Negative press we’ll have either coupling the system Maidsafe regularization as if it is decided without them.
Before any action I am in favor of a consensus between the two sides, but I fear that this will not be possible, any government or financial institution will agree to maintain user privacy, which I am more in favor of a consensus among components Maidsafe on these issues, on the other hand because it must be Maidsafe who must engage the regulariaciones?, when the other party will have no pleasure in setting their own to please Maidsafe.
I am aware that getting the law in any action is the best choice either to avoid difficulties to get better press, but I do remember that safety, privacy and freedom are not compatible with government financial centralization to which we are and these three premises under Security, Privacy and Freedom should be the most important priorities in making decisiciones.
Not to sound radical, but engage or negotiate a consensus between the parties is possibly come to a deterioration of the fundamentals of Maidsafe and this should not be condescending.
Personally, I’d forget about fiat and leave it to the centralised exchanges and not have a de-centralised fiat exchange on Maidsafe, at least anytime in the near future.
I’d restrict everything to crypto - fiat is so OLD internet. It’s like trying to incorporate (highly regulated) tally-sticks, cowry shells or beads back into the current fiat system…why?
Because this tech is a stretch for everyday citizens. All of it needs to be catered to the technologically illiterate who have everyday capital to pour into a system that could replace much of the need for old money
Hi Nick, last summer if you remember back to the talk yourself and David did at Codebase, which i had the fortune (really great presentation,Q and A) to attend…in attendance were a couple of guys that work for an Edinburgh company, they have impressive automated KYC and anti money laundering enterprise solutions, and have experience of working with Bitcoin companies…maybe they can taylor solutions, options. All the best.
Hi John, Yes I remember chatting to a couple of devs from miicard. This would be useful discussion for any exchanges using SAFE. Maybe @dallyshalla would be interested in speaking with them as I think Infinity Algorithms is a company and would need to observe relevant legislation. Thanks for passing this info on.
Yes, so when starting the decentralized exchange; I had consulted with a legal adviser; a lawyer; based on the description of what I was getting started on: a decentralized exchange without owners, and anonymous participants; the code is open source and forkable; the protocol is standardized for relaying the transactions on this exchange.
the sale of safecoins for bitcoins is unaffected by any regulations and legislation on the service level; only the users must be complying with regulations; so integrating any system to make it compliant for the people is a good thing; though on the level of bitcoin/safecoin there is not a single piece of legislation against it; except the usual capital gains taxes where they apply(if later bitcoins are converted for fiat).
Anything sold on the exchange is not the responsibility of MaidSafe, Infinity Algorithms, or even the SAFE Network; however, making the correct code to facilitate KYC for those who must observe it; that’s great, giving an identity system so that people can identify legitimate merchants is also a good thing; these will each be included; even a suite of automated contracts to facilitate commerce.
Since a bitcoin/safecoin trade will need to be an automated contract since the confirmations times differ; safex is just that; an automated contract facilitator; the services ontop of safex will all need to have their due requirements; and that will be the job of the automated contracts, and the users of those contracts to fulfill regulatory requirements.
There is yet much to do; though the first straight forward demonstration is bitcoin/safecoin;
expanding into a direct fiat/safecoin exchange will be also straightforward though time consuming; if we want liquidity immediately out the gates; best is to use bitcoins.
I think that the most frictionless way is (surprisingly) to make SAFEcoin Ripple gateway, i.e just issue and redeem IOU’s.
This is obviously fully automated process.
Then everybody willing to purchase safecoins for either cryptos or fiat will identify himself at USD/EUR/XXX gateway where all KYC is already done.
The downside to ripple is the lack of privacy; not every place on the planet requires the same regulation; ripple is not anonymous in any capacity; so it would be dangerous to outright start working with ripple; also it is not decentralized they use centralized monetary policy models;
I really don’t think it will…honest. Once you introduce Fiat the whole ball game changes. I’m not sure I’m understanding this concept at all tbh. Just to clarify, the Safex Exchange is not an Exchange, but a protocol which can expand into a direct Safecoin/Fiat Exchange? Which company/person is going to do the coding that specifically facilitates this direct fiat/Safecoin exchange?
I don’t get the protocol thing is what I mean. I understand that bitcoin and safenet are protocols and they have relevant legal defense as such - what people build on it is their responsibility, not bitcoin or Maidsafe’s. I don’t get how this has the same defense if its intended use was to trade fiat? Is the defensive argument not more similar to a Silk Road one, which could engender the same scrutiny?
I’m just asking really, as I’m not really getting it and have a number of alarms going off in my head…
Can I ask, did you specifically state to your lawyer that the exchange of fiat was involved and that your concern was meeting anti-money-laundering requirements?
