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US Senate Bill S.1241 to Criminalize Concealed Ownership of Bitcoin
- 21 9y agoBank secrecy is dead* To imagine that bitcoin could change that or not abide is foolishness. * for poor people anyway, with poor meaning < $10 mil which affords you lawyers and offshore shell companies
- mirimir 9y agoWell, bank secrecy is as dead as governments can make it, for obvious reasons. However, for cryptocurrencies, it's mainly exchange interfaces with meatspace currencies that are hard to keep private. If you use local wallets like Electrum, transact via Tor, mix thoroughly, and generally practice good OPSEC, your personas and their cryptocurrency can be as anonymous as you like. But only as long as you maintain compartmentalization from meatspace.
- lordCarbonFiber 9y agoSo long as you never use your currency to buy anything you've got a great anonymous currency. Sounds very useful.
- stale2002 9y agoIf a coffee shop accepts bitcoin, your transaction is effectively as untraceable as cash is today. The more that people use bitcoin, the more useful it gets and the harder it is to stop.
- CryptoPunk 9y agoFYI, Bitcoin can't be used for coffee purchases anymore, due to throttling of transaction throughput, but Bitcoin Cash and Ethereum can.
- throwaway613834 9y ago> If a coffee shop accepts bitcoin, your transaction is effectively as untraceable as cash is today. How? There is no globally public record of all cash transactions, unlike with Bitcoin.
- teawrecks 9y agoBecause at no point is your identity tied to the address.
- Retric 9y agoIf you have an account with 100 mill in stolen bitcoins and use it at a coffee shop then looking at security footage is relatively trivial as there is a clear time stamp involved. Cash on the other hand might be traced at the bank, but it it's hard to directly link it unless their is a clear pattern of behavior. Even better, a random 5$ bill may not end up at the bank directly if someone get's change at the end of the day. Worse it's not just the government that can track bitcoins. I can easily see a gang keeping an eye on transactions looking for people with large accounts so they can use physical means of persuasion to liberate it.
- stale2002 9y agoCryptocurrencies can be mixed. If you engage in very basic precautions, such as doing something easy like transferring your money to monero, and then back again, it is effectively impossible to track where your money came from. Once you get to the coffee shop stage, nobody knows where that money came from.
- 21 9y agoWith today statistical analysis methods is trivial to track big flows through various block chains, even if some of them are totally hidden. And they only get better by the day, with your traces sitting there like a duck. And you don't need to be 100% certain, it's enough to get a pool of suspects which then you can analyze/surveil with other methods.
- mirimir 9y agoThat's true only if you practice good OPSEC. You must be using a wallet that's not associated with your meatspace identity. Not in any way. Not through bank accounts, IP addresses, etc. Nor through any Bitcoin transaction. Once a wallet is associated with you, all past and future transactions involving that wallet are also associated with you. So it's prudent to have many wallets, and to always mix when transferring among them.
- tehlike 9y agoNot entirely. Monero enables this by default, though.
- mirimir 9y agoYou must compartmentalize. You can buy and sell anything that isn't linkable to your meatspace identity. With enough virtual wealth to hire the right consultants, you could probably retire comfortably somewhere.
- ben_w 9y agoI doubt you could retire. Creating a justification for why your meatspace identity now has money from an anonymous source without tying those identities together is money laundering.
- mirimir 9y agoYes, it is. So you'd need to retire somewhere pretty laid back.
- ben_w 9y agoIs there somewhere “laid back” which is not corrupt, which has a functioning police force, and which has its own financial system?
- deleted 9y ago[deleted]
- tehlike 9y agoI am curious its implications on capital gains. If you retire in a place with 0 capital gains, then would your home country tax you? I do not know the answer.
- ben_w 9y agoDepends on both countries. If I understand correctly, if you’re from the USA you owe taxes on worldwide income regardless of where you earned it. I have no idea if that applies to capital gains or not, nor how other nations treat worldwide income — not even my own nation.
- X86BSD 9y agoOr you could just, use a secure anonymous coin like say monero and forget all this time consuming effort to try and anonymous a non anonymous coin.
