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Always Read the Footnotes

by Cat Wed Aug 2nd, 2017 at 03:08:54 PM EST

5. The Financial Action Task Force

Thirty-seven member and observer states constitute FATF. You may compare this cohort listing to the disjunctive table in Wikipedia's flawed article, "Legality of bitcoin by country or territory", wherein editors cite, for example, US Internal Revenue Service treatment of property. Hold that thought and ask yourself, "SELF, does my government tax this property yet?"

The Financial Action Task Force

defines "virtual currency" as : a digital representation of value that can be digitally traded and functions as:  (1) a medium of exchange; and/or (2) a unit of account; and/or (3) a store of value,
such as "money". Money is a function. The money function colloquially expresses the exchange between of two or more independent variables and denotes combinations of tangible and intangible values, stored or represented by the symbols, or tokens, exchanged. EUR or walnuts, "Wimmin" and children, yapstones and so forth.
but does not have legal tender status (i.e., when tendered to a creditor, is a valid and legal offer of payment) in any jurisdiction.
 Herein this Release the SEC asserts, "virtual currency" is (4) a form of recorded contract, or an "agreement between private parties creating mutual obligations enforceable by law" IF obligations specified by the contract satisfy uniform definition of executable terms (1), 2-espec. Art.14) expressing all foregoing representations of exchange, account, and value ("currency" or "medium"), regardless of tender denomination.  
Do all types of lawful contracts ("agreements") constitute a "property," or a possession? Yes, a written or even contested verbal contract satisfies most definitions of personal property, or personalty (arch.), according to English Common Law (3) which has come to color ius civile of ancient Rome with which peoples governed by western empire live today. A contract is a type of security in the subclass personal property in the class of properties in the universe of capital.
It is not issued or guaranteed by any jurisdiction, and fulfills the above functions only by agreement within the community of users of the virtual currency. Virtual currency is distinguished from fiat currency (a.k.a. "real currency," "real money," or "national currency"), which is the coin and paper money of a country that is designated as its legal tender; circulates; and is customarily used and accepted as a medium of exchange in the issuing country. It is distinct from e -money, which is a digital representation of fiat currency used to electronically transfer value denominated in fiat currency.
FATF Report, Virtual Currencies, Key Definitions and Potential AML/CFT Risks, FINANCIAL ACTION TASK FORCE (June 2014), www.fatfgafi.org/media/fatf/documents/reports/Virtual-currency-key-definitions-and-potential-aml-cft -risks.pdf.  
6. Ethereum, developed by the Ethereum Foundation, a Swiss nonprofit organization, is a decentralized platform that runs smart contracts on a blockchain known as the Ethereum Blockchain.  
7. Christoph Jentzsch released the final draft of the White Paper on or around March 23, 2016. He introduced his concept of a DAO Entity as early as November 2015 at an Ethereum Developer Conference in London, as a medium to raise funds for Slock.it, a German start-up he co-founded in September 2015. Slock.it purports to create technology that embeds smart contracts that run on the Ethereum Blockchain into real-world devices and, as a result, for example, permits anyone to rent, sell or share physical objects in a decentralized way. See SLOCK.IT, https:/slock.it.  
8. Christoph Jentzsch, Decentralized Autonomous Organization to Automate Governance Final Draft - Under Review, https://download.slock.it/public/DAO/WhitePaper.pdf.
9. Id.  
10. Id. The White Paper contained the following statement: A word of caution, at the outset: the legal status of [DAO Entities ] remains the subject of active and vigorous debate and discussion. Not everyone shares the same definition. Some have said that [DAO Entities] are autonomous code and can operate independently of legal systems; other have said that [DAO Entities] must be owned or operate[d] by humans or human created entities. There will be many use cases, and the DAO [Entity] code will develop over time. Ultimately, how a DAO [Entity] functions and its legal status will depend on many factors, including how DAO [Entity ] code is used, where it is used, and who uses it. This paper does not speculate about the legal status of [DAO Entities] worldwide. This paper is not intended to offer legal advice or conclusions. Anyone who uses DAO [Entity] code will do so at their own risk.

source:SECURITIES AND EXCHANGE COMMISSION, Release No. 8107/July 25, 2017, Report of Investigation Pursuant to Section 21(a) of the Securities Eschange Act of 1934: The DAO
[emphasis added]  
Momentarily setting aside "the path" of cultural misappropriation by philosophical outlaws, tell us: Did you expect state agents to forego this opportunity to exercise their right to tax any form of "virtual currency"?
Nadie es libre.

