Going offshore to escape the CFTC

Broker Discussion Forex Brokers
7119

Unforuntately I guess a lot of people even in the crypto community did not understand the implications of what FinCen has planned. They are threatening the immutability and censorship capabilities of crypto. It goes beyond bitmex and is much more sinister. They are implying they want side chain development addons for crypto that institute kyc measures and forced licensure on crypto brokers as though they were banks, to be able to black list unauditible unpassable sources, political enemies, or whoever, for whatever arbitrary reason, and definitely to block withdraws. They canā€™t theorectically block deposits, but they can easily design website functions to hide and deny deposit addresses, by simply identifying and blacklisting people, forcing people into an unbanked, unā€™registeredā€™ unapproved grey area, this would lead to people being pushed away and turned away from bitpay like commerce, etc. This is Electronic Freedom Foundation level international human rights level stuff they are engaging in. Crypto was made to escape this kind of stuff.

The specific change they are proposing is commanding that all these money transmitters know not who is using the exchange but who owns the deposit address that funds from the exchange are being sent to, itā€™s the travel rule from BSA. Now bitpay would need to know who is sending bitcoin to something - itā€™s the implication of knowing who is spending i.e., it isnt p2p cash anymore. Not to mention the unbanked global south who do not have proper identity papers, ā€¦venuzuelans have been able to transmit bitcoin to surviveā€¦this is just a work around for abusive sanctions disguised as BSA stuff I guarentee you

7120

I think a lot of praise is given to blockchain technology when discussing cryptocurrency without giving much thought beyond what it can really offer and what it could mean for regular people if it were allowed to evolve in the way that it was intended, with full autonomy. The very creed and culture of cryptocurrency is being challenged as lawmakers are setting out to undermine its very nature by controlling it. The issue absolutely goes beyond simple freedoms and privacy rights.

Governments and corporations will use security and criminal deterrence as justification for a very wide range of unspoken solutions that will ultimately give them the control that they need to keep the current systems in place that favor the minority. The reasoning is not difficult to understand for anyone that truly sees the value that cryptocurrency can offer and the impact that it could have on the current financial systems.

The reaction that we are seeing was predictable. The people behind the people that are proposing these new policies know exactly what they are doing. If history has taught us anything, we can expect that the changes will occur over time, and in a subtle way, so as to not attract too much attention or cause people to think too much about them so that when the time comes that people actually wake up and realize what has actually happened, it will be too late to solicit any real change.

What we allow to happen in these early stages will define the future of cryptocurrency. People should not be too quick to accept the idea that this is all for the sake of security and crime prevention. There are solutions already in place for those things. My hope would be that people will care enough to educate themselves so that they may be better-equipped to challenge any questionable proposals that perpetuate the problems that we currently face. Butā€¦I suspect that ignorance and apathy will win in the end, as it usually does.

It does not help that the lawmakers that are being persuaded to formulate effective legislation are being advised by the very same people that likely value the current systems that are already in place. Lawmakers need to be properly educated and hear all arguments, from all sides, so that they can make informed decisions.

Let us consider, for a moment, the argument for money laundering. How is requiring KYC at the exchange or wallet level going to solve this problem? There is absolutely nothing that you can do to stop people from making private, untraceable, physical exchanges without being physically present. If someone wants to exchange crypto for fiat, or vice versa, they can do so, whether useless KYC legislation exists or not. Furthermore, there is nothing to stop someone from transferring money out to another wallet, converting funds to an untraceable cryptocurrency, then back to a totally different wallet etcā€¦ Such newly-proposed KYC legislation does nothing except burden non-criminals, invade our privacy and extend the already, long-armed reach of US regulatory bodies. If criminals want to break the law, they will continue to do so. It used to be that criminals could simply walk into a casino and drop cash down for chips and then turn around and cash them out for clean money, which would be a lot simpler than dealing with crypto. Not sure if things have changed with that, but one would think so by now.

Having KYC requirements at the banking level makes sense, and it works. Having such requirements at the exchange level (assuming non-fiat exchange) or wallet level is nonsensical and likely serves some unspoken agenda. If you want to combat laundering, then target fiat-to-crypto or crypto-to-fiat exchanges and transfers - be that at the banking level, via sites like CoinBase, localbitcoins, craigslist or an oddball exchange like Bitfinex etcā€¦
A point worth mentioning here, is that all of the aforementioned, with the exception of peer-to-peer solutions such as localbitcoins and craigslist, already have KYC requirements in place. So we should ask ourselves, who really benefits from this newly-proposed legislation and what are the real reasons behind it?

1 Like
7121

The crux of Crypto is that it eliminates the 3rd party in a transaction.
Complete anonymity is not required and I would argue that its not even desirable, because of the few who use it to cover truly heinous activity. Far better to have complete transparency.

Let everyone see ALL money movements, especially those of people in power.