- mirimir 9y agoOnce Monero is accepted more widely, sure.
- tehlike 9y agoyou mean, like bitcoin isn't?
- mirimir 9y agoYou might be surprised at what's available for Bitcoin. Servers and VPN services. Consultants. Plus stuff via dark markets.
- tehlike 9y agoSo the very niche market. I guess my point is, still bitcoin is mostly speculation - the stuff you talk about wouldn't add up to billions of dollars of marketcap, for example.
- mirimir 9y agoYes, of course it's mostly speculation. But it's funny for someone on HN to be characterizing what I mentioned as "niche market". I mean, what more than capital, servers and consultants does one need for a startup?
- tehlike 9y agoWhy do you need bitcoin for that? I don't see the relation.
- tehlike 9y agoMonero could. Fungible, and private by design.
- mkempe 9y agoNot in Switzerland -- as long as you are neither US citizen nor US resident.
- chris_st 9y agoWell, at the very least that'll change how numer.ai works, if this passes.
- multibit 9y agoOf course the justification is to "stop money laundering and terrorist financing".
- jgh 9y agoEh did you notice that huge tax cut they just gave the ultra-rich? They gotta start digging through the couch to pay for it ;)
- adventured 9y agoThe US has the most progressive taxation system among all developed nations. Nothing about that fundamental progressiveness has changed due to the tax cuts. The top 20% are paying 95% of all income taxes, that will continue. For example, the US is radically more progressive on taxation than all of Scandinavia: https://taxfoundation.org/how-scandinavian-countries-pay-their-government-spending/ https://taxfoundation.org/how-scandinavian-countries-pay-the...
- failrate 9y ago*had. It's just been blown up.
- loeg 9y agoThe (conservative) Tax Foundation article totally ignores that Norway also has an individual wealth tax (0.85% on assets above about USD $179,000), which is quite progressive compared to income taxes. They also have higher capital gain and dividend tax rates than the US (which the article mentions).
- jjoonathan 9y ago> income taxes Oh, come on. Everyone here knows how this game is played.
- lavamantis 9y agoBut the top tax rate has been steadily declining since the Eisenhower administration. This tax bill furthers that decline. Over that period we've seen an increase in inequality. Are they correlated? I'm not sure the bit about what share of income tax is paid by the wealthy is meaningful here, outside of right wing think tank PR releases (your linked site is funded by the Koch Brothers btw. Just a heads up).
- chroem- 9y agoGood old Dianne Feinstein, always protecting me from the scary terrorists.
- rothbardrand 9y agoAnd freedom. Remember, freedom is scary. To the downvoters: Seriously it is. For example: Can you imagine what would happen if we allowed people to have bars? People are expected to DRIVE to a BAR and DRINK! Can you imagine what people would do then, if we legalized the existence of bars? People would drive home drunk! Banning bars is obviously the right thing to do!
- mcny 9y agoI appreciate the spirit (I am no DF fan either!) but in the state of New Jersey if you serve alcohol at a party, you are responsible if you allow an inebriated guest to drive off and they mow down people. If this is about gun control, there is no reason to panic. Your guns are safe.
- rothbardrand 9y agoLOL! I wasn't talking about guns, and no, guns are not safe, every year more and more guns are banned in this country. T he idea that guns are not being banned is just a lie that is told to pretend like not banning all of them outright isn't banning them. But my point was that just because you have responsibility for inebriated people doesn't mean that drunk driving can't happen-- we should ban bars. OF course the thing is, most people who go to bars don't drive drunk. They have the freedom of choice. That's what's scary to HN people... who have been brought up to worship government and believe tyranny is a good thing.
- jfoutz 9y agoDrivers and bartenders are licensed. Cars and booze are registered. Requiring a higher standard for risky stuff is how we handle everything.
- 9y ago
- TazeTSchnitzel 9y agoWhere's the problem? Can someone explain? It's not like this bans owning Bitcoin.
- nlperguiy 9y ago2nd layer solutions would provide fungibility and ultimate privacy. Cryptocurrencies like Zcash, Dash or Monero, especially Monero, could be illegal.
