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This was just a matter of time. Welcome to the reality of being involved in the money business in the USA. Coinbase is concerned with the breadth of the request

This was just a matter of time. Welcome to the reality of being involved in the money business in the USA. Coinbase is concerned with the breadth of the request. That is actually kind of cute considering that your bank has to report any transaction over $10000 to the US Dept of Treasury and people are actively prosecuted on suspicion of making transactions under this threshold to avoid reporting requirements [1]. Whenever I hear someone talk about the dream of anonymous currency. I kind of laugh to myself because I know how far the government currently goes to monitor every little piece of your financial life to make sure you are paying what you owe in taxes. [1] https://www.washingtonpost.com/news/the-watch/wp/2014/03/24/the-federal-structuring-laws-are-smurfin-ridiculous/?utm_term=.40575f1e297f https://www.washingtonpost.com/news/the-watch/wp/2014/03/24/...

mhluongo 10y ago
Coinbase has to report SARs, as well- they're a fully licensed money transmitter in the US- so maybe tone down the condescension. This is an overreach of a different type and by a different government body, and would be precedent-setting AFAIK.
- ryanackley 10y ago
  SARs only apply to suspicious activity. CTRs are what your bank has to file for every transaction over $10000. Also, it's all the Dept. of Treasury. The IRS is essentially the collection agency of the Dept. of Treasury. It's listed as a bureau on the U.S. Treasury's website. https://www.treasury.gov/about/organizational-structure/bureaus/Pages/default.aspx https://www.treasury.gov/about/organizational-structure/bure...
  - mhluongo 10y ago
    My point stands. Coinbase already has bank-level scrutiny, both directly and from its banking partners ("know your customer's customer"). I completely agree that anonymity in finance is at odds with many of the government's methods to enforce taxation, and that this is only the beginning. But Coinbase has been the white knight in this space in the US dealing with the regulations, and I don't think they're naive to push back on this. It might be a losing battle over the next decade, but that doesn't mean it's not a worthwhile cause today.
    - ryanackley 10y ago
      If your point is that it has a bank's level of scrutiny, then no it clearly does not stand. I mean isn't that the point of the government request? A bank's level of scrutiny would mean the government could reasonably guess if you are holding out on taxes which is clearly not the case here. Does the IRS regularly subpoena Chase and BofA's customer records. No, because there is no need. Thanks to the CTRs, they can crunch the numbers and figure out if the amount you paid on your taxes is suspiciously low. Sure, it's a worthwhile cause. I wish them luck because Congress and the Courts have consistently torn down financial privacy over the last 30-40 years.
      - mhluongo 10y ago
        To your point about SARs / CTRs- SARs at banks are usually triggered by cash deposits and withdrawals at a much lower level, and every bitcoin transaction is roughly equivalent to a cash transaction. Thus "bank-level scrutiny". > I mean isn't that the point of the government request? It's not clear to me whether they actually need this at all, considering Coinbase's existing reporting requirements. It's common enough from other branches to make overreaching requests to set a precedent (eg the DoJ / Apple iPhone) so I wouldn't just assume it's business as usual.
        ryanackley 10y ago
        You're fixated on SARs being comparable to CTRs and they just aren't. First, a SAR is only for suspicious activity and it's relatively uncommon, a CTR is not optional and very common. If a SAR is being filled out, it's after trying to get in touch with the person to better understand their business and why various transactions look suspicious. It's not undertaken lightly. It's not a routine filing whereas CTR's are.
        wheelerwj 10y ago
        > SAR is only for suspicious activity and it's relatively uncommon lol, just. stop. you obviously have no experience with this type of regulation (or at least you better hopeyou don't).
  - andrewpi 10y ago
    >SARs only apply to suspicious activity. CTRs are what your bank has to file for every transaction over $10000. For every currency transaction, not every transaction. (if you deposit a check for $50,000, that doesn't get reported unless the bank thinks something about the transaction is suspicious) Are bitcoins classified as currency for the purposes of CTR reports?
    - wheelerwj 10y ago
      No, transferring 10k worth of bit Coin doesn't warrant a CTR, only if it's bought or sold using cash.
jonaf 10y ago
This, absolutely. I'm actually surprised the government showed their hand so soon. There must be a lot of money in Bitcoin already. The government WANTS people to go 100% digital with their capital. It is infinitely easier to track digital money. Bitcoin is something they're against because the anonymity factor. I won't be surprised if we see some legislation to block or inhibit anonymous digital currency. Let's not forget that the US will really want to "own" or be in control of any significant digital currency. Since the US dollar is the world reserve currency, the US wields unprecedented economic power on a global scale. Any currency that has the potential or shows signs of shaking that up will be on the radar for the US govt and the Fed, as controlling currency is the means by which one can control the economic destiny of any nation(s). As we saw with Egypt, for example, several years ago. A simple change in US monetary policy can result in the overthrowing of foreign governments! Interesting side anecdote: A person very close to me purchased Bitcoin on the stock market, but Bank of America froze the account on suspicion / risk of money laundering or general FUD. It isn't clear how much of this was due to the bank or the government, as they are in bed together, but it prevented this person from being able to trade Bitcoin in his account anymore. Sadly, had his account not been frozen, he would have doubled his money. N.B. Citations needed, obviously. Commenting on mobile makes this challenging.