I am more surprised it took so long for the states to react.
by fjallstrom on Wed Aug 2nd, 2017 at 09:56:37 PM EST
It seems that way at times, because MSM stories have fixated for nearly a decade on market failure more often than CB policy movements to legitimize, or acquire, "virtual currency" positions in the market. For example, Head of Bundesbank Proposes Digital Currency To Compete With Bitcoin. The 'tag was also early to accept this "private property" as legal tender. BoJ has done so this year.

By comparison, some may perceive the SEC's equivocation on behalf of US Treasury as either a disingenuous standard for free trade or a symptom of weak capital control.

Diversity is the key to economic and political evolution.

by Cat on Wed Aug 2nd, 2017 at 10:45:48 PM EST
[ Parent ]
As far back as I can recall, every tax man I have heard talk about BtC has emphasized that if you're making real money off of it you need to declare it; same as if you're day trading WoW gold or EVE currency.

I doubt it'll come under much law enforcement scrutiny anytime soon, though. BtC is mostly used by people who have bigger problems with the law than tax fiddles, and by people scamming Libertarians providing Libertarians with an object lesson in the origins of and use case for financial regulation.

I don't see either as being particularly high on law enforcement's priority list.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Aug 3rd, 2017 at 05:23:17 PM EST
[ Parent ]
if you're making real money off of it you need to declare it ...
Trans. Report any realized gain (profit) from the sale of an "asset-backed" (legal tender) "contract" commonly called a "bitcoin" to one's local tax authority, and all will be well with you. And by realized gain, I dare to speak for CPA everywhere, when I say: That is possession of legal tender in exchange for possession of "virtual currency".  

I doubt it'll come under much law enforcement scrutiny anytime soon ...
Scrutiny and Convictions
Mt. Gox | Behind the Biggest Bitcoin Heist in History: Inside the Implosion of Mt. Gox
BitInstant | Bitcoin's first criminal goes to prison today
Silk Road | Prosecutors Trace $13.4M in Bitcoins From the Silk Road to Ulbricht's Laptop  
Bitcoin Savings & Trust | rendon Shavers Sentenced in First Bitcoin Securities-Fraud Case
"Remember, the IRS treats Bitcoin and other digital currencies as property, not currency."
Coinbase & Cryptsy | IRS Escalates Hunt For Bitcoin Users In Coinbase Summons Case  

US Library of Congress | Regulation of Bitcoin in Selected Jurisdictions

The European Union (EU) has passed no specific legislation relative to the status of the bitcoin as a currency.  In October 2012, the European Central Bank issued a report on virtual currency schemes that discusses the Bitcoin system and briefly analyzes its legal status under existing EU legislation

BitcoinETI | Gibraltar Lands First European Bitcoin ETI, 2015
BitStamp | A Bitcoin Exchange Just Got Approval to Operate Across the EU
BitStamp d/b/a Gemini | A Bitcoin Exchange Just Got Approval to Operate Across the EU, 2016

In review, I gather, your perception of the interests of the state differ from my own because of our different locations and citizenship.

Diversity is the key to economic and political evolution.

by Cat on Fri Aug 4th, 2017 at 02:57:15 PM EST
[ Parent ]
Surely  any receipt of consideration in exchange for  assets or work  needs to be declared: being paid in bitcoin doesn't mean you don't need to declare the gain. Payment in kind is still payment as far as the revenue are concerned.
by Colman (colman at eurotrib.com) on Fri Aug 4th, 2017 at 03:17:03 PM EST
[ Parent ]
True. In the US "payment-in-kind" is taxable, therefor subject to penalty, if no estimated value denominated in legal tender is reported during the tax year.

So. Shall we start a sideline convo to resurrect the labor value of money?

Diversity is the key to economic and political evolution.

by Cat on Fri Aug 4th, 2017 at 03:36:13 PM EST
[ Parent ]
itemized in the balance sheet of every publicly traded company. These are not taxed until sold.

Diversity is the key to economic and political evolution.
by Cat on Fri Aug 4th, 2017 at 06:23:51 PM EST
[ Parent ]
I seem to recall a period in eurotrib commentaries, when news about local scrip initiatives (e.g. UK, New York, USA) was met with some sympathy. That would be up to and during the early years of the Panic of '08.