- almostApatriot1 9y agoI say good. Those coins don't need to go mainstream so they can be held, pumped, and dumped. Let people use them for buying drugs.
- JoshTriplett 9y agoWhat's the problem with being required to send a plaintext copy of every encrypted email to various government agencies around the world? It's not like that would ban using encrypted email.
- cmurf 9y agoWhat the problem with being required to report your income from various government agencies around the world? It's not like that would ban governments from existing, surely some people will continue to voluntarily pay some taxes on the honor system.
- tfha 9y agoIs there any evidence of Bitcoin being used by terrorist groups? Wouldn't that be a terrible idea for the terrorists?
- tanilama 9y agoIt has been used for ransoming such as HBO's case.
- mirimir 9y agoI have no idea. But it's a great way to get relatively anonymous donations. At least, if you educate your donors to mix first. Also, properly mixed Bitcoin is great for anonymously leasing VPN services and servers, and for buying fake Facebook etc accounts, which are all useful for advocacy. And maybe black-market arms dealers accept Bitcoin now.
- rothbardrand 9y agoYes, it is a terrible idea for terrorists. And currently, bitcoin is too hard to use for terrorists or most criminals. You have to be relatively sophisticated. Yah, you may have gotten your grandma a wallet, but that's not the same as mastering the level of opsec to fund a clandestine organization using cryptocurrencies... And further, since every transaction is recorded forever in the blockchain if any future address is compromised, the entire network can be compromised instantaneously.... Bitcoin is really worse for terrorist financing than good old USD. And we "lost" trillions of USD on Pallets in the Iraq and Afghanistan wars.
- sophont42 9y agoYep, and Obama’s shipped a pallet directly to a state sponsor of terror. Why use BTC?
- CryptoPunk 9y agoGood digital currency will be useful to terrorists just as a good internet is. But just as the internet creates a more connected and prosperous world that reduces conflict and terrorism overall, so will digital currency. Also, it reduces the threats posed by governments against their own people. Government repression, like that seen in Venezuela or for a more extreme example, North Korea, can kill far more people than non-state terrorism, and tools that empower individuals help resist that.
- crb002 9y agoHow do you define "digital currency"? Under US legal tender laws BTC isn't money. You can incur capital gains when you exchange BTC for something over the basis you acquired it for, but you essentially gave smoothing of value away for something ephemeral.
- mooman219 9y agoI'm waiting for the law to get so vague, they accidentally cover in-app/in-game currencies with legislation that requires it to be regulated.
- rothbardrand 9y agoI suspect money laundering is already there.... they don't care, its all selective prosecution anyway. The purpose of the laws is not to stop crimes, but to make so many things a crime that if you resist tyranny they can discredit you and jail you.
- failrate 9y agoAny game that has goods that can be exchanged by players is a potential for illegal money transfers even without the ability to get money back out of the game. For example, there's a shadow market for both CounterStrike weapon skins and Team Fortress 2 items. Here's how it works: I have a big supply of items. They have an assigned value. You give me money and the name of the receiving party. I send some items to a broker across the planet. They receive the goods, take their big, and give the rest in cash to the receiving party. We have now just made a wire transfer inside of TF2.
- rothbardrand 9y agoOne of the great things about bitcoin is it gives libertarianism a business model... and it's right out of SEK3's New Libertarian Manifesto--which was written in the 1970s-- SEK game theorized out what would happen with the Soviet Union, and proved to be correct 20 years later... now we are seeing the exact same game plan here in the USA with bitcoin and this law. But they are too late. Most likely outcome is this will get reversed or widely ignored.... but if they are successful, everyone smart will start leaving the country... or they will create an arab spring like response here, eroding respect for the government and police. Gay rights couldn't be resisted in the age of the internet when everyone knew their cousin or that guy they went to work with was gay.... will be the same thing with bitcoin. Question is, just how violent and authoritarian the tyrants in DC want to get.
