6 ms·

What is the point of Tether? Is it for dodging taxes?

by atarian 9y ago

samsonradu 9y ago
Dodging regulation, in that many exchanges don’t touch money but tether instead.
ceejayoz 9y ago
Circumventing know-your-customer laws.
machinecontrol 9y ago
Tether is supposedly pegged to USD. Traders use it to store assets while avoiding crypto price volatility without having to deal with fiat currency.
- TaylorGood 9y ago
  Which, Waves DEX has USD as an option in their wallets. Bypassing the need for Tether altogether, but their exchange is also rather limited..
- vkou 9y ago
  How is not having to deal with fiat currency an advantage for traders? They still need to do cost-basis accounting for taxes, and this just shifts their risk of <exchange I use stealing all my USD and the police will never get it back> to <USDT will pop and collapse into worthlessness>. I understand how this benefits exchanges (Because they can claim they don't need to follow KYC), but how does it benefit their users? They'll also eventually need to convert USDT into USD - which they can withdraw. If you have an exchange that you can withdraw USD from, why are you even keeping your balance in USDT? Just trade on that exchange... It's like if the NYSE only allowed you to cash out in scrip. I understand how this benefits them, but how does it benefit me?
  - GenericsMotors 9y ago
    > It's like if the NYSE only allowed you to cash out in scrip. I understand how this benefits them, but how does it benefit me? It doesn't benefit you, as you're left holding a bag of useless scrip if there's a big crash. Which is precisely why tether is such a cause for concern. Well, except for crypto fanatics that call anything perceived as negative as baseless FUD.
  - moduspol 9y ago
    It's still slow and tedious to move USD between exchanges, and likely raises a lot of flags with your bank. Being able to move USD between banks as fast and frictionlessly as you can move crypto makes it easier to take advantage of price differences on different exchanges. The tethers themselves are also tradeable with people who may or may not pay taxes or trade on KYC-compliant exchanges.
  - enolan 9y ago
    Token transfers are much faster than wires/ACH and have less regulatory overhead. It benefits you to sell your bitcoins for USDT on one exchange and send the tether to another one. This is much faster and cheaper than selling for real USD and wiring the money to the second exchange. Or hypothetically you could pay for stuff that's priced in dollars without the friction and fees of the traditional banking system. I don't think anybody actually does that though. It's a way of combine the advantages of cryptocurrency - speed, fees, lack of regulation - with the stability of fiat currencies. Not very stable if the issuer is insolvent though.
    - vkou 9y ago
      > Token transfers are much faster than wires/ACH and have less regulatory overhead. It benefits you to sell your bitcoins for USDT on one exchange and send the tether to another one. This is much faster and cheaper than selling for real USD and wiring the money to the second exchange. Why wire money from one exchange to another? Is it to trade instruments that are available on one but not the other? Is it because your exchange does not have fiat withdrawals? Is it to take advantage of pricing arbitrage, because one of the two exchanges does not allow fiat withdrawals (How will you cash out, then, without paying a premium, that will eat your arbitrage?) If so, why not just wire the bitcoins? Or Eth, or litecoin, or whatever? Why introduce conversion to USD or USDT as an intermediate step? Tether seems to be solving a non-problem - or at least, it's not solving it in a way where its alleged USD peg provides any value. Use litecoin, or bch, or dogecoin, or whatever.
chvid 9y ago
Creating fake USD to inflate the value of various crypto currencies.
sna1l 9y ago
In Europe, trading like-kind assets isn't a taxable event, so a lot of people take gains and move them into USDT. edit: At least that's what I remember seeing last, laws may have changed.
- jonknee 9y ago
  "Like-kind" is quite a stretch when considering something pegged to USD.
- lawn 9y ago
  For Sweden at least crypto to crypto trades are taxable. But I know this is different for different countries, for example Denmark doesn't tax your gains at all.
- cobookman 9y ago
  Last year a lot of people thought that. However its not true and trades between crypto are taxable.
hendzen 9y ago
Quantitative easing for cryptocurrency markets.
- deleted 9y ago
  [deleted]
vkou 9y ago
Another poster claims that most of the people who currently own Tether have no idea that they actually own Tether. [1] If that is true, then the point of it seems to be enriching the people running exchanges, at the expense of their users. [1] https://news.ycombinator.com/item?id=16264371 https://news.ycombinator.com/item?id=16264371
mtgx 9y ago
You can "dodge taxes" with any cryptocurrency, if that's your goal. What Tether offers primarily is a safeguard against crypto-world volatility without having to deal with FIAT exchanges randomly holding your money for weeks or months at a time, of which you can find many horror stories on Reddit (even for people with KYC verification in place). I believe "stablecoins" will be needed in the cryptoworld, especially if the goal is still ultimately to have crypto coins used a "currency". But I'm not sure there's any reason why they need to be "pegged to the dollar" or any FIAT currency. It just needs to be relatively stable, perhaps in relation to the total market cap of cryptocurrencies at any given point in time.
- joosters 9y ago
  There are endless reports of exchanges holding people's crypto coins for weeks and months at a time. Tether is no safeguard here.
ThrustVectoring 9y ago
On the buy side, it's for avoiding using a bank account and the associated know-your-customer and anti-money-laundering laws. If you send and receive dollars, there are reporting requirements that you have to legally follow. Tethers are car wash tokens, not dollars, so various organizations are willing to let you do whatever with them. The obvious incentive on the sell side is that you can print literally billions of car wash tokens and buy other cryptocurrencies with them.

