce restrictions, taxes, etc.

Going to be very interesting and expensive legal case if MTGOX even bothers .

I agree this will only force other exchanges to comply with existing laws which can only be good for Bitcoin.

The actual warrant has nothing to do with Bitcoin. I'm guessing that Dwolla would only transfer to US accounts. Mt Gox setup a company in the US with a US account and used that account to act an intermediary between Mt Gox and Dwolla. In doing so they broke money laundering rules because this transfer of money was at the request of a client - not simply money in exchange for goods.

Say you want to put 10k USD into mt gox. You put 10k into Dwolla, Dwolla transfers to Mutum Sigillum and the Mutum Sigillum transfers to Mt Gox in Japan - the last step breaks US laws since its transferring money at your request as so it (according to the affidavit) makes it a money services provider and as a money services provider it has to comply with FinSEC - for example it has a duty to report the transfer for amounts over $x. Why you're transferring the money into Mt Gox is not important it's the transfer of funds between the two companies which breaks the law.

The MtGox head opened a US bank account under false pretenses. After FinSEC published their guidelines he failed to come into compliance, presumably based on the assumption that the Mutum Sigillum intermediary was enough to insulate him from prosecution. This prosecution was inevitable.

This action will put the fear into other exchange owners, who will now either shut down or come into compliance.

End result - legitimate, insured exchanges available to the masses. Bitcoin becomes ready for mainstream adoption.

No wonder so many VC's in Silicon Valley are pissing their pants with excitement!

Why would they need to transfer the money from Mutum Sigillum in US to Mt Gox in Tokyo for each customer transaction? As long as the Japanese regulators are happy, they could leave all or part of that pile of USD in Mutum Sigillum US.

Also, I am not sure what "customer instruction" could result in Mt Gox "sending" that money elsewhere. It is more like a merchant purchase deposit account than a currency exchange or money transmitting business. Money transmitting implies multiple destinations, deposit implies a single destination.

In 2011, it could be argued that Bitcoin wasn't a currency.  Mt.Gox does not transmit USD, Euro, etc, or exchange between traditional currencies.  They take real currency from a customer, and facilitate trades of real currency for bitcoins.  This is no different from buying/selling World of Warcraft gold for real currency.  You could extend this further, and say that it is the same as any auction site.  Is Ebay a money transmitter, because you can buy/sell things?  Doesn't every single business "exchange money" for goods or services?

 Unless I misunderstood the chain of events is as follows:

When purchasing with Dwolla

1) You send money to Dwolla
2) Dwolla transfers money to Mutum Sigillum
3) Mutum Sigillum transfers money to Mt Gox in Japan
4) Mt Gox credits your account

and the reverse when you sell into Dwolla

1) Mt Gox debits your account
2) Mt Gox sends transfer to Mutum Sigillum in US
3) Mutum Sigillum transfers money to Dwolla
4) Dwolla credits your account.

The affidavit states that when opening the account Mutum Sigillum answered 'No' to 'Do you deal in or exchange currency for your customers?' and 'No' to 'Does your business accept accept funds from customers and send the funds based on customer's instructions?' - so really the part of the law they broke has nothing to do with Bitcoin it's the transfer of funds between Mutum Sigillum and Mt Gox - maybe they believed this was legal (or a lawyer advised them as such) but clearly Mutum Sigillum accepts funds from customers and sends the funds based on customer's instructions even if Dwolla is in the middle. Really they should have just answered yes and complied with FinSEC. Anybody who has tried to send a wire transfer greater than $10k or even a Western Union greater than $1k has probably run into FinSEC regulations - mainly that the sender has to identify himself properly and that the transfer has to be reported.