Dev Update :safe: Transcript 16th February

Well, I’m learning stuff today. Still not sure how this relates to the exchange and KYC - have I misunderstood the nature of the Exchange - is it exchanging goods? Why do only centralised exchanges dealing in fiat need/use KYC?

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.
Q-1: How is virtual currency treated for federal tax purposes?
A-1: For federal tax purposes, virtual currency is treated as property. General tax
principles applicable to property transactions apply to transactions using virtual
currency.

That is the closest that you are going to get to an answer until and unless they start suing people across the board for it. Now the IRS says that this is only intended to apply to tax treatment, but if those definitions are accepted (and courts really don’t like to say that the fundamental definitions applied by the taxman are wrong) then crypto is clearly within AML and KYC laws, just like oil and diamonds are.

And Form 1099-K is essentially an AML, anti-tax fraud device.

Agreed, the KYC Law probably won’t apply to Safexchange because there is no exchange, or at least no entity they can prosecute. They could prosecute one of us for our part in the exchange, but that’s like prosecuting a road builder because someone was speeding on it.

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So, is what you are actually saying that IF the IRS definitions for tax purposes are accepted, then at some point in the future the USA will deem purely Crypto to Crypto Exchanges as needing to abide by KYC in the USA? There is currently no requirement to do so though? I believe the definitions/regulations may differ in UK too.
Edit:
I think we can all basically agree that if we have fiat involved, then we are going to need KYC and we may need it whether fiat involved or not? I would also say the Exchange would work globally across many different legal jurisdictions, so we have to be extra on the ball with KYC and abide by the most restrictive? I just don’t see it…lol….I’d definitely leave the extra fiat headache out and say bollocks to KYC myself and take my chances.

No, what I am saying is that the literal laws on the subject can easily be interpreted to cover crypto to crypto exchanges RIGHT NOW. I suspect that the only reason that the IRS is waiting is because 1. at the end of the day, its not that big of an economy and 2. It seems like Congress is going to do something about it soon.

Historically the US Gov at least does not warn people before prosecuting them. In the e-gold and Goldmoney prosecutions, those institutions had previously gotten a specific ruling from the Treasury department that their gold-backed virtual currency was not “money” within the AML and KYC laws.

But then a couple years later, the Justice Department filed charges against them, and the court held. “Clearly, a “money transmitting service” includes not only a transmission of actual currency, but also a transmission of the value of that currency through some other medium of exchange.”
United States v. E-Gold, Ltd., 550 F. Supp. 2d 82, 94 (D.D.C. 2008)

The solution is a decentralization defense. Write software release it into the wild, and have NO links to any specific transactions on it.

Again, I’ve skimmed it and will research further but the main issue in the case involved changing fiat currency to e-gold. If the fiat wasn’t involved, then there appears to have been no case…lol…I’ll look deeper. I don’t see how any of this is going to be a concern for Safecoin or Maidsafe really, it’s a platform with a token and anonymous. We just don’t want to go attracting attention by trying to plug into the existing system - we’ve got a better system…lol
So…how’s anyone going to buy any Safecoin for fiat when Safecoin only exists on the network, can a bridge be made, if so that directly involves Maidsafe, so the Exchange has to be scrupulously squeaky clean I reckon or sod all to do with Maidsafe but sits on the Network? Any thoughts?.
My thought is it won’t work and we should buy with bitcoin,… till they’re sold out

Except that the court didn’t make the decision on the grounds that the company changed fiat to e-gold. It made the decision on the grounds that the transfer of e-gold was a transfer of value. That was the point that I’ve been trying to make all along.

The solution as I see it is to decentralize. Have a local-bitcoins style approach, where individual people are buying and selling safecoin, either for cash or for goods or services. If each farmer sells coins to the people he knows in exchange for value, then safecoin begins to filter out in a distributed way.

The granularity of the farming reward should be distributed enough to avoid any pockets of wealth that would draw the ire of regulators. (I just don’t want anyone to be confused into thinking that because they aren’t prosecuted that what they are doing is legal).

This is what I see @dallyshalla’s exchange facilitating.

