Couldn't someone create a 'Credits' card that converts crypto to 'Credits' and get the top 100 stores on board, through some form of incentivisation (i.e no processing fees, like there are with CC and Debit cards) therefore bypassing Fiat, but do it in the form of a 'Gift Card'?
It seems you can bypass some regulations by doing this. How long would it take until the regulatory board starts banging down your door.
At least here in the US, retailers already do better than this with their closed-loop (merchant-specific) gift cards: you pay them an activation fee to get the card and they make interest on the money until it's spent.
That also has its own unique problems - if a retailer goes into bankruptcy, the gift cards are likely to be worthless (they're considered "unsecured debt"). Buying gift cards from a brand-new startup would be taking considerable risk.
Then there's the IT integration hassles, since existing closed-loop cards are coded into their POS etc. Adding "Credits" is going to take additional development - why are retailers going to spend money to do that?
The other option would be an open-network style card, but those are typically issued (again, in the US) by companies like MasterCard and Visa & carry the usual processing fees.
Since the merchants ultimately want to be paid in USD (or other local currencies, but we'll just say USD for simplicity), you could start a company which takes in USD and gives back a one-to-one token for USD, which can then be either traded back and forth for crypto and associated with your Credits cards. Since this USD token - call it a "Tether?" - is 100% backed by USD, associating with a CC is basically just another debit card with a weird backend at the bank that holds the cash.
Critically, "Tether" and the dollars that back it would have to be held in a transparent, auditable manner by the company who of course would comply with all regulations. Otherwise, no US bank or major retailer would touch them.
> The fee would be paid at the point of converting your crypto to the 'Credits'(which users would happily pay, they already do when converting to Fiat)
These fees are going to have to be higher than normal conversion fees, if you want to fund the credits operation - someone is going to have to pay for -
Alterations to the PoS software to accept credits
Server infrastructure which can authorise the transactions
Helpdesk staff to help out the shop staff when they get confused/stuck/whatever
”In the U.S., Coinbase also partnered with Shift for a traditional Visa card. But many European cryptocurrency companies who provided Visa cards had to go back to the drawing board because Visa stopped working Wave Crest Holding — Wave Crest Holding was the card issuer for all European cryptocurrency cards.”
A proper crypto backed Visa or Mastercard debit card would be the thing. Large companies are hesitant to get involved, because these are also great for money laundering. Just like the gift cards.
Oh yes Dollars, how could I forget! You forgot to mention the other upsides; they are subject to taxes when converting from crypto, you can literally have them lose value in your pocket via deflationary monetary policy, the work only with the confines of a nations borders, the list goes on and on!
> the work only with the confines of a nations borders
Dollars are accepted pretty much anywhere.
I always find it ironic that Americans worry about the value of their currency when it's the currency that other countries turn to when theirs has collapsed.
> they are subject to taxes when converting from crypto
Using a Bitcoin gift card to purchase goods is the same as selling it for cash.
> you can literally have them lose value in your pocket via deflationary monetary policy
Deflation means your money gains value doing nothing. The dollar is inflationary. It loses a little bit of value if it sits around doing nothing. (If you have lots of money losing money to inflation, you're hiding illegally-obtained currency or doing something stupid.)
Moreover, this is an odd complaint to make of the dollar relative to cryptocurrencies, which have a habit of suddenly losing lots of value.
> the work only with the confines of a nations borders
Dollars are relatively internationalized. And again, an odd complaint to make of the dollar relative to cryptocurrencies.
Disclaimer: I am neither a lawyer nor a CPA. This is not legal nor tax advice.
> Deflation means your money gains value doing nothing. You're criticizing an aspect of inflationary monetary policy.
What a surprise, the person railing against fiat currency and trying to reinvent credit cards "but with bitcoin, and without fees!" has no idea what they're talking about.
And I think you only need that disclaimer if you are a lawyer or CPA and what you're saying could reasonably be construed as legal or tax advice.
