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> I don't own ETH anymore, I gave it to Coinbase. You DO own the ETH. Regardless of whether you are staking it yourself, or have given it to Coinbase to stake.

by dibt 4y ago

> I don't own ETH anymore, I gave it to Coinbase. You DO own the ETH. Regardless of whether you are staking it yourself, or have given it to Coinbase to stake. Similar to how you maintain ownership of your rental property even if you allow a property management company to run it. This is true if you move your ETH from a self-custody wallet to coinbase (custodial wallet). Either way, you maintain ownership. The tokens earned are taxable as income, just as income from a paying tenant on your rental property is taxed. Also, the IRS defines crypto tokens as "property." As far as I know, there is no such distinction for bonds or loans. From https://www.irs.gov/businesses/small-businesses-self-employed/digital-assets https://www.irs.gov/businesses/small-businesses-self-employe...: "For federal tax purposes, digital assets are treated as property."

dragontamer 4y ago
> You DO own the ETH. Personal wallets cannot participate in ETH staking and you know it. The first step is to transfer your ETH to a large scale, trusted wallet, like Coinbase's wallet. What you own is an IOU from Coinbase saying they owe you the ETH at a future date. The value of this IOU is taxable of course. But the important thing is that if Coinbase goes bankrupt, it is an unsecured IOU / bond that is junior to Coinbase's other creditors. ----- Just like how depositors into Celsius "owned" IOUs saying they had BTC or ETH or USDC in Celsius... it turns out that the value of those IOUs is worthless as the bankruptcy proceedings carried forward. Customer deposits, in the USA, are junior to investment banker's bonds that funded the business to begin with.
- dibt 4y ago
  > The first step is to transfer your ETH to a large scale, trusted wallet, like Coinbase's wallet. Absolutely FALSE. I don't know how you could possibly be so confidently wrong. One of the big selling points of PoS is that you don't need mining facility/hardware. You only need 32 ETH, and the resources to run the node. NO central entity is required. From: https://ethereum.org/en/staking/#how-to-stake-your-eth https://ethereum.org/en/staking/#how-to-stake-your-eth "Solo staking on Ethereum is the gold standard for staking. It provides full participation rewards, improves the decentralization of the network, and never requires trusting anyone else with your funds." Even if you move it to Coinbase for them to do the staking, the custodial wallet is in your name. The same happens with ETH held for trading. You can move it from one exchange to another, and still not trigger a taxable event as long as you own both accounts/wallets.
  - fragmede 4y ago
    "Only". Retail price of 32 ETH is about $40k USD which seems like a lot to me.
    - dibt 4y ago
      Compared to Bitcoin mining hardware that will need to be fixed/replaced/upgraded and housed physically, it's relatively cheap. There's a technical reason explained here: https://kyrianalex.substack.com/p/why-32-eth-was-required-for-ethereums https://kyrianalex.substack.com/p/why-32-eth-was-required-fo... It can be changed. It's what was chosen at the time based on the design of the network.
    - dragontamer 4y ago
      I remember the cash number as being much higher, but I guess 32 ETH is not worth as much as it used to be a few months ago... One benefit to this crashing price. It makes these kind of set numbers easier to hit I guess.
      - zoklet-enjoyer 4y ago
        It also used to be a lot lower. I had considered taking out a $20k loan to buy 32 ETH

by dibt 4y ago

dragontamer 4y ago

> You DO own the ETH. Personal wallets cannot participate in ETH staking and you know it. The first step is to transfer your ETH to a large scale, trusted wallet, like Coinbase's wallet. What you own is an IOU from Coinbase saying they owe you the ETH at a future date. The value of this IOU is taxable of course. But the important thing is that if Coinbase goes bankrupt, it is an unsecured IOU / bond that is junior to Coinbase's other creditors. ----- Just like how depositors into Celsius "owned" IOUs saying they had BTC or ETH or USDC in Celsius... it turns out that the value of those IOUs is worthless as the bankruptcy proceedings carried forward. Customer deposits, in the USA, are junior to investment banker's bonds that funded the business to begin with.

dibt 4y ago
> The first step is to transfer your ETH to a large scale, trusted wallet, like Coinbase's wallet. Absolutely FALSE. I don't know how you could possibly be so confidently wrong. One of the big selling points of PoS is that you don't need mining facility/hardware. You only need 32 ETH, and the resources to run the node. NO central entity is required. From: https://ethereum.org/en/staking/#how-to-stake-your-eth https://ethereum.org/en/staking/#how-to-stake-your-eth "Solo staking on Ethereum is the gold standard for staking. It provides full participation rewards, improves the decentralization of the network, and never requires trusting anyone else with your funds." Even if you move it to Coinbase for them to do the staking, the custodial wallet is in your name. The same happens with ETH held for trading. You can move it from one exchange to another, and still not trigger a taxable event as long as you own both accounts/wallets.
- fragmede 4y ago
  "Only". Retail price of 32 ETH is about $40k USD which seems like a lot to me.
  - dibt 4y ago
    Compared to Bitcoin mining hardware that will need to be fixed/replaced/upgraded and housed physically, it's relatively cheap. There's a technical reason explained here: https://kyrianalex.substack.com/p/why-32-eth-was-required-for-ethereums https://kyrianalex.substack.com/p/why-32-eth-was-required-fo... It can be changed. It's what was chosen at the time based on the design of the network.
  - dragontamer 4y ago
    I remember the cash number as being much higher, but I guess 32 ETH is not worth as much as it used to be a few months ago... One benefit to this crashing price. It makes these kind of set numbers easier to hit I guess.
    - zoklet-enjoyer 4y ago
      It also used to be a lot lower. I had considered taking out a $20k loan to buy 32 ETH