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Barring value judgements about the subject, there are some large chronology and fact checking problems with this post. The federal scrutiny of Bitcoin happened

Barring value judgements about the subject, there are some large chronology and fact checking problems with this post. The federal scrutiny of Bitcoin happened a long time ago now. The China crackdown was this year. The US agencies mentioned all started examining bitcoin in 2012 at the very latest, and had a decent grip by the next year. Left off the list is the agency with the most impactful jurisdiction- the DHS- who essentially "signed off" on the "legality" of Bitcoin in 2013, specifically citing the ease of tracing bitcoin transactions. The IRS gave its guidance on bitcoin (and classed it as property for taxation purposes) in 2014. FinCen was not particularly concerned at this time, according to someone at FinCen at the time. Cooperation between compliance specialists (like Promontory) and major investors and the federal government (for KYC and AML) hit full steam by end 2013, by necessity. The FBI seizes assets suspected of being used in the commission of federal crimes, and bitcoin is simply another asset for them to seize, which the Justice Department has done successfully for a decade now. One could argue that bitcoin was able to go to the moon because of these decisions, actions, and verdicts. Sources: people who worked in these agencies or organizations at the time and the publicly available information at the time that it was disseminated.

Animats 5y ago
2018 was the year the US SEC really cracked down on ICOs. First a few of the totally fraudulent ones.[1] Then, anything that looked like a security offering.[2] The IRS has been gradually upping the pressure. Form 1040 for 2020 included, for the first time on the main form, the question "At any time during 2020, did you sell, receive, send, exchange or otherwise acquire any financial interest in any virtual currency?" The IRS has access to Know Your Customer data from many crypto exchanges, so, anyone who checks "No" and has a crypto exchange account will get attention. Here's a history of the IRS slowly tightening its grip on cryptocurrencies.[3] [1] https://www.sec.gov/news/press-release/2018-53 https://www.sec.gov/news/press-release/2018-53 [2] https://finance.yahoo.com/news/sec-brings-ico-crackdown-open-132238303.html https://finance.yahoo.com/news/sec-brings-ico-crackdown-open... [3] https://hub.accointing.com/our-crypto-platform/report-taxes/part-3-a-guide-to-irs-history-with-cryptocurrencies https://hub.accointing.com/our-crypto-platform/report-taxes/...
- digitailor 5y ago
  Right, I understand that can appear to be tightening, but the IRS guidance is exactly the same since 2014, as are the penalties. They're now more actively alerting US taxpayers they need to pay taxes on their "virtual currencies." But the US taxpayer has always had that obligation, and the IRS is now starting to more visibly enforce it. They've been doing so less visibly as well. With so much more digital asset economic activity, there's that much more taxation, and that much more enforcement. The code is the same. American crypto exchanges were actually reporting predating that announcement; they had to in order to not get shut down. Thoughtful people knew that certain regulation would have to be met from the beginning, but that memo wasn't universal and there's no one who goes door to door with the facts for hungry home speculators. There's likely to be a continual wave of retroactive enforcement for some time. That's why most sincere people in the space have been paying any required taxes generated by their activity starting for the year 2015 at the latest. Incidentally, bitcoin hasn't been considered a security by the IRS yet, but the infrastructure bill that just passed has a whole sea change of new regulation for the space. I don't feel I've been informed well enough yet to comment much regarding macro implications. But there is something in there that could effect the latest buzzwords to go media viral: NFTs. Securities-related Know Your Counterparty and Anti-Money Laundering regulations that will be in effect starting in 2023 may apply to NFT sales, for any seller. That could have a real impact. You would need the EIN or social security number of your buyer. We could call this tightening or a crackdown, but I think it also might be fair to call it reigning things in to prevailing standards. I don't really know. All this revolves around interesting questions about how the standards continue to be established for what constitutes a digital security vs digital property/currency. As to the ICOs crackdown, it was nice to see regulators actually take real action on straightforward and often inept securities fraud. They were enabled by capability advances that weren't as feasible with bitcoin alone. They were old grifts cycled around again for a round of digital "innovation," so they were nipped in the bud pretty quickly. These kinds of fraud will probably spring up at every stage of the digital asset technology development cycle. The noise can be a bit maddening, and I can understand your general sentiment.
  - virgilp 5y ago
    Rules don't matter. Enforced rules do. If IRS only started tightening their grip in 2020... Their statements prior to 2020 didn't have any effect, yet. I'm not saying "it's doom and gloom for crypto". I'm saying it's fair to claim things didn't fully play out yet.
codebolt 5y ago
Regardless of Bitcoin itself, it seems the US has started looking at Federal regulation of stablecoins only this year. The way it looks to me, the existence of wildcat stablecoins are an important pillar keeping the crypto economy afloat. Just this week Tether was seen printing billions again, just as Bitcoin started going south.
- Animats 5y ago
  Tether has a lot of people worried. It's a big enough issue to have reached Cabinet level. Tether now has US$76 billion outstanding. This can't end well.