> they are subject to taxes when converting from crypto
Being subject to taxes is a byproduct of the transaction, not the currency you use. You don't pay different tax rates for a transaction in Euro compared to the same transaction in USD.
I'm sure what you mean isn't that BTC makes it easier to avoid paying taxes, right?
Get a grip, Cryptos can and have lost 20% of their value overnight. Compared to the value cash could lose over a year of inflation, it's not even close. Not a great argument.
It is interesting that you raised that point because "dollars" are Federal Reserve Notes, which, in turn, are debt instruments that fund some of the most unspeakably awful people who commit the most unspeakable acts. It funds the MIC, the war machine, and shitty politicians like Chuck Schumer, Nancy Pelosi, and establishment Republicans.
Interestingly, the fight to eliminate the power structure and restore the US to "by and for the people" is being resisted by idiots who have been conditioned that Trump is a racist, misogynist hatemonger who can't do anything useful for humanity. Meanwhile, the new Administration is working hard to put things right (or right-er) it's just a very hard job with many setbacks.
Yes they are backed by the U.S. Government, the most powerful organization in the history of world civilization. They are a representation of a claim on wealth by the entity that holds a monopoly on the legal use of violence to compel people to accept said currency as a medium of exchange.
So, like, pretty much what I am looking for when I need to buy stuff.
> It seems you can bypass some regulations by doing this.
Which regulations do you think it sidesteps? Because that seems to just make the scheme a money transfer system subject to all the usual AML regulations.
> How long would it take until the regulatory board starts banging down your door.
"It seems you can bypass some regulations by doing this."
Why would you think that? They're not gonna go, "Ooooo, you got us. You did the exact thing that we're regulating, but you called it a different name. Dang it."
"Gift cards aren’t as convenient as receiving money on your bank account or a debit card. But they’re a great way to avoid telling your bank that you made money by speculating on cryptocurrencies. Many banks directly report data on their users to local tax authorities. But don’t forget that Coinbase can track all your withdrawal events and notify tax authorities too."
So this "journalist" is telling people it's a great idea to evade tax... hmmmm...
Maybe...but it sounds like the "warnings" that grape juice manufacturers placed on their products during Prohibition, to prevent turning them into wine accidentally by letting them ferment.
That paragraph might be better written:"You might think that gift cards could be a good way to avoid financial disclosure, but in practice, Coinbase is most likely beholden to, and compliant with, all of the same disclosure laws."
> But don’t forget that Coinbase can track all your withdrawal events and notify tax authorities too.
Seems like they're warning you that while it might seem like a good way to avoid taxes, Coinbase has everything necessary to screw you and is willing to share it should you "forget" to report the income.
> "Gift cards aren’t as convenient as receiving money on your bank account or a debit card. But they’re a great way to avoid telling your bank that you made money by speculating on cryptocurrencies. Many banks directly report data on their users to local tax authorities. But don’t forget that Coinbase can track all your withdrawal events and notify tax authorities too."
Sigh. Always comes down to tax evasion or illegal transactions.
Not only tax evasion. Stupid tax evasion. Tax evasion that leaves a screaming paper trail. None of this is being enforced right now. But in a downturn? Particularly if the offender has assets? Enormously stupid way to do an already stupidly-risky thing.
> Gift cards aren’t as convenient as receiving money on your bank account or a debit card. But they’re a great way to avoid telling your bank that you made money by speculating on cryptocurrencies. Many banks directly report data on their users to local tax authorities. But don’t forget that Coinbase can track all your withdrawal events and notify tax authorities too.
Does TechCrunch have any actual editorial review process or do “journalists” publish whatever tax evasion / money laundering 101 instructional article they want?
49 comments
[ 4.1 ms ] story [ 142 ms ] threadIt seems you can bypass some regulations by doing this. How long would it take until the regulatory board starts banging down your door.
Why would they do this?
>through some form of incentivisation (i.e no processing fees, like there are with CC and Debit cards)
The user pays processing fees upfront with their cryptocurrency?
