Side note: The graph could use some TLC. The colors are indistinguishable and there are no static historical charts on the page, just the graph since my visit.
@patio11 19h19 hours ago Eventually, a bank or, more likely, a regulator is going to say “Actually this doesn’t look like a legit deposit that we’re uncomfortable with supporting due to AML/regulatory reasons. It looks an awful lot like proceeds of crime intermingled with grey money.”
@patio11 19h19 hours ago More And the terrifying outcome, from the cryptocurrency economy perspective, is the regulator doing what the USFH did with respect to Mutum Sigillum (Mt Gox’s US front): “OK, we’re going to give you two choices.”
@patio11 19h19 hours ago More Door #1: Prove that it’s legal money. This should be trivial for you because KYC is the law and your compliance should be automatic. So have your lawyer suit up. BTW we expect this to take 3+ years.
Door #2: We propose a 50% haircut.
A clear abuse, it's the government's job to prove illegal deeds. Holding customers funds hostage under the threat of bankruptcy, while the company navigates the complex legal minefield the government itself created is just about the most corrupt system and farther from the rule of law you can get, short of direct confiscation.
They even went as far as claiming MtGox was a money transmitting business because it was a customer of Dwolla, and so customers of Dwolla could send money to themselves by withdrawing and depositing dwolla to MtGox: http://k.lenz.name/LB/2013/05/16/seizure-warrant-against-mut...
Tether and Bitfinex are the same thing, though both will vigorously deny that, but it's patently clear that they're intimately related. Tether has variously been able to get banking services, and thus act as a USD deposit to enter crypto exchanges like Bitfinex (USD -> USDT tether -> trade for Bitcoin, etc.). Because it's so clear that Tether is simply used as a way to circumvent AML/KYC, Tether continues to have difficulty securing banking services.
This current uncoupling of USD:USDT(tether) is due to such a banking issue. There are two major risks with Tether:
* Liquidity: without access to banking services, Tether uncouples and there can be a 'bank run' as the majority of funds are unavailable to maintain the stable price.
* Reserves: right now there are no guarantees that each Tether is backed by actual USD. You simply have to trust Tether on this. Ultimately Tether may be a sort of fractional reserve, and thus enough selling pressure will make Tether worthless.
At it's core, it's just a clumsy obfuscation.
Would you mind briefly expanding on "Because it's so clear that Tether is simply used as a way to circumvent AML/KYC"? Not being contrarian, I just don't understand how this part works.
This is blatant, willful and permanently-documented tax evasion, an amusing combination of illegality and stupidity.
This is really no different than selling and buying stocks in an IRA account.
You transacted into (what you believed was) a proxy for cash. That's obviously selling.
Every tax jurisdiction has rules about this because every tax jurisdiction has idiots who thought they'd found a clever workaround. (I think the first American one involved a guy in the 19th century selling property for the key to a lockbox full of cash.)
In reality if they want to punish you for this they'll see right through it. Loopholes are only loopholes because there's an established history of authorities not willing to enforce it (brown paper bags around liquor bottles, "Suggested Donations").
This is an insane assertion. One of the main points of an IRA is that the trades within it aren't taxable events. Trades made outside an IRA are taxable events.
But I see the point here regarding a cash proxy.
Full disclosure: I have zero exposure to crypto. Not my cup of tea.
On 31 December 2017, the IRS clarified that § 1031 does not apply to crypt-crypto trades. It did not say § 1031 applied to crypto-crypto trades before then.
The article you reference says "traders still may be able to argue that their transactions undertaken in 2017 and prior years were not taxable under the Section 1031 like-kind exchange rules," but that "the application of the like-kind exchange rules to crypto transactions is far from certain" [1, emphasis mine].
Essentially, you're being taxed on the income you got from holding that security, not for trading, it's just assessed when you trade.
It's possible that $2M were issued, and the rest don't even exist (or rather they are still controlled by the tether organisation).