- mhluongo 10y ago
  > Interesting side anecdote: A person very close to me purchased Bitcoin on the stock market, but Bank of America froze the account on suspicion / risk of money laundering or general FUD. It isn't clear how much of this was due to the bank or the government, as they are in bed together, but it prevented this person from being able to trade Bitcoin in his account anymore. Sadly, had his account not been frozen, he would have doubled his money. I highly doubt your contact bought bitcoin on the stock market, since there hasn't been an ETF launched. They might've bought bitcoin on an bitcoin exchange and had their bank account frozen- it still happens frequently. Banks in the US are still scared to do business with bitcoin folks because they don't want to get undue attention down the line (eg Operation Chokepoint), and banking a potential MSB is more difficult ("know your customer's customers").
  - 10y ago
jrcii 10y ago
I've said for a long time that the problem digital currency proponents seem to be missing is that there is nothing intrinsic to the technology that prevents it from being regulated. A bill is already up in California that requires businesses to report anyone who uses it. The only reason it hasn't been heavily regulated is because it hasn't become big enough to be on the radar yet. The second it is, it will become like anything else.
wheelerwj 10y ago
Respectfully, you are incorrect or misinformed on many points. - coinbase is and has been a licensed MSB for several years, this means that it has already had to comply with all of the same BSA rules as every other bank. [1] - Banks don't have to report ANY transaction over $10,000. They have to report every CASH transaction (or aggregate of transactions) over $10,000 and any Suspicious transaction (or aggregate of transactions) over $2,000 [2] - coinbase is rightfully concerned about the breadth of the subpoena because it's a giant fishing expedition. In order to request records, the federal government SHOULD have to provide reasonable proof of suspected criminal activity. [3] - finally, this has absolutely nothing to do with anonymity. This has everything to do with another drastically over-reaching request by the federal government for personal information even when there is no evidence of any specific crime. [1] https://www.coinbase.com/legal/licenses?locale=en https://www.coinbase.com/legal/licenses?locale=en [2] https://www.ffiec.gov/bsa_aml_infobase/pages_manual/OLM_015.htm https://www.ffiec.gov/bsa_aml_infobase/pages_manual/OLM_015.... [3] See the Constitution.
- kchoudhu 10y ago
  Coinbase is welcome to fight the breadth of the request, but they will lose -- if not this time, then the next. The government has every interest in regulating BTC out of existence: the ability to transact value with no government intermediation cuts to the core of what it means to be a nation state, and no state is ever going to renounce that monopoly.
  - rms_returns 10y ago
    >> ..cuts to the core of what it means to be a nation state, and no state is ever going to renounce that monopoly. Yet, some countries have started willingly renouncing that monopoly. For example, Australian Reserve Bank has clearly stated that "There would be nothing to stop people in this country deciding to transact in some other currency in a shop if they wanted to. There’s no law against that, so we do have competing currencies."[1] Similarly, The South African Reserve Bank has come to the conclusion that "The Bank does not oversee, supervise or regulate the Virtual Currency (VC) landscape."[2] [1] https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country#Australia https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country... [2] https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country#South_Africa https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country...
tracker1 10y ago
I've been postulating that a return to import/export taxes in addition to a small vat and include financial exchanges for import/export could be a better tax system with less bureaucracy than the current IRS. Not that I like the approach, but feel it would be better overall, have less gov't and be harder to work around.
- trhway 10y ago
  >return to import/export taxes in addition to a small vat thus significantly slowing B2B and B2C markets. Why would we do it? It is like Middle Ages - one can consume only what is produced in the castle's vicinity and from every bucket of grain one has to give share to the lord and share to the church (note - the example is exactly vat, not income tax, as vat is taken as share of the total volume without regard to the production cost while income tax is share of profit (i.e. of difference between total value and cost to produce)) And yes, nor the lord, nor the church were bothered with bureaucracy.
  - tracker1 10y ago
    Because B2B and B2C markets usually use BANKS as intermediaries for currency exchange anyway, so only the banks need to do it, and already have exchange provisions for fees, it would be easier to do there as a tax (additional fee). So instead of every individual responsible for filing taxes, only banks, and businesses do (which they already do as sales tax).