- tehlike 9y agoNobody will leave the country, i think that's a very bold prediction. The ones that would leave would be hidden bitcoin millionaires/billionaires. I agree on the "they are too late" point, but think of it this way: US already knew about your financials. This law doesn't change that.
- rothbardrand 9y agoPeople are already leaving the country, and at an increasing rate. The rate of renouncements of US citizenship has been rising for the past 20 years but sharply under Obama. They have started making it HARDER to renounce, as some sort of attempt to keep people in-- one of the pieces of advice you will see often regarding renunciation is to never tell them you are renouncing for tax reasons. That's one of the reasons they will refuse (yes, you have to beg permission to be let out of your slavery, er, citizenship)..... so the old saw of "you owe taxes because you choose to be here" is false.. More and more americans are leaving without renouncing, just going off the grid in asia or wherever, showing up only to renew their passports. Once some country is smart enough to offer citizenship to educated americans, the trend will become a tide.
- tehlike 9y ago
- bitsane 9y agoGood, finally some concrete step by senate to stop block craze. Meh typical HN commenters "Taxes are great, except when its us who get taxed". The way I see its time to throw book at bitcoin holders, lets start putting Coinbase execs in prison.
- tehlike 9y agoPeople must declare their income from cryptos, but they like to be in gray area. Many many people has generated massive taxable events as they moved their cryptocoins into other cryptocoins as a means of diversification, for example. They just like to think of it as an "invisible" event that's not government's business. But then, the same people complain about quality of public education, or why 101 sucks, or something along those lines that require tax money. Currently, cryptocoins are seen as "have your cake and eat it too".
- Simulacra 9y agoWith the NSA permeating so much, how sure can we be a bitcoin was ever truly anonymous ?
- estroz 9y agoBitcoin was not and never will be anonymous if a user converts to fiat. There is always a way to trace a transaction through the blockchain, and from there to a fiat-Bitcoin exchange where you have an account tied to your bank.
- mercer 9y agoI suppose the more anonymous option would be to 'buy' mining or use something like localbitcoins? You could still get caught, of course, but it'd be a lot more difficult.
- tehlike 9y agoBitcoin is not anonymous, and it is tracable. Your identity is known as soon as you go to an exhange or convert to fiat.
- garmaine 9y agoIt never was. Anonymity a property bitcoin never had nor tried to have.
- grandalf 9y agoUh, it says intentionally concealing, not owning. Income from investments is supposed to be reported to the IRS. It’s silly that anyone would expect crypto currencies to be an exception. This would be one of the few cases when the title should be updated.
- drcode 9y ago> Income from investments is supposed to be reported to the IRS. Bitcoin income has required disclosure since 2013, this bill seems to say that even bitcoin just sitting idle in an account need to be disclosed somehow, which is a MAJOR breach of privacy. This is like saying to someone "If you own a nice painting in your house you need to let us know about it" even if it generates no income. They are basically saying "if you value your privacy you are a criminal, even if you aren't breaking any other laws" which should scare everyone.
- tehlike 9y agoIsh. it's not that different from status quo. 1. Government already knows all of your US bank accounts. 2. They ask you to declare foreign bank accounts. 3. Majority of countries have deals with US to inform them of US residents/citizens accounts, and many banks for this reason do not accept new accounts from us citizens. 4. US asks you to declare any monetary instrument as you enter country (above 10K) or so. So if you think about it, they are not asking anything different from what they already do.
- DennisP 9y agoThe text doesn't sound so much to me like it's criminalizing intentionally concealed ownership of cryptocurrency, as ownership of accounts at exchanges...say, by signing up for an exchange with a fake ID.
- JoshTriplett 9y agoAs written, it'd be easy to interpret even a private wallet as an "account", since there's a record of it on the blockchain.
- moduspol 9y agoThis link gives a little more background: https://news.bitcoin.com/proposed-u-s-legislation-may-criminalize-those-who-conceal-bitcoin/ https://news.bitcoin.com/proposed-u-s-legislation-may-crimin... > A ‘prepaid access device’ means an electronic device or vehicle, such as a card, plate, code, number, electronic serial number, mobile identification number, personal identification number, or other instrument, that provides a portal to funds or the value of funds that have been paid in advance and can be retrievable and transferable at some point in the future. To me that seems pretty clear they're targeting cryptocurrencies held outside of exchanges.