One principle of effective law enforcement is to serve the people. The peopleā€™s support is key. We have some laws that are both inhibiting trading and technology, and resulting in innovation and money going overseas. This is counterproductive.
Go after terrorists and human traffickers.
And let people trade and innovators innovate.
Encourage commerce.

For all this to work properly a transparent and accountable government is required.

Ideally, we shouldnā€™t need anonymity.

Thanks all for your contributions. The topic is very interesting and I think it is very applicable to our predicament.

1 Like
7122

Seeing all transfers is already possible.

I cannot speak for everyone, however, some people value their privacy and free will to do as they choose with their own money. Not everyone that feels this way is trying to hide something.

There is real value in having the choice of anonymity, especially in a world where governments spy on their own people, with little or no oversight, and where everything is tracked.

Imagine all of your credit card purchases being available to law enforcement without a warrant. What makes cryptocurrency any different? If providing our wallet address and identification will become a requirement, regardless of criminal history or background, then not only would all of our crypto-based purchases and investments be exposed and no longer private, but such requirements may create more opportunities for identity theft as hackers continue to target crypto exchanges and other sites.

And what happens when criminals get a hold of that data? What will stop them from using your identity to break the law? And how will you be able to prove your innocence? Crypto wallets are hacked all of the time. What if your wallet gets hacked and someone uses your cryptocurrency to purchase illegal items on the dark web. Do you think that law enforcement will believe that you did not just transfer that cryptocurrency to another wallet before making your purchase in an attempt to hide your tracks? Because your wallet is tied to you, personally, this creates a real problem.

All KYC systems that I have seen are digital and handled remotely. They can be easily faked since there are no good ways to verify the owner of the identification documents. We have no control over how that data is transferred or stored.

Lawmakers need to be aware of these things before passing potentially, irresponsible legislation. This does not even touch on other, possible issues that might arise from such efforts.

7123

Some good points hereā€¦ Anonymity has value. Further, anonymity becomes more valuable the more corrupt the powers that be become.
My argument is for the ideal. I would much rather live in an open society with good governance than have to operate in the shadows out of necessity. Tech is making the world less private. True privacy is largely a thing of the past. In this new high tech world, I would rather see a move towards universal transparency than consolidated unchecked power or anarchy (which is unsustainable anyway).

Posting all information publicly is not always required for transparency. Warrants are required for certain info, etc. Effective checks and balances need to be in place.

We can see transactions on the block chain. The identities associated with specific wallets donā€™t need to be public knowledge; although, I am OK with exchanges having to tie identities to wallets. There are good reasons that authorities need to know about large money movements. They just need to let the rest of us be and not abuse the power. It is a balancing act. I think some level of universal transparency is our best outcome if it can be maintained.

7124

We will never see a truly transparent and accountable government. As privacy becomes less-commonplace, it will likely become more valuable and should not be taken for granted.

Regarding KYC requirements, pairing wallets with identifiable persons and newly-proposed legislation etc., I see no reason to comment on this specific topic any further unless I see some tangible evidence that these things are being considered or are actually happening.

At this point, I can only speculate about these matters because I have not taken the time to properly research and confirm any of it. Nonetheless, it is always good to discuss these things and to consider all perspectives and possibilities so that we are better-prepared for the inevitable.

7125

unfortunately I would say itā€™s rather tangible, although buried in 30 pages of FinCen double speak. Itā€™s what would de facto be required to identify a random wallet. In any case they are actually fairly explicit in their point

https://www.fincen.gov/sites/default/files/2019-05/FinCEN%20Guidance%20CVC%20FINAL%20508.pdf

7126

Right now Iā€™m pouring through the law on Elligible contract participant looking for a loophole. I desperately need to set up foreign structures and bank accounts in those foreing structures that will allow me to operate retirement accounts and regular corporate brokerage accounts, particularly on kraken to access the 50x leverage futures. Itā€™s getting dour. I canā€™t let them rob the future of crypto from me. Iā€™m not sure how long the anonymous exchanges like bitmex or others will be allowed. Today CZ said the decentralized exchange binance just released is geoblocking america and 30 other countries. Itā€™s complete madness its out of control.

These laws related to the CFTC ECP are diabolically complex, and almost solely seemingly crafted against the non affluent and non institutional. They even go so far as to exempt floor trader for foreign registered entity if its brick building. They clearly hate what we are, self employed digital nomads.

I am afraid Iā€™m going to way up one day with nothing left to trade but American commodity exchanges. Frankly I donā€™t want to be run out of my own damn homeland. I donā€™t want to live in Europe all year long.

I would strongly consider anyone here start learning how to set up a foreign entity that can trade any foreign broker.

Play the devils advocate. What if bitcoin really does go to 100,000 or 300,000, what if some of these ICOā€™s go mental again. Do you appreciate being barred out of that?