mhluongo 10y ago

Coinbase has to report SARs, as well- they're a fully licensed money transmitter in the US- so maybe tone down the condescension. This is an overreach of a different type and by a different government body, and would be precedent-setting AFAIK.

ryanackley 10y ago
SARs only apply to suspicious activity. CTRs are what your bank has to file for every transaction over $10000. Also, it's all the Dept. of Treasury. The IRS is essentially the collection agency of the Dept. of Treasury. It's listed as a bureau on the U.S. Treasury's website. https://www.treasury.gov/about/organizational-structure/bureaus/Pages/default.aspx https://www.treasury.gov/about/organizational-structure/bure...
- mhluongo 10y ago
  My point stands. Coinbase already has bank-level scrutiny, both directly and from its banking partners ("know your customer's customer"). I completely agree that anonymity in finance is at odds with many of the government's methods to enforce taxation, and that this is only the beginning. But Coinbase has been the white knight in this space in the US dealing with the regulations, and I don't think they're naive to push back on this. It might be a losing battle over the next decade, but that doesn't mean it's not a worthwhile cause today.
  - ryanackley 10y ago
    If your point is that it has a bank's level of scrutiny, then no it clearly does not stand. I mean isn't that the point of the government request? A bank's level of scrutiny would mean the government could reasonably guess if you are holding out on taxes which is clearly not the case here. Does the IRS regularly subpoena Chase and BofA's customer records. No, because there is no need. Thanks to the CTRs, they can crunch the numbers and figure out if the amount you paid on your taxes is suspiciously low. Sure, it's a worthwhile cause. I wish them luck because Congress and the Courts have consistently torn down financial privacy over the last 30-40 years.
    - mhluongo 10y ago
      To your point about SARs / CTRs- SARs at banks are usually triggered by cash deposits and withdrawals at a much lower level, and every bitcoin transaction is roughly equivalent to a cash transaction. Thus "bank-level scrutiny". > I mean isn't that the point of the government request? It's not clear to me whether they actually need this at all, considering Coinbase's existing reporting requirements. It's common enough from other branches to make overreaching requests to set a precedent (eg the DoJ / Apple iPhone) so I wouldn't just assume it's business as usual.
      - ryanackley 10y ago
        You're fixated on SARs being comparable to CTRs and they just aren't. First, a SAR is only for suspicious activity and it's relatively uncommon, a CTR is not optional and very common. If a SAR is being filled out, it's after trying to get in touch with the person to better understand their business and why various transactions look suspicious. It's not undertaken lightly. It's not a routine filing whereas CTR's are.
        wheelerwj 10y ago
        > SAR is only for suspicious activity and it's relatively uncommon lol, just. stop. you obviously have no experience with this type of regulation (or at least you better hopeyou don't).
- andrewpi 10y ago
  >SARs only apply to suspicious activity. CTRs are what your bank has to file for every transaction over $10000. For every currency transaction, not every transaction. (if you deposit a check for $50,000, that doesn't get reported unless the bank thinks something about the transaction is suspicious) Are bitcoins classified as currency for the purposes of CTR reports?
  - wheelerwj 10y ago
    No, transferring 10k worth of bit Coin doesn't warrant a CTR, only if it's bought or sold using cash.

jonaf 10y ago

This, absolutely. I'm actually surprised the government showed their hand so soon. There must be a lot of money in Bitcoin already. The government WANTS people to go 100% digital with their capital. It is infinitely easier to track digital money. Bitcoin is something they're against because the anonymity factor. I won't be surprised if we see some legislation to block or inhibit anonymous digital currency. Let's not forget that the US will really want to "own" or be in control of any significant digital currency. Since the US dollar is the world reserve currency, the US wields unprecedented economic power on a global scale. Any currency that has the potential or shows signs of shaking that up will be on the radar for the US govt and the Fed, as controlling currency is the means by which one can control the economic destiny of any nation(s). As we saw with Egypt, for example, several years ago. A simple change in US monetary policy can result in the overthrowing of foreign governments! Interesting side anecdote: A person very close to me purchased Bitcoin on the stock market, but Bank of America froze the account on suspicion / risk of money laundering or general FUD. It isn't clear how much of this was due to the bank or the government, as they are in bed together, but it prevented this person from being able to trade Bitcoin in his account anymore. Sadly, had his account not been frozen, he would have doubled his money. N.B. Citations needed, obviously. Commenting on mobile makes this challenging.