Bristol pound is just one example of what local currencies can achieve

The mayor of Bristol, George Ferguson, takes 100% of his salary in Bristol Pounds (₤B) and the chief executive accepts ₤5,000 of her salary in "local". The city also earns local currency from market traders who use their ₤B earnings to pay their pitch fees.

Ithaca Hours

It seems to me, some "alternative" currencies (besides consumer credit wealth) enjoy greater state interest than borderless bitcoin.

Diversity is the key to economic and political evolution.

by Cat on Fri Aug 4th, 2017 at 03:32:52 PM EST
Sardex in Sardinia,
in the Basque country etc...

There are plenty of local currency initiatives all over Europe.

by Bernard on Fri Aug 4th, 2017 at 06:12:13 PM EST
[ Parent ]
Yes. I've given two proto-exemplaries which I could easily recall.
                                                      There are also many ponzi schemes, frauds, and thefts... bank robberies. So. One of many open questions idly remaining is: Why the villainy associated by MSM with bitcoin traders in particular?

And what sort of "assets" implicating exchange value of money are safe from taxation?

(Asking for an ultra-right conservative frenemy :)

Diversity is the key to economic and political evolution.

by Cat on Fri Aug 4th, 2017 at 06:38:08 PM EST
[ Parent ]
my credit card "available balance" is taxed?

(whispered my ultra-right conservative frenemy :)

Diversity is the key to economic and political evolution.

by Cat on Fri Aug 4th, 2017 at 06:40:19 PM EST
[ Parent ]
SEC blessing provokes Goldman-Sachs salesforce. Implied illegitimacy of "drug money" is dead in USA, buried under USD-denominated crypto-currency option products. US Treasury M&A operation is complete.

Here's What Goldman Is Telling Big Money Clients About Bitcoin

"Whether or not you believe in the merit of investing in cryptocurrencies (you know who you are), real dollars are at work here and warrant watching," analysts including Robert Boroujerdi and Jessica Binder Graham wrote in a Q&A sent to clients.
Digital exchanges and block trades, and options will be coming soon. ...In addition, Bitcoin options exist and are traded on offshore exchanges, and could be traded in the U.S. by the end of the year.
Ethereum [!] offers a digital currency called ether, but this is just one component of its smart contract [!] execution and primarily used to facilitate and reward using the network.

Diversity is the key to economic and political evolution.
by Cat on Thu Aug 10th, 2017 at 06:56:29 PM EST
a decentralized platform that runs smart contracts on a blockchain

This metaphoric language has been bugging me for weeks. Just as a server is not a cloud, an electronic database record does not run. The "smartness" of a record is the sum of records in all relative databases to which it is associated.

Diversity is the key to economic and political evolution.

by Cat on Thu Aug 10th, 2017 at 07:10:21 PM EST
As Bitcoin Risks Big Split, Along Comes Minor One: QuickTake Q&A

The "Big Split" is a euphemism for a sales event last week, when members of "bitcoin" cartel introduced a new product category which features greater data storage capacity permitted any one data record ("block", txt, IDs, primary and foreign keys inclusive). The structure and middle/hardware upgrade is named SegWit2x.

This product evidently was developed and promoted by operational specialists in the cartel. They claim, greater capacity improves transaction verification ("chain") speed ... between n relational databases owned/operated by retail "bitcoin" custodians ("miners" a/k/a bankers, investment bankers). This product's benefit, or value proposition, is named "BitCash". The cartel's marketing specialists prefer the original storage limit, 6MBm. They claim, limiting capacity of n records assures data integrity, or accuracy in record verification.

This disruption among "bitcoin" distributors is analogous to any historical establishment of third-party "clearing houses". Until the turn of this century is was not uncommon to wait 14 days for the face amount of a personal check presented for deposit to be credited as legal tender ("cash") to the bearer's bank account. Today, depending on the depository institution, clearing may occur instantaneously, because of ATM data communication between those institutions.

The "Big Split" purportedly reduces transaction clearing time from 6 hrs to 20 min. Accordingly, he market value of "bitcoin" equity, or ownership, has increased exponentially. Coincidentally, structural support for regulatory oversight enhances the book value of forthcoming ICOs (initial coin offerings) "backed" by the SEC.

Diversity is the key to economic and political evolution.

by Cat on Sat Aug 12th, 2017 at 12:24:58 AM EST
[ Parent ]

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