5 ms·

Why would they ban it when they can tax it instead and benefit from it?

by nslzk 4y ago

Kukumber 4y ago
Because it is used to circumvent international trade sanctions, and for illegal activities (drugs, weapons and dark sexual activities) You can't tax a transaction in cryptocurrency
- mekster 4y ago
  Do people still think it's some kind of magic untraceable money? Unless all your financial activity completes within crypto transactions, you'll want to convert that to fiat one way or another and there's usually a KYC applied to it.
  - jjulius 4y ago
    The narrative that it's untraceable was pushed far and wide within popular culture around it's inception. I would expect lay people, and even HN users who aren't heavily involved in that space, to retain that perception.
- game-of-throws 4y ago
  0.5% of Bitcoin's volume is illegal activity. [1] 11%-12% of the USA's economy is illegal activity. [2] If you wanted to commit a crime or evade taxes, probably the dumbest thing you could do is record permanent evidence on a public, immutable ledger. [1]: https://ciphertrace.com/2020-year-end-cryptocurrency-crime-and-anti-money-laundering-report/ https://ciphertrace.com/2020-year-end-cryptocurrency-crime-a... > Cash—anonymous and liquid—has long served as a tool for criminals. Cryptocurrency, with its similar characteristics, may likewise struggle to ever completely shake its bad reputation, despite illicit transactions making up less than 0.5% of Bitcoin’s yearly volume in 2020. [2]: https://www.investopedia.com/articles/markets/032916/how-big-underground-economy-america.asp https://www.investopedia.com/articles/markets/032916/how-big... > Estimates vary widely, but some put the underground economy at 11% to 12% of U.S. gross domestic product (GDP).
  - Kukumber 4y ago
    That's a good point indeed, so the illegal activity is not that great of an argument It still is something that facilitates it And is the reason why some countries banned the use of cash after a certain amount Wich again validates my argument about lack of regulation, or lack of actions from governments (ban), if we follow the logic for any other kind of currencies, including local/regional ones, specially the ones that are supposed to be competitive
    - game-of-throws 4y ago
      I'm not aware of where large cash transactions are banned, but if they are surely it's because cash is largely untraceable. Meanwhile bitcoin is easily traceable, and the IRS is not afraid to crawl the blockchain to piece together what you don't tell them[1]. Putting my tinfoil hat on, I wonder if governments are helping spread this myth that crypto is untraceable because it makes it easier to catch criminals. [1]: https://www.taxlitigator.com/the-irs-confirms-its-great-eye-is-firmly-fixed-on-cryptocurrency-announcing-operation-hidden-treasure-by-evan-davis/ https://www.taxlitigator.com/the-irs-confirms-its-great-eye-...
      - necovek 4y ago
        I think most countries that are worried about traceability (of cash) would simply require proof of origin: eg. bank withdrawal even if from 20 years ago; or house sale or... whatever that provides the proof that the cash in question could have originated from a legal, taxed source.
  - twiss 4y ago
    The second link refers to the "black economy", which includes, for example, a housekeeper getting paid in cash without reporting it to tax authorities. The first link also includes "using cryptocurrency to hide financial activity, such as evading taxes or operating an unregistered MSB", but I doubt many housekeepers are using Bitcoin for that. In my opinion, it would be more interesting to compare the statistics on payments for activity that is itself illegal (regardless of whether it's taxed or not).
moralestapia 4y ago
"Why would they ban drugs if they could tax them instead and benefit from it?" Thibgs on practice get much more complex easily.
usefulcat 4y ago
The USG can print money, more or less, so it has no need of tax revenue from Bitcoin. Federal taxes exist mainly to balance out (most of) the enormous amounts spent by the federal government and, to a lesser extent, to (dis)incentivize various things.

Why would they ban it when they can tax it instead and benefit from it?

by nslzk 4y ago

Why would they ban it when they can tax it instead and benefit from it?

Because it is used to circumvent international trade sanctions, and for illegal activities (drugs, weapons and dark sexual activities) You can't tax a transaction in cryptocurrency

mekster 4y ago
Do people still think it's some kind of magic untraceable money? Unless all your financial activity completes within crypto transactions, you'll want to convert that to fiat one way or another and there's usually a KYC applied to it.
- jjulius 4y ago
  The narrative that it's untraceable was pushed far and wide within popular culture around it's inception. I would expect lay people, and even HN users who aren't heavily involved in that space, to retain that perception.
game-of-throws 4y ago
0.5% of Bitcoin's volume is illegal activity. [1] 11%-12% of the USA's economy is illegal activity. [2] If you wanted to commit a crime or evade taxes, probably the dumbest thing you could do is record permanent evidence on a public, immutable ledger. [1]: https://ciphertrace.com/2020-year-end-cryptocurrency-crime-and-anti-money-laundering-report/ https://ciphertrace.com/2020-year-end-cryptocurrency-crime-a... > Cash—anonymous and liquid—has long served as a tool for criminals. Cryptocurrency, with its similar characteristics, may likewise struggle to ever completely shake its bad reputation, despite illicit transactions making up less than 0.5% of Bitcoin’s yearly volume in 2020. [2]: https://www.investopedia.com/articles/markets/032916/how-big-underground-economy-america.asp https://www.investopedia.com/articles/markets/032916/how-big... > Estimates vary widely, but some put the underground economy at 11% to 12% of U.S. gross domestic product (GDP).
- Kukumber 4y ago
  That's a good point indeed, so the illegal activity is not that great of an argument It still is something that facilitates it And is the reason why some countries banned the use of cash after a certain amount Wich again validates my argument about lack of regulation, or lack of actions from governments (ban), if we follow the logic for any other kind of currencies, including local/regional ones, specially the ones that are supposed to be competitive
  - game-of-throws 4y ago
    I'm not aware of where large cash transactions are banned, but if they are surely it's because cash is largely untraceable. Meanwhile bitcoin is easily traceable, and the IRS is not afraid to crawl the blockchain to piece together what you don't tell them[1]. Putting my tinfoil hat on, I wonder if governments are helping spread this myth that crypto is untraceable because it makes it easier to catch criminals. [1]: https://www.taxlitigator.com/the-irs-confirms-its-great-eye-is-firmly-fixed-on-cryptocurrency-announcing-operation-hidden-treasure-by-evan-davis/ https://www.taxlitigator.com/the-irs-confirms-its-great-eye-...
    - necovek 4y ago
      I think most countries that are worried about traceability (of cash) would simply require proof of origin: eg. bank withdrawal even if from 20 years ago; or house sale or... whatever that provides the proof that the cash in question could have originated from a legal, taxed source.
- twiss 4y ago
  The second link refers to the "black economy", which includes, for example, a housekeeper getting paid in cash without reporting it to tax authorities. The first link also includes "using cryptocurrency to hide financial activity, such as evading taxes or operating an unregistered MSB", but I doubt many housekeepers are using Bitcoin for that. In my opinion, it would be more interesting to compare the statistics on payments for activity that is itself illegal (regardless of whether it's taxed or not).

moralestapia 4y ago

"Why would they ban drugs if they could tax them instead and benefit from it?" Thibgs on practice get much more complex easily.

usefulcat 4y ago

The USG can print money, more or less, so it has no need of tax revenue from Bitcoin. Federal taxes exist mainly to balance out (most of) the enormous amounts spent by the federal government and, to a lesser extent, to (dis)incentivize various things.