Iā€™m even considering doing this in a retirement account, taking the distribution penalty, not liquidating the bitcoin, but only to pay the distribution, and borrowing against the remaining at least on some of it.

Crude oil is very profitble on some of these offshores. I have methods to do it, but I hate the hours. It is not as profitble as bitcoin on a good day. And forex wellā€¦Iā€™ve become spoiled on bitcoin, lets just leave it at thatā€¦

7127

Just found this site. Only glanced through it, but it looks VERY interesting on the surface. If anyone knows anything about it, please share. I would be interested to know what kind of volume they see with their crypto pairs. Being able to trade EOS at 100x seems insane to me! EOS can move 8% in less than 30 minutes! Evidently, no KYC required.

7128

I also read that Binance margin trading is now available for about 5 assetsā€¦at a measly 2x haha.

7129

Theres better ones than bitmex and i think primexbt might not be legit but im not positive. I wont even mention the good ones Iā€™m so afraid of bringing heat on it. Although its pretty much a google away. And I learned about Haasbot, which would make crypto that much more worthwhile.

7130

so I think that is the take home message, the only way to access the global bitcoin and forex derivative market and ico investment market legally, with tax compliance, as an american resident, through sole employment, is through a self directed retirement account, preferably a 401k ā€”>then you use Roll Over Business startup to fund a side business by selling shares to the 401k and you live off the new business by trading other stuff.

thanks uncle sam, I feel so special

hereā€™s a very careful long brutal legalese article on Frank and Dodd, this is what itā€™s about. CFTC and SEC Adopt Final Rules Further Defining ā€œSwap Dealer,ā€ ā€œMajor Swap Participantā€ and ā€œEligible Contract Participantā€ | Katten Muchin Rosenman LLP

7131

do anybody know the pip value and lot size for bitcoin or any other crypto?

7132

If you look at the specification of the asset (assuming MT5), you will see that the contract size may vary. For BTC, the contract size is 1. Which means that one contract of BTC is equal to 1 BTC. However, the commission is based off of 100K worth of the asset. So, even though LTCā€™s contract size is 1, and the value of that contract may only be $112 (USD equivalent), you do not pay full commission on every LTC that you trade. At least, this is how it was explained to me by Coinexx support.

It can be confusing, but you can see everything once you start trading it. Just open a demo account if youā€™re unsure.

1 Like
7133

CRYPTO TRADING TAX COMPLIANCE

So, in 100 words or less, when using Coinbase Pro, how
do you track all of your trades to generate an IRS
compliant Tax Return on your capital gains and losses?

I donā€™t hold Cryptos (yet) but just use them as a money
transfer mechanism but, what if I wanted to trade them
as well?

hyperscalper

7134

@jack112forexdude

Offshore entities are useless without utilizing a non us citizen nominee director & signatory (huge risk)
Dual citizenship is useless (Passports now show original place of birth)

To completely escape the CFTC, you only have 3 optionsā€¦

  1. Become a US expat w/ offshore residency in a large financial center with local employment (domestic banks & brokers may open accounts).
  2. Pay taxes on your assets, renounce your US citizenship & move out the country
  3. Obtain >5M in assets so that youā€™re an ECP Qualified US Citizen exempt from regulations
7135

the only way now is to renounce your US citizenship and never come back because the U.S. goverment now tax you 10yrs after you renounce

7136

-I would not say that dual citizenship is useless. After all, if you can prove that you are a citizen of a non-US country, then that may help you to circumvent or satisfy any KYC requirements that have been put into place by the broker or the exchange, and not all KYC requirements include a passport as a form of identification. Additionally, having citizenship can eliminate a lot of the hurdles involved with residency, visas and permits (your option #1). I am no accountant, but there may also be foreign-earned income exclusions or tax credits that may be applicable in such cases of permanent residence in a non-US country, depending on the situation, which is a lot easier to do and maintain as a citizen of that foreign country.

So long as offshore brokers and exchanges continue to allow US citizens (either knowingly or not), we shall be able to invest our money without the added limitations that have been put into place by the CFTC. If KYC becomes a mandatory requirement everywhere (unlikely), then that might seriously limit our options.

7137

And if you step >30 days back in the US at any point in the next 10 years your taxed as a US citizen on world wide income again lol. However youā€™re talking IRS + CFTCā€¦ the 3 methods I mentioned would allow you to potentially open UK/EU/AUS brokerage accounts, which are pretty much impossible for US citizens now.

1 Like
7138

I was really referring to useless for opening offshore bank accounts. Alot of brokers are perfectly fine with a US citizen as IBC director & ultimate beneficiary, the massive problem is banking. If you were born in the US, the bank will see your original place of birth on your second passport and list you as an American until you provide them proof youā€™ve renounced your citizenship, which then slams the door in your face due to FATCA.