Because someone still has to pay the fees for blockchain transactions, and the infrastructure pieces this scheme will need.
Your not using the blockchain anymore when you buy something with 'Credits', just as you aren't using the blockchain when you;
convert crypto to fiat -> use fiat in a shop.
That also has its own unique problems - if a retailer goes into bankruptcy, the gift cards are likely to be worthless (they're considered "unsecured debt"). Buying gift cards from a brand-new startup would be taking considerable risk.
Then there's the IT integration hassles, since existing closed-loop cards are coded into their POS etc. Adding "Credits" is going to take additional development - why are retailers going to spend money to do that?
The other option would be an open-network style card, but those are typically issued (again, in the US) by companies like MasterCard and Visa & carry the usual processing fees.
These fees are going to have to be higher than normal conversion fees, if you want to fund the credits operation - someone is going to have to pay for -
Alterations to the PoS software to accept credits Server infrastructure which can authorise the transactions Helpdesk staff to help out the shop staff when they get confused/stuck/whatever
A proper crypto backed Visa or Mastercard debit card would be the thing. Large companies are hesitant to get involved, because these are also great for money laundering. Just like the gift cards.
Dollars are accepted pretty much anywhere.
I always find it ironic that Americans worry about the value of their currency when it's the currency that other countries turn to when theirs has collapsed.
Using a Bitcoin gift card to purchase goods is the same as selling it for cash.
> you can literally have them lose value in your pocket via deflationary monetary policy
Deflation means your money gains value doing nothing. The dollar is inflationary. It loses a little bit of value if it sits around doing nothing. (If you have lots of money losing money to inflation, you're hiding illegally-obtained currency or doing something stupid.)
Moreover, this is an odd complaint to make of the dollar relative to cryptocurrencies, which have a habit of suddenly losing lots of value.
> the work only with the confines of a nations borders
Dollars are relatively internationalized. And again, an odd complaint to make of the dollar relative to cryptocurrencies.
Disclaimer: I am neither a lawyer nor a CPA. This is not legal nor tax advice.
What a surprise, the person railing against fiat currency and trying to reinvent credit cards "but with bitcoin, and without fees!" has no idea what they're talking about.
And I think you only need that disclaimer if you are a lawyer or CPA and what you're saying could reasonably be construed as legal or tax advice.
Being subject to taxes is a byproduct of the transaction, not the currency you use. You don't pay different tax rates for a transaction in Euro compared to the same transaction in USD.
I'm sure what you mean isn't that BTC makes it easier to avoid paying taxes, right?
Interestingly, the fight to eliminate the power structure and restore the US to "by and for the people" is being resisted by idiots who have been conditioned that Trump is a racist, misogynist hatemonger who can't do anything useful for humanity. Meanwhile, the new Administration is working hard to put things right (or right-er) it's just a very hard job with many setbacks.
So, like, pretty much what I am looking for when I need to buy stuff.
Which regulations do you think it sidesteps? Because that seems to just make the scheme a money transfer system subject to all the usual AML regulations.
> How long would it take until the regulatory board starts banging down your door.
Not long at all.
Why would you think that? They're not gonna go, "Ooooo, you got us. You did the exact thing that we're regulating, but you called it a different name. Dang it."
So this "journalist" is telling people it's a great idea to evade tax... hmmmm...
Seems like they're warning you that while it might seem like a good way to avoid taxes, Coinbase has everything necessary to screw you and is willing to share it should you "forget" to report the income.
Sigh. Always comes down to tax evasion or illegal transactions.
Not only tax evasion. Stupid tax evasion. Tax evasion that leaves a screaming paper trail. None of this is being enforced right now. But in a downturn? Particularly if the offender has assets? Enormously stupid way to do an already stupidly-risky thing.
You can buy until $ 2000 daily.
Does TechCrunch have any actual editorial review process or do “journalists” publish whatever tax evasion / money laundering 101 instructional article they want?