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Comment by ogogmad | Hacker News Reader

Why is converting to fiat any more expensive than selling for Tether?

[edit]

Maybe I've figured it out: It's essentially a way of moving a sum of fiat between exchanges without going through a bank. If you withdraw to a bank, then you have to wait a while before you can move that money back into an exchange. At least that's my experience.

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Exiting to fiat requires KYC reporting and taxes. Tether, in many settings, allows you go get away with _not_ doing that.

But that requires that the exchange doesn't impose KYC requirements when you withdraw Tether. Do such exchanges exist? Are they legal? Bitfinex, which is closely affiliated with the company that runs Tether, actually does not allow you to withdraw Tether without doing KYC. This circles back to my first post.

There are plenty of non-Bitfinex un-banked exchanges that allow you to do whatever you want, including the DEXs.

OK, so let's say you buy and sell crypto using DEXes, and take home your profit in the form of Tether (or another stablecoin). What happens if you want to spend it on things? You can't use Amazon, eBay or any supermarket because none of them take Tether - so you're left holding a bag of useless Tether. Again, what is the point?

> Exiting to fiat requires KYC reporting and taxes. Tether, in many settings, allows you go get away with _not_ doing that.

The IRS has been very clear, when you swap one crypto for another, it's a taxable event. Generally it's not a good idea to avoid the reporting.

[edit] Cleaned up as I likely misread your statement.

> it's a taxable event.

In USistan

Is discussing a venue for (possible, depending on your location) tax fraud equivalent to admission of participating in tax fraud?

Thanks for pointing that out, I've edited it to clear up what I meant. Poor wording on my part.

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