What to know about cryptocurrency auctions and the future of Bitcoin

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D.Did you know that the US government often holds auctions for cryptocurrencies that it acquires in asset seizures? According to an article published by CNBC last August, the government had already seized more than $ 1.2 billion worth of cryptocurrencies for the year so far.

In this segment of Backstage pass, registered on December 20, Fool.com contributors Rachel Warren, Toby Bordelon, and Jason Hall discuss this phenomenon and a recent report on CNBC government cryptocurrency auctions. Additionally, they share their views on what this news means for cryptocurrency investments on a larger scale.

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Rachel Warren: But there is one of the next things they will auction. I guess that’s $ 56 million worth of cryptocurrency that the authorities confiscated as part of a Ponzi scheme case. It’s like, these are things that aren’t making the news, but they’re happening.

Apparently I was genuinely fascinated “in July the DOJ hired a San Francisco-based digital anchor as the custodian of cryptocurrency seized or confiscated in criminal proceedings. It is the first federal bank for cryptocurrencies and will help the government store and liquidate this digital property.” I think in this area we know that cryptocurrency has been an area that has been open to abuse for a while.

I think this helps not only legitimize it, but it can also protect investors. Another point I wanted to make. I