Animats 5y ago

2018 was the year the US SEC really cracked down on ICOs. First a few of the totally fraudulent ones.[1] Then, anything that looked like a security offering.[2] The IRS has been gradually upping the pressure. Form 1040 for 2020 included, for the first time on the main form, the question "At any time during 2020, did you sell, receive, send, exchange or otherwise acquire any financial interest in any virtual currency?" The IRS has access to Know Your Customer data from many crypto exchanges, so, anyone who checks "No" and has a crypto exchange account will get attention. Here's a history of the IRS slowly tightening its grip on cryptocurrencies.[3] [1] https://www.sec.gov/news/press-release/2018-53 https://www.sec.gov/news/press-release/2018-53 [2] https://finance.yahoo.com/news/sec-brings-ico-crackdown-open-132238303.html https://finance.yahoo.com/news/sec-brings-ico-crackdown-open... [3] https://hub.accointing.com/our-crypto-platform/report-taxes/part-3-a-guide-to-irs-history-with-cryptocurrencies https://hub.accointing.com/our-crypto-platform/report-taxes/...

digitailor 5y ago
Right, I understand that can appear to be tightening, but the IRS guidance is exactly the same since 2014, as are the penalties. They're now more actively alerting US taxpayers they need to pay taxes on their "virtual currencies." But the US taxpayer has always had that obligation, and the IRS is now starting to more visibly enforce it. They've been doing so less visibly as well. With so much more digital asset economic activity, there's that much more taxation, and that much more enforcement. The code is the same. American crypto exchanges were actually reporting predating that announcement; they had to in order to not get shut down. Thoughtful people knew that certain regulation would have to be met from the beginning, but that memo wasn't universal and there's no one who goes door to door with the facts for hungry home speculators. There's likely to be a continual wave of retroactive enforcement for some time. That's why most sincere people in the space have been paying any required taxes generated by their activity starting for the year 2015 at the latest. Incidentally, bitcoin hasn't been considered a security by the IRS yet, but the infrastructure bill that just passed has a whole sea change of new regulation for the space. I don't feel I've been informed well enough yet to comment much regarding macro implications. But there is something in there that could effect the latest buzzwords to go media viral: NFTs. Securities-related Know Your Counterparty and Anti-Money Laundering regulations that will be in effect starting in 2023 may apply to NFT sales, for any seller. That could have a real impact. You would need the EIN or social security number of your buyer. We could call this tightening or a crackdown, but I think it also might be fair to call it reigning things in to prevailing standards. I don't really know. All this revolves around interesting questions about how the standards continue to be established for what constitutes a digital security vs digital property/currency. As to the ICOs crackdown, it was nice to see regulators actually take real action on straightforward and often inept securities fraud. They were enabled by capability advances that weren't as feasible with bitcoin alone. They were old grifts cycled around again for a round of digital "innovation," so they were nipped in the bud pretty quickly. These kinds of fraud will probably spring up at every stage of the digital asset technology development cycle. The noise can be a bit maddening, and I can understand your general sentiment.
- virgilp 5y ago
  Rules don't matter. Enforced rules do. If IRS only started tightening their grip in 2020... Their statements prior to 2020 didn't have any effect, yet. I'm not saying "it's doom and gloom for crypto". I'm saying it's fair to claim things didn't fully play out yet.

codebolt 5y ago

Regardless of Bitcoin itself, it seems the US has started looking at Federal regulation of stablecoins only this year. The way it looks to me, the existence of wildcat stablecoins are an important pillar keeping the crypto economy afloat. Just this week Tether was seen printing billions again, just as Bitcoin started going south.

Animats 5y ago
Tether has a lot of people worried. It's a big enough issue to have reached Cabinet level. Tether now has US$76 billion outstanding. This can't end well.