What is the point of Tether? Is it for dodging taxes?

samsonradu 9y ago

Dodging regulation, in that many exchanges don’t touch money but tether instead.

ceejayoz 9y ago

Circumventing know-your-customer laws.

machinecontrol 9y ago

Tether is supposedly pegged to USD. Traders use it to store assets while avoiding crypto price volatility without having to deal with fiat currency.

TaylorGood 9y ago
Which, Waves DEX has USD as an option in their wallets. Bypassing the need for Tether altogether, but their exchange is also rather limited..
vkou 9y ago
How is not having to deal with fiat currency an advantage for traders? They still need to do cost-basis accounting for taxes, and this just shifts their risk of <exchange I use stealing all my USD and the police will never get it back> to <USDT will pop and collapse into worthlessness>. I understand how this benefits exchanges (Because they can claim they don't need to follow KYC), but how does it benefit their users? They'll also eventually need to convert USDT into USD - which they can withdraw. If you have an exchange that you can withdraw USD from, why are you even keeping your balance in USDT? Just trade on that exchange... It's like if the NYSE only allowed you to cash out in scrip. I understand how this benefits them, but how does it benefit me?
- GenericsMotors 9y ago
  > It's like if the NYSE only allowed you to cash out in scrip. I understand how this benefits them, but how does it benefit me? It doesn't benefit you, as you're left holding a bag of useless scrip if there's a big crash. Which is precisely why tether is such a cause for concern. Well, except for crypto fanatics that call anything perceived as negative as baseless FUD.
- moduspol 9y ago
  It's still slow and tedious to move USD between exchanges, and likely raises a lot of flags with your bank. Being able to move USD between banks as fast and frictionlessly as you can move crypto makes it easier to take advantage of price differences on different exchanges. The tethers themselves are also tradeable with people who may or may not pay taxes or trade on KYC-compliant exchanges.
- enolan 9y ago
  Token transfers are much faster than wires/ACH and have less regulatory overhead. It benefits you to sell your bitcoins for USDT on one exchange and send the tether to another one. This is much faster and cheaper than selling for real USD and wiring the money to the second exchange. Or hypothetically you could pay for stuff that's priced in dollars without the friction and fees of the traditional banking system. I don't think anybody actually does that though. It's a way of combine the advantages of cryptocurrency - speed, fees, lack of regulation - with the stability of fiat currencies. Not very stable if the issuer is insolvent though.
  - vkou 9y ago
    > Token transfers are much faster than wires/ACH and have less regulatory overhead. It benefits you to sell your bitcoins for USDT on one exchange and send the tether to another one. This is much faster and cheaper than selling for real USD and wiring the money to the second exchange. Why wire money from one exchange to another? Is it to trade instruments that are available on one but not the other? Is it because your exchange does not have fiat withdrawals? Is it to take advantage of pricing arbitrage, because one of the two exchanges does not allow fiat withdrawals (How will you cash out, then, without paying a premium, that will eat your arbitrage?) If so, why not just wire the bitcoins? Or Eth, or litecoin, or whatever? Why introduce conversion to USD or USDT as an intermediate step? Tether seems to be solving a non-problem - or at least, it's not solving it in a way where its alleged USD peg provides any value. Use litecoin, or bch, or dogecoin, or whatever.

chvid 9y ago

Creating fake USD to inflate the value of various crypto currencies.

sna1l 9y ago

In Europe, trading like-kind assets isn't a taxable event, so a lot of people take gains and move them into USDT. edit: At least that's what I remember seeing last, laws may have changed.

jonknee 9y ago
"Like-kind" is quite a stretch when considering something pegged to USD.
lawn 9y ago
For Sweden at least crypto to crypto trades are taxable. But I know this is different for different countries, for example Denmark doesn't tax your gains at all.
cobookman 9y ago
Last year a lot of people thought that. However its not true and trades between crypto are taxable.

hendzen 9y ago

Quantitative easing for cryptocurrency markets.

deleted 9y ago
[deleted]

vkou 9y ago

Another poster claims that most of the people who currently own Tether have no idea that they actually own Tether. [1] If that is true, then the point of it seems to be enriching the people running exchanges, at the expense of their users. [1] https://news.ycombinator.com/item?id=16264371 https://news.ycombinator.com/item?id=16264371

mtgx 9y ago

You can "dodge taxes" with any cryptocurrency, if that's your goal. What Tether offers primarily is a safeguard against crypto-world volatility without having to deal with FIAT exchanges randomly holding your money for weeks or months at a time, of which you can find many horror stories on Reddit (even for people with KYC verification in place). I believe "stablecoins" will be needed in the cryptoworld, especially if the goal is still ultimately to have crypto coins used a "currency". But I'm not sure there's any reason why they need to be "pegged to the dollar" or any FIAT currency. It just needs to be relatively stable, perhaps in relation to the total market cap of cryptocurrencies at any given point in time.

joosters 9y ago
There are endless reports of exchanges holding people's crypto coins for weeks and months at a time. Tether is no safeguard here.

ThrustVectoring 9y ago

On the buy side, it's for avoiding using a bank account and the associated know-your-customer and anti-money-laundering laws. If you send and receive dollars, there are reporting requirements that you have to legally follow. Tethers are car wash tokens, not dollars, so various organizations are willing to let you do whatever with them. The obvious incentive on the sell side is that you can print literally billions of car wash tokens and buy other cryptocurrencies with them.