mhluongo 10y ago
> Interesting side anecdote: A person very close to me purchased Bitcoin on the stock market, but Bank of America froze the account on suspicion / risk of money laundering or general FUD. It isn't clear how much of this was due to the bank or the government, as they are in bed together, but it prevented this person from being able to trade Bitcoin in his account anymore. Sadly, had his account not been frozen, he would have doubled his money. I highly doubt your contact bought bitcoin on the stock market, since there hasn't been an ETF launched. They might've bought bitcoin on an bitcoin exchange and had their bank account frozen- it still happens frequently. Banks in the US are still scared to do business with bitcoin folks because they don't want to get undue attention down the line (eg Operation Chokepoint), and banking a potential MSB is more difficult ("know your customer's customers").
- 10y ago

jrcii 10y ago

I've said for a long time that the problem digital currency proponents seem to be missing is that there is nothing intrinsic to the technology that prevents it from being regulated. A bill is already up in California that requires businesses to report anyone who uses it. The only reason it hasn't been heavily regulated is because it hasn't become big enough to be on the radar yet. The second it is, it will become like anything else.

wheelerwj 10y ago

Respectfully, you are incorrect or misinformed on many points. - coinbase is and has been a licensed MSB for several years, this means that it has already had to comply with all of the same BSA rules as every other bank. [1] - Banks don't have to report ANY transaction over $10,000. They have to report every CASH transaction (or aggregate of transactions) over $10,000 and any Suspicious transaction (or aggregate of transactions) over $2,000 [2] - coinbase is rightfully concerned about the breadth of the subpoena because it's a giant fishing expedition. In order to request records, the federal government SHOULD have to provide reasonable proof of suspected criminal activity. [3] - finally, this has absolutely nothing to do with anonymity. This has everything to do with another drastically over-reaching request by the federal government for personal information even when there is no evidence of any specific crime. [1] https://www.coinbase.com/legal/licenses?locale=en https://www.coinbase.com/legal/licenses?locale=en [2] https://www.ffiec.gov/bsa_aml_infobase/pages_manual/OLM_015.htm https://www.ffiec.gov/bsa_aml_infobase/pages_manual/OLM_015.... [3] See the Constitution.

kchoudhu 10y ago
Coinbase is welcome to fight the breadth of the request, but they will lose -- if not this time, then the next. The government has every interest in regulating BTC out of existence: the ability to transact value with no government intermediation cuts to the core of what it means to be a nation state, and no state is ever going to renounce that monopoly.
- rms_returns 10y ago
  >> ..cuts to the core of what it means to be a nation state, and no state is ever going to renounce that monopoly. Yet, some countries have started willingly renouncing that monopoly. For example, Australian Reserve Bank has clearly stated that "There would be nothing to stop people in this country deciding to transact in some other currency in a shop if they wanted to. There’s no law against that, so we do have competing currencies."[1] Similarly, The South African Reserve Bank has come to the conclusion that "The Bank does not oversee, supervise or regulate the Virtual Currency (VC) landscape."[2] [1] https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country#Australia https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country... [2] https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country#South_Africa https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country...

tracker1 10y ago

I've been postulating that a return to import/export taxes in addition to a small vat and include financial exchanges for import/export could be a better tax system with less bureaucracy than the current IRS. Not that I like the approach, but feel it would be better overall, have less gov't and be harder to work around.

trhway 10y ago
>return to import/export taxes in addition to a small vat thus significantly slowing B2B and B2C markets. Why would we do it? It is like Middle Ages - one can consume only what is produced in the castle's vicinity and from every bucket of grain one has to give share to the lord and share to the church (note - the example is exactly vat, not income tax, as vat is taken as share of the total volume without regard to the production cost while income tax is share of profit (i.e. of difference between total value and cost to produce)) And yes, nor the lord, nor the church were bothered with bureaucracy.
- tracker1 10y ago
  Because B2B and B2C markets usually use BANKS as intermediaries for currency exchange anyway, so only the banks need to do it, and already have exchange provisions for fees, it would be easier to do there as a tax (additional fee). So instead of every individual responsible for filing taxes, only banks, and businesses do (which they already do as sales tax).