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lol…OK …I’ll accept that for now…but may return…lol

So, this would be an app that sits on the network, complies with KYC and integrates some kind of Ripple payment system linked to a users bank account?

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Yes, it is great to have discussions like this if a person intended to make some kind of established business; and in this case much discussion is about those who are under the guise of US regulations;

Since safex has nothing to do with making business, rather the transmission of messages;

This type of discussion is relevant to those people who intend to run a transaction business with safex;

So, plans from Infinity Algorithms side is to provide a suite of digital contracts; which you could see demos of in the near future;

Try to perceive a drop down menu with a contract that offers the trading of safecoins for a shipping address for example; and based on your locale you will have access to various types of contracts, complete with the necessary regulatory line items such as identification, etc; so I’d ask; that before cherry picking at this exchange with limited knowledge, thanks a ton @kirkion for sharing your insights with the group; I’m glad to have known light on your background;

I’d reiterate to please wait for the implementation, then scrutinize :wink:

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Perhaps, but thats not what I was thinking.

See there is a difference between handling a transaction, providing an escrow service, and facilitating a transaction. When you handle a transaction, you take party A’s money or property, place it under your control at least enough to verify it, do the same with B’s money or property and then hand A what was B’s and B what was A’s.

But if you provide a conference room where deals take place, physical or virtual… what business of it is yours what consenting adults do in a room?

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See what I understand @dallyshalla to be talking about here is facilitating transactions, providing a virtual room, with a desk, pens, and form contracts which the parties can edit as they please.

That is NOT something that makes one party to a transaction and thus required to conform with KYC and AML laws. Doing so would be equivalent to holding the property owner who leases office space to a bank liable for the actions of the bank.

What I wanted to make clear was that this whole notion that a closed crypto system, that is a system which doesn’t directly interact with fiat, is somehow immune to the AML, KYC and tax laws is incorrect. Prosecution may be difficult, or not worth the government’s time, but that is NOT the same thing as the underlying activity being legal.

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Absolutely correct;

Exchanges of grand scale; such as NYSE, CBOT, COMEX, etc; when the digital trading platforms emerged; they had a tough time make a conformed messaging protocol so that all trading platforms could communicate to the main exchanges at ease; at first there were several possible connections through third parties; the third parties remained but a standard emerged, and it is a simple messaging protocol that stores the information for a transaction to occur;

The actual exchange of goods is regulated by the exchanges themselves; safex will facilitate the messaging;

So, safex is not making any futures; but if CBOT wanted to issue futures; they can use the standards of safex to create messages for moving futures across safe network for example; it is quite novel; I’m looking forward to the API connections for safe network; bitcoin has been connected today! expand, expand expand.

If you’re interested please read this:

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Sorry…you talking to me? I’m not a coder, explained I didn’t grasp the concept and have been asking relevant questions I believe and not knocking you …I’m hardly going to “cherry-pick” something I don’t understand, just to be critical. I also wished you luck. Nevermind, thanks for the help Kirklon…

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happy to chat!

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Thanks @Al_Kafir it has been insightful; and inspirational to disclose a lot of this information; glad to have it in plain sight; yet still

please await the implementation :slight_smile:

SAFEX has the potential to become a standard in the move to implement open cryptographically secured network transmission of financial data across the globe.

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@culexevilman :

SAFEX has the potential to become a standard in the move to implement open cryptographically secured network transmission of financial data across the globe.

OMG I had my first SAFEgasm ™.

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Not gonna hit the like button on your SAFEgasm :smile:

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Sorry, but I had to…where this fits in the jigsaw is becoming clearer to me I think.
Sounds like a condom brand name…lol

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Just to look at another crypto 2.0 project…

Etherex is a decentralized exchange that will probably launch with the genesis, so you’ll be able to trade your bitcoins.

So after Mt. Gox and other exchanges, the crytoworld is fixing problems by creating decentralized platforms
We don’t have to be longer scared that our coins are stolen and we don’t have to wait for a centralized exchange to trade our coins as well. No more “Vote for our coin to get on Cryptsy!!!” on some Bitcointalk forum. Love it!!!

http://www.reddit.com/r/ethereum/comments/2whsn2/what_will_be_the_best_way_to_obtain_ether_after/