Also, you pretty much lose your anonymity meeting KYC requirements, so I don’t see an alternative to Ripple, or at least something “ripple- like” (maybe a flake?) in order to bridge to fiat world.
@Al_Kafir, What do you mean by this? Do you mean that AML and KYC requirements are tied to the exchange of fiat?
This is not legal advice, but that is not the case. Virtually all AML and KYC laws of which I am aware are really only concerned with transfer of value. Value=value=value. That is Money = fungible property = anything which can be used to transfer value easily.
So for instance you could have a money laundering scheme involving low carat diamonds, barrels of oil and race horses (or sports cars). No fiat changes hands in this exchange, but it can be used to launder value and therefore would be reached by most AML laws. It is the same with KYC, to the extent that what is going on is a transfer of value then the laws will reach it.
In fact the only difference is that when you have transfers of value without using Fiat, you are also legally required to report gain or loss, depending on the fair market value of the property at the time of the purchase compared to FMV at sale. So in terms of needing to legally distance itself from the behavior of its users, a decentralized exchange has the same requirements whether Fiat is or is not involved.
I agree with everything you just said…roughly, and from what I understand. What I am saying is that if it is purely an exchange dealing in crytocurrency, (no other forms of value), then everything is OK. This is because they are more legally akin to tokens and can be freely exchanged. As you say, once you introduce the “value” of fiat, the game changes as I see it.
I’m not 100% on this and I’m just advising that I think we need to be - if we are, then fine
No, what I was trying to say is that from the perspective of the IRS and most financial institutions, cryptocurrencies are simply really fungible property.
Similar to shares in companies, or other easily fungible nonfiat instruments.
To the extent that a crypto currency has value, it is property with value. To the extent that it can be used to effect a transfer of value due to fungible characteristics, it is going to be covered by AML and KYC.
Can you point me to where the IRS states this please. So you are saying the situation is even worse? Are you sure? Surely, the taxman can only get involved once you have made a gain in the fiat currency that the govt uses to collect taxes in. You are not liable until any profits have been converted to fiat cash. Cheers
Now as a practical matter, it may be very difficult to prove what the precise value is in court and therefore to get convictions under the laws, similar to how the cash/barter economy works in the US. People use it all the time and rarely comply with the law, but so long as the markets are relatively small and illiquid the government does not waste resources pursuing it.
That is NOT the same thing as saying that the law as written does not reach those transactions.
Virtual currency is a digital representation of value that functions as a medium of exchange, a unit of account, and/or a store of value.
The specific question we have been talking about is Q-15 on page 5-6.
Q-15: Are there IRS information reporting requirements for a person who settles
payments made in virtual currency on behalf of merchants that accept virtual
currency from their customers?
A-15: Yes, if certain requirements are met. In general, a third party that contracts with
a substantial number of unrelated merchants to settle payments between the merchants
and their customers is a third party settlement organization (TPSO). A TPSO is
required to report payments made to a merchant on a Form 1099-K, Payment Card and
Third Party Network Transactions, if, for the calendar year, both (1) the number of
transactions settled for the merchant exceeds 200, and (2) the gross amount of
payments made to the merchant exceeds $20,000. When completing Boxes 1, 3, and
5a-1 on the Form 1099-K, transactions where the TPSO settles payments made with
virtual currency are aggregated with transactions where the TPSO settles payments
made with real currency to determine the total amounts to be reported in those boxes.
When determining whether the transactions are reportable, the value of the virtual
currency is the fair market value of the virtual currency in U.S. dollars on the date of
payment.
Q-6: Does a taxpayer have gain or loss upon an exchange of virtual currency for
other property?
A-6: Yes. If the fair market value of property received in exchange for virtual currency
exceeds the taxpayer’s adjusted basis of the virtual currency, the taxpayer has taxable
gain. The taxpayer has a loss if the fair market value of the property received is less
than the adjusted basis of the virtual currency. See Publication 544, Sales and Other
Dispositions of Assets, for information about the tax treatment of sales and exchanges,
such as whether a loss is deductible.
OK, I see that you have to pay tax and vat on goods/services paid for in crypto-currencies…I’m not sure how this relates to KYC applying in a crypto to crypto exchange - no goods or services or property are involved.
What am I missing here?..lol
Sorry, I should have asked can you tell me where it states you need to abide by KYC for purely crypto to crypto?
You might think this, but the tax man doesn’t! A capital gain becomes taxable at the point of conversion to anything so if you hold Safecoin and when you convert it to Bitcoin (or fluffy tigers), any gain is calculate then based on an assessment of the fiat value, no need to convert to fiat at all.