5 ms·

Stablecoins to face new restrictions in Japan

50 points by marban 5y ago

eganist 5y ago
Question (that I won't interpret as tax advice. I have no crypto positions to my knowledge): do crypto to stablecoin transactions incur taxes equivalent to liquidating securities to cash? Because if not, that sounds like a massive tax gap that should probably be addressed.
- astrange 5y ago
  Equivalent to securities yes, but equivalent to stocks no. Wash trades are allowed.
  - unmole 5y ago
    So, equivalent to forex?
    - deleted 5y ago
      [deleted]
- vmception 5y ago
  For US persons, all crypto trades, including crypto to crypto, including to stablecoins, are reportable capital tax events. This was clarified in the 2017 tax reform, and the IRS has also said it applies pre-2017 (pre-2017 law is totally worth challenging but its much lower value involved so its history). I know plenty of people, including their CPAs, that get this wrong. Mostly because they never had to handle taxes themselves before, but they imagine things like only paying taxes when dollars hit their bank account, a wild abstraction that is saying the crypto exchange financial institution is ignorable for taxes and all their onchain data is ignorable for taxes.
  - eganist 5y ago
    Nice, thanks. Yeah, the few crypto events I had were thankfully much simpler and easily handled in re: taxes, so this was always an open question for me.
  - pjc50 5y ago
    It's quite obvious that none of the people pumping this stuff on Reddit etc. are paying any of these taxes. And the IRS doesn't have the resources to hunt all or even more than a fraction of them. (Fun question to upset everyone: suppose you, along with some other people, own an ownership/control token in a DAO. The DAO makes some trades on your behalf. Who incurs what tax liability?)
    - vmception 5y ago
      I would treat them as board seats in a foundation (orphaned entity) taxed at the entity level, and the entity is non-US As governance tokens aren’t equity, and there is nothing to pass through Either way, there would be enough board seats OR shareholders from different places to dilute ownership to ensure there was no subpart f income bearer board seats, even better than bearer shares. Crypto is immediately picking up the baton after all that energy was used to jettison bearer shares off the planet over the prior two decades.
- porknubbins 5y ago
  Absolutely. All crypto exchanges from one to another are considered property exchanges where you have to recognize a gain. In contrast, I believe major currencies which are recognized as such have some favorable treatment so that if you are just a traveler who goes to England you aren’t on the hook because the GBP goes up vs USDbut don’t take that as tax advice.
- reginold 5y ago
  YC startup Cointracker is a terrific tool to take the pain out of archaic crypto taxation: https://www.cointracker.io/ https://www.cointracker.io/ Sure, it's dumb to renew my Notes software and have that be a taxable event but...not my problem anymore :)
numair 5y ago
Oh, great. The banking industry is getting “tough on crypto” by helping themselves. The Bank of Japan and the large banks in Japan operate one giant, corrupt, stupid oligarchy. It’s the insane incompetence of these entities, and witnessing it first-hand, that made me realize that non-bank crypto/digital currencies and stores of value are going to end up winning. Living in a first-world country with a third-world banking system has been an absolute eye-opener. Don’t buy the hype — this is all about helping a bunch of entities that have done very little to serve the needs of the people whose tax revenue directly subsidizes their elaborate racket. The worst part is, these large Japanese banks aren’t just a domestic problem: outside of their borders, they’re some of the largest financiers of environmental destruction in the world (palm oil plantations, coal mines, etc) because they know the Japanese media will never tell the public what they’re up to. It’s almost as though these global regulators and banks are hoping for massive systemic risk and failure in crypto, so they can step in and “save the world.” And, judging from 90% of the comments in these sorts of articles on HN, the “enlightened” public will cheer them on as they do it.
- xwolfi 5y ago
  The problem is the amount of crime one could do with a fake stablecoin. Maybe you re right and the central bank of Japan (that has nothing to do with the banking industry) is criminal. But it doesn't change that stablecoins must be audited. What if Tether was relying on a Bahamas bank created by the writer of inspector gadget ? That d be quite worrying to let them continue saying it's all safe and real, no?
  - numair 5y ago
    When you’re a regulator, it’s often useful to allow things to grow into giant systemic failure so you have greater latitude to “fix things” when the time is right. As Sarbanes-Oxley demonstrated, the fix is often worse than the problem, and can hold economies back by decades (and if you study the history of some of the greatest fallen economies, such as in Old China, you will see that it can trigger permanent decline). The anti-crypto people on here are as annoying as the “social networking websites are not worth hundreds of millions of dollars” were in the early 2000s.
webinvest 5y ago
Is it because nearly every stablecoin is in USD and none so far are in JPY? Safety obviously isn’t the reason they’re restricting USD stablecoins because you can invest in CumRocketCoins, SquidGameTokens, and ShibaInuTokens still there.
- arcticbull 5y ago
  The risk is of course that the price action driving people into these speculative manias is created through ersatz dollars. Kill the stablecoins, kill the valuations, kill the manias, stop the madness. Or at least help, anyways.
arcticbull 5y ago
> Japan is acting to limit the number of issuers of cryptocurrencies like Tether, which are backed by such reserve assets as the dollar or the yen... Well that's a generous read of Tether's backing. [1] [1] https://ag.ny.gov/sites/default/files/2021.02.17_-_settlement_agreement_-_execution_version.b-t_signed-c2_oag_signed.pdf https://ag.ny.gov/sites/default/files/2021.02.17_-_settlemen...
lindwhi 5y ago
I don't intended to create FUD but there's a scandal on Tether that is waiting to explode.