- politician 9y agoThat description covers literally every thing that has ever been sold to a buyer. The act of buying something makes it "prepaid access device" since it may possibly in the future be used to retrieve funds, e.g. via a sale, and may be transferred at some point in the future.
- moduspol 9y agoYep. Something tells me that was the intention.
- em3rgent0rdr 9y agoYour private bitcoin wallet (even in your home) is your bank.
- nickthemagicman 9y agoMonero still ok?
- notaboutdave 9y agoThis would make "Satoshi Nakamoto" a criminal for not declaring the genesis block on his taxes.
- 6nf 9y agoOnly if Satoshi is American. And if he's still alive.
- tehlike 9y agoOr if he hasnt renounced his citizenship
- garmaine 9y agoRenouncing citizenship wouldn’t prevent you from owing uncollected or misfiled back taxes.
- tehlike 9y agoGood point. Educate me (since i am not sure about that part of taxes), would exercising your gains and converting them to fiat in a country which doesn't have capital gains taxes (singapore, i think is one?) generate backtaxes? I am thinking: BTC=0 value when satoshi generated them. Now they are worth billions. There is capital gains, but assume he renounced his us citizenship before converting them to fiat. What would happen?
- freeloop3 9y agoHe'd pay taxes as if he sold at fair market value. This scenario has occurred time and time again when someone acquires a lot of wealth through investment. His best option would probably be to create an irrevocable trust which pays him a percentage every quarter. Then he won't owe any taxes on what has already accrued. Then he can consider expatriation or moving to Puerto Rico.
- pmorici 9y ago
- nickysielicki 9y ago"I wasn't concealing ownership, I just thought I had lost the key to unlock my wallet. You see, it all started with my friend's unreliable boat."
- ransom1538 9y agoGeneral question. Currently money laundering is illegal (concealing money gained from unlawful activity) [i] and the IRS already asks you specifically if you own assets [digital currency] [ii], so i am honestly curious what this would change. If you own bitcoin and are not disclosing this to the government [irs] of such assets you are already breaking federal law. This just adds charges? Or does this help fund the feds to form task forces? Lawyers I have consulted mention trusts to legally hide assets [iii]. help. [i] https://www.law.cornell.edu/uscode/text/18/1956 https://www.law.cornell.edu/uscode/text/18/1956 [ii] https://www.irs.gov/newsroom/irs-virtual-currency-guidance https://www.irs.gov/newsroom/irs-virtual-currency-guidance [iii] https://www.wsj.com/articles/SB912140808262492000 https://www.wsj.com/articles/SB912140808262492000
- em3rgent0rdr 9y ago> "the IRS already asks you specifically if you own assets [digital currency] [ii]" I don't see anywhere in [ii] where it specifically says that you have to disclose the mere ownership of personally-held bitcoins. That is just saying that you have treat bitcoin just like any other property.
- ransom1538 9y agoExactly. It is an asset. So you only disclose when you sell?
- zeep 9y agois it the same for gold?
- bobbybreakdanc 9y agoSo, if this is taken to mean ownership or control of cryptocurrency wallet, what does that imply? What defines ownership? Access? If someone holds a key to a house that doesn't mean they own the house. What defines control? If a key is destroyed, and no one else owns that key, is is control lost? What if the key is lost? Is control lost until the key is recovered?
- HashThis 9y agoThe United States has divided into a privileged class vs commoners: 1) PRIVILEGED CLASSES: Easy cheap to create Off-shore shell company legal entity. Hide ownership of your money. It will auto-shift to a new country if government tries to uncover ownership. Offshore laws make it illegal for bank workers to uncover identity 2) COMMONERS: FinCen dominates over commoners. Every transaction tracked. Prison if you have Bitcoin privacy. They can put you in prison if they claim two transactions were because you were trying to get privacy from government.
- deleted 9y ago[deleted]