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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.
... 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.
Bitcoin is inherently the opposite of anonymous. Every single transaction is forever part of the blockchain, free for anybody and everybody to download, and even compulsory if you want to have a local wallet.
The only way to anonymize your coin is to use a service which mixes up your coins so that it's nearly impossible to trace where they went once they go into the system.
That isn't the heart of bitcoin at all.
"When life gives you lemons, don't make lemonade. Make life take the lemons back!" -- Cave Johnson
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.
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
Create a new BitCoin account, transfer some funds there and claim "I don't know whose account that is and I don't remember why I sent money there" and you've got a weak plausible deniability, I mean it's not like I have to keep track of my cash that way, just because I was given a $20 bill with serial number 1234567 from the bank it doesn't prove anything when it shows up in some drug dealer's roll of cash. Or for that matter, that a $20 bill once used to buy drugs is now in my hands. Money kept in secret must be used in secret though, if you pay with then openly it'll expose your shadow account and all the money paid from it as yours all along.
Live today, because you never know what tomorrow brings
Why is an invocation of Godwin modded as insightful?
File under 'M' for 'Manic ranting'
...car jokes incoming...
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.
You don't even need to transfer bitcoins there yourself. Whenever you receive bitcoins from someone, have them sent to a new wallet. If you can keep the transaction secret, the bitcoins can be kept secret too.
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?
That's really the only thing you're talking about.
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=...
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.
Then the room the temperature is being measured in is on Pluto?
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