50 points by marban 5y ago

Question (that I won't interpret as tax advice. I have no crypto positions to my knowledge): do crypto to stablecoin transactions incur taxes equivalent to liquidating securities to cash? Because if not, that sounds like a massive tax gap that should probably be addressed.

astrange 5y ago
Equivalent to securities yes, but equivalent to stocks no. Wash trades are allowed.
- unmole 5y ago
  So, equivalent to forex?
  - deleted 5y ago
    [deleted]
vmception 5y ago
For US persons, all crypto trades, including crypto to crypto, including to stablecoins, are reportable capital tax events. This was clarified in the 2017 tax reform, and the IRS has also said it applies pre-2017 (pre-2017 law is totally worth challenging but its much lower value involved so its history). I know plenty of people, including their CPAs, that get this wrong. Mostly because they never had to handle taxes themselves before, but they imagine things like only paying taxes when dollars hit their bank account, a wild abstraction that is saying the crypto exchange financial institution is ignorable for taxes and all their onchain data is ignorable for taxes.
- eganist 5y ago
  Nice, thanks. Yeah, the few crypto events I had were thankfully much simpler and easily handled in re: taxes, so this was always an open question for me.
- pjc50 5y ago
  It's quite obvious that none of the people pumping this stuff on Reddit etc. are paying any of these taxes. And the IRS doesn't have the resources to hunt all or even more than a fraction of them. (Fun question to upset everyone: suppose you, along with some other people, own an ownership/control token in a DAO. The DAO makes some trades on your behalf. Who incurs what tax liability?)
  - vmception 5y ago
    I would treat them as board seats in a foundation (orphaned entity) taxed at the entity level, and the entity is non-US As governance tokens aren’t equity, and there is nothing to pass through Either way, there would be enough board seats OR shareholders from different places to dilute ownership to ensure there was no subpart f income bearer board seats, even better than bearer shares. Crypto is immediately picking up the baton after all that energy was used to jettison bearer shares off the planet over the prior two decades.
porknubbins 5y ago
Absolutely. All crypto exchanges from one to another are considered property exchanges where you have to recognize a gain. In contrast, I believe major currencies which are recognized as such have some favorable treatment so that if you are just a traveler who goes to England you aren’t on the hook because the GBP goes up vs USDbut don’t take that as tax advice.
reginold 5y ago
YC startup Cointracker is a terrific tool to take the pain out of archaic crypto taxation: https://www.cointracker.io/ https://www.cointracker.io/ Sure, it's dumb to renew my Notes software and have that be a taxable event but...not my problem anymore :)

numair 5y ago

Oh, great. The banking industry is getting “tough on crypto” by helping themselves. The Bank of Japan and the large banks in Japan operate one giant, corrupt, stupid oligarchy. It’s the insane incompetence of these entities, and witnessing it first-hand, that made me realize that non-bank crypto/digital currencies and stores of value are going to end up winning. Living in a first-world country with a third-world banking system has been an absolute eye-opener. Don’t buy the hype — this is all about helping a bunch of entities that have done very little to serve the needs of the people whose tax revenue directly subsidizes their elaborate racket. The worst part is, these large Japanese banks aren’t just a domestic problem: outside of their borders, they’re some of the largest financiers of environmental destruction in the world (palm oil plantations, coal mines, etc) because they know the Japanese media will never tell the public what they’re up to. It’s almost as though these global regulators and banks are hoping for massive systemic risk and failure in crypto, so they can step in and “save the world.” And, judging from 90% of the comments in these sorts of articles on HN, the “enlightened” public will cheer them on as they do it.

xwolfi 5y ago
The problem is the amount of crime one could do with a fake stablecoin. Maybe you re right and the central bank of Japan (that has nothing to do with the banking industry) is criminal. But it doesn't change that stablecoins must be audited. What if Tether was relying on a Bahamas bank created by the writer of inspector gadget ? That d be quite worrying to let them continue saying it's all safe and real, no?
- numair 5y ago
  When you’re a regulator, it’s often useful to allow things to grow into giant systemic failure so you have greater latitude to “fix things” when the time is right. As Sarbanes-Oxley demonstrated, the fix is often worse than the problem, and can hold economies back by decades (and if you study the history of some of the greatest fallen economies, such as in Old China, you will see that it can trigger permanent decline). The anti-crypto people on here are as annoying as the “social networking websites are not worth hundreds of millions of dollars” were in the early 2000s.

webinvest 5y ago

Is it because nearly every stablecoin is in USD and none so far are in JPY? Safety obviously isn’t the reason they’re restricting USD stablecoins because you can invest in CumRocketCoins, SquidGameTokens, and ShibaInuTokens still there.

arcticbull 5y ago
The risk is of course that the price action driving people into these speculative manias is created through ersatz dollars. Kill the stablecoins, kill the valuations, kill the manias, stop the madness. Or at least help, anyways.

arcticbull 5y ago

> Japan is acting to limit the number of issuers of cryptocurrencies like Tether, which are backed by such reserve assets as the dollar or the yen... Well that's a generous read of Tether's backing. [1] [1] https://ag.ny.gov/sites/default/files/2021.02.17_-_settlement_agreement_-_execution_version.b-t_signed-c2_oag_signed.pdf https://ag.ny.gov/sites/default/files/2021.02.17_-_settlemen...

lindwhi 5y ago

I don't intended to create FUD but there's a scandal on Tether that is waiting to explode.