Most people probably think when they deposit money into a bank that they own the money. This is interesting to note because the public sentiment does not match up with reality. This is also particularly interesting because a lot of people in crypto are probably intending to "cash out" without realizing that when they do they are giving the ownership of their wealth to the bank. It is possible for instance to lose access to the money in your bank account under certain specific circumstances.
So remember the following:
Once you cash out your crypto and withdraw into a bank account the money legally is owned by the bank and not the account holder.
Statistically speaking, under most conditions and circumstances the owner of the account has control over the funds even if they do not legally own the funds.
A personal bank account is not effective asset protection from a legal standpoint.
These will be important to remember for the US persons who decide to take profit in the current and upcoming bull run of Ethereum. It is also important to note that it will be a taxable event when you trade as well as when you withdraw if you don't trade. If you withdraw for instance from Coinbase then expect at some point Coinbase to alert you to the fact that you have to pay taxes. The exact strategy for how to go about this is something only an accountant can properly answer but the obvious point is the more crypto you spend (whether for goods and services or crypto to crypto) the more taxable events you generate.
Short term capital gains taxes in places like California are almost 50% and so it is borderline crazy to day trade crypto in California. A person might think they are getting some sort of big win with instant millionaire status only to find out they owe close to 50% in taxes due to federal and local capital gains taxes (you get taxed twice in most instances). Strategically speaking, for people in certain states under certain laws it may in fact make more sense to buy and hoard. If you do not spend any crypto on anything and simply hold it then you reduce the risk of IRS troubles and the risk of bank troubles. Risk management strategies in my opinion become increasingly important as the value (and price) of cryptocurrency increases.
The above post is not legal or financial advice. Speak with an accountant.
References
https://www.forbes.com/sites/robertwood/2017/08/31/californias-13-3-tax-on-capital-gains-inspires-move-then-sell-tactics/#68c8980a2097
http://www.publications.parliament.uk/pa/cm201011/cmhansrd/cm100915/debtext/100915-0002.htm
https://www.pbs.org/newshour/economy/is-your-money-safe-at-the-bank-an-economist-says-no-and-withdraws-his
nice post
Follow me for more
very interesting! something to think about
I am seek of Crypters, people of crypto world, not use a decentralized exchanges like BitShares. No IRS of that world can trace you on BitShares as long they can't connect your account to your person.
For Opening account on BitShares, you need only anonymous email account (aka google, yahoo ...) to verify account. You can own multiple accounts and nobody care.
I use only BitShares. I'm really limited in number of coins but my funds are only mine.
I write TA articles and posts, start initiative Upvote Myself no More and series For Better Steemit#1, #2, #3, #4. Writing series TFDSRE, stuff about new way of technical analysis: #1, #2, #3.
Check my blog an meet you in my comments.
Hi there!
So true yet many people seem to ignore the tax man.
Capital gains tax here in the UK is 20% so guys an gals please consult your accountant before making any significant transfers to your bank account.
Cheers!