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New York State Proposes Sweeping Bitcoin Regulations
An anonymous reader writes On Thursday, Benjamin M. Lawsky, the superintendent of financial services, announced proposed regulations for virtual currency companies operating in New York. The "BitLicense" plan, which includes rules on consumer protection, the prevention of money laundering and cybersecurity, is the first proposal by a state to create guidelines specifically for virtual currency. "We have sought to strike an appropriate balance that helps protect consumers and root out illegal activity—without stifling beneficial innovation," he said in a statement.
"We have sought to strike a regulatory balance so that we can collect taxes from this growing industry without killing the golden, tax-paying goose."
NY State may run afoul of the Interstate Commerce Clause which bans them from interfering with the Universe outside their borders.
Aren't there already laws on consumer protection, money laundering, fraud, abuse, and cybersecurity? I'm honestly wondering why they need extra laws to outlaw actions that are already illegal.
If this is about taxes (can't tell from TFA), aren't these business already taxed on their profits like any other business? It seems to me that this is all a bit unnecessary, and likely to drive away people who seek to start Bitcoin based companies.
What could go wrong if 50 states and the feds decide on differing, possibly conflicting regulations. But maybe that's the point - regulate them into obscurity.
Its not just about taxing business. Individuals are to be taxed too.
A recent IRS advisory said virtual currency is to be treated as an assent not a currency. So lets say you receive some bitcoins. At some future date you spend these bitcoins. Since these bitcoins are an asset you have to account for their gain or loss in value for the days that you held them and declare a loss or gain on your taxes. In short spending bitcoins has the paperwork overhead of selling stocks, its not like spending dollars at all.
Ex. You buy one coin at $500 and another at $600. Coins are priced at $800 at the time of a future purchase. You buy something for $1,200, 1.5 coins. Using FIFO (first in first out) your basis for the outgoing 1.5 coins is $500 + $300 = $800, and the basis for the returning 0.5 coins is still $300. You experienced a gain of $400 on the 1.5 coins at the time of the sale and that $400 would seem to be taxable income. Apologies if I botched the math, hopefully the point gets across.
"We have sought to strike an appropriate balance that helps protect consumers and root out illegal activity—without stifling beneficial innovation," he said in a statement.
We'll just see what Taaki and Wilson have to say about that balance...
... likely to drive away people who seek to start Bitcoin based companies.
A business can accept bitcoins for payment and never touch a bitcoin nor ever be at risk for price fluctuations.
Various exchanges provide merchant services where a merchant gives sale info to the exchange, the exchange converts the dollar amount to bitcoins and provides the merchant with the converted amount and a bitcoin payment address (one belonging to the exchange). The customer essentially makes the bitcoin payment to the exchange. When the exchange confirms the payment they credit the merchant's account with the exact amount of dollars that the merchant originally specified regardless of any fluctuation in bitcoin's exchange rate.
A business need never touch a bitcoin. They can continue to price in dollars, do all their accounting in dollars, never have to show a bitcoin on their federal or state taxes, etc.
Wouldn't this basically be a stake in the heart of what makes Bitcoin Bitcoin - the ability to anonymize transactions?
If that goes away, then Bitcoin value will turn to vapor pretty quickly.
Left MS Windows for Linux Mint and never looked back!
Vote for Bernie in 2016!
we believe that setting up common sense rules of the road is vital to the long-term future of the virtual currency industry, as well as the safety and soundness of customer assets.(We think the situation at Mt. Gox, for example, made that very clear.)
It seems to me the Bitcoin community has been doing just fine without regulatory "assistance". Sure some people got burned by Mt. Gox, but I'm okay with that being one of the risks if it allows me to avoid government meddling. The State is a hell of a lot more of a threat to me than some shyster like Karpeles.
I'm from the government. I am here to help.
Back off assholes
prevention of cybersecurity? what?
This is typical of NY arrogance. Schumer, Guillani, Bloomberg, petty tyrants all. They manage their sheeple, denying them arms, sodas, and freedom from the banking establishment.
NY is a bump on the cryptocurrency freeway.
It sounds so broad as to include my Final Fantasy XI gil, World of Warcraft gold and Star Trek Online credits.
Will they try to tax my Steam achievements too?
Get free satoshi (Bitcoin) and Dogecoins
These regulations will be irrelevant shortly. While bitcoins is not anonymous the zerocoin protocol is mathematically proven. Implemented properly it just won't matter how you get your money into and out of fiat currencies. Once you've bought the coin the exchange won't know what you've done with it. Want to pull your money out? They won't know where you got it. All they're going to know is how much. That may send up red flags if your pulling money out and not reporting it on your income taxes. However your transactions will be anonymous and any purchases you can can be relatively anonymous. The only problem will be the NSA, but in theory they'll stay out of your business in most cases. Unless that is your an international drug smuggler, dealer, etc.
We do have to worry about the NSA still as they're already overstepped whats legal and it's a short hop to going after criminal enterprises. At this very moment the majority of people are probably not going to be impacted by the NSAs illegal actions. However we already know the NSA has been tipping off law enforcement agencies and instructing the to do parallel construction. It appears to be the case this is exclusive to high profile drug related cases- at the moment. Too much of this would eventually reveal facts the NSA can't afford to reveal about the program. And it's this reason they aren't tipping in numbers.
According to Fox Newz their new governor is a commie socialist.
Make the salient point without putting in the (D) or (R), and let the reader discover it and be enraged themselves when they research it on their own.
Bipartisan infuriation can be generated by allowing them to discover the root causes of the offense during their own reading rather than you telling them and them dismissing it as a partisan rant.
Quite frankly anyone who's still cheering for either the Democrats or Republicans at this point should probably be interned and then shot as a traitor to the country, along with all the officials they have elected, past and present.
If you want to clean up a mess like we have the easiest way to excise the cancer. And that may mean losing a few 'healthy' cells along with the sick. Although if they voted either D or R they're probably not that healthy to begin with.
Why is an invocation of Godwin modded as insightful?
File under 'M' for 'Manic ranting'
If NY does this a new type of business will be created in which transfers of cash flow to branches outside of NY and are then converted to or from bitcoins. One could even work this into a charge card in an automated way. In other words NY will have the lead yanked out of its pencil.
Apologies if I botched the math, hopefully the point gets across.
You didn't botch the math, you botched the accounting. Inventory accounting methods such as FIFO wouldn't apply.
No one said you had to use FIFO. You have to pick the coins you are using somehow, FIFO is one of various options. Personally I would probably use LIFO, spend the newer coins first, hang on to your oldest coins. That way if I hold any for over a year they can be cashed out and taxed at a lower rate, long term capital gains. Hopefully, have to check with an accountant on that.
The whole point of bitcoin is that it is an anonymous currency which the government can't track. Once it is "regulated" nobody will need to use it! They will find another way to exercise their right to transact in private.
Why don't they just change their state flag to the swastika?
The one true faith.
The geek's emotional investment in Bitcoin can be frightening.
Bitcoins, which lost 45 percent of their value after skyrocketing to more than $1,100 last year, are poised to tumble further, according to the latest Bloomberg Global Poll of financial professionals.
Fifty-five percent of those surveyed said the virtual currency trades at unsustainable, bubble-like prices, according to the quarterly poll of 562 investors, analysts and traders who are Bloomberg subscribers. Another 14 percent said it's on the verge of a bubble. Only 6 percent of respondents said a bubble isn't forming. The remaining 25 percent were unsure.
Merchants including Expedia Inc., Dish Network Corp. and Overstock.com Inc. have decided to accept bitcoins. A total of 63,000 businesses now take the virtual currency, and people have set up more than 5 million wallets to keep their digital holdings, according to CoinDesk, which tracks its use.
That enthusiasm contrasts with opinions expressed by finance-industry leaders. JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon, 58, has said bitcoins probably won't last as a currency after governments subject them to rules and standards akin to those for other payment systems. Billionaire investor Warren Buffett, 83, has said he'll be surprised if bitcoins last 10 or 20 years.
A Bloomberg poll in January showed investor doubts in the virtual currency as well. Almost half of 477 international investors, analysts and traders who are Bloomberg subscribers were bearish on bitcoins and said they would sell them. At the time, bitcoins traded about 30 percent above current levels.
Bitcoins Can't Shake Bubble Image in Poll After 45% Drop [July 17]
Things that get the bitcoin "community" riled up are pretty amusing. Bitcoin is going to be a tax nightmare if you actually bother to file for it. Isn't it subject to capital gains tax in the US too?
yes Litecoin & Dodgecoin are better for miners of course.. but an attack on bitcoin is an attack on all digital currencies.
Whos is lobbing this? who's not getting votes next election?
gah..
joke of a city? Sick of hearing about these authoritarian fucks banning and frisking everything.
That's really the only thing you're talking about.
Sorry New York, but the Internet is OUR domain and we are not going to tolerate ANY encroachment.
So the regulations that allowed fraudulent investment products( leading to the 2008 housing bubble and subsequently global financial collapse) worked so well. Obviously these regulations will be equally as efficient in *crowding out new industry players*cough cough... Rooting out illegal behaviors and * shafting cough cough* protecting consumers. https://m.youtube.com/watch?v=...
If they can't control it, I don't see how they can tax it.
New York is only trying to steal a piece of the pie, and I for one will do everything in my power to disrupt them or anybody else.
The IRS and many people, it seems, don't understand BitCoin. It doesn't help that the name also misleads in this way.
BitCoin is not analagous to actual coins, objects which can be exchanged. BitCoin is a distributed peer to peer bank.
Why is it a bank? A bank is no longer a store of actual physical objects, it is merely a transaction ledger. Transactions are logged that determine the number of tokens that a given account controls. Account balances and so on are merely a digest of this transaction log - the log is the thing.
BitCoin is likewise a transaction ledger. The rebuttal to the usual bone-headed arguments about people "copying" coins because they are just numbers reveals this. Unlike the transaction ledger of a traditional bank which relies on a lot of central security to prevent people writing to it, BitCoin welcomes people writing to it's ledger, and then farms out the task of deciding whether those transactions are legitimate to the network. Balances are again, merely a digest of the ledger.
A BitCoin wallet ... isn't a wallet! It contains no coins. The blockchain (aka the ledger) contains the coins (along with certificates as to who mined them, then subsequently, transaction records of where they were transferred). The wallet ONLY contains something that proves you control (or "the network agrees that you control") a given set of coins - your private key.
A BitCoin is not an asset you hold. Transferring coins is a service the network provides (like any other bank). If your wallet is destroyed, no BitCoins cease to exist... but the network now has no way to transfer them (unlike a real bank, which can fudge it because it shares control of it's ledger with no-one).
BitCoin should really be BitBank
Your wallet should really be your "pass key".
But you can imagine how quickly the banks would have moved against it if it was called "BitBank".....
BitCoin are not assets. BitCoin is a service.
If we are measuring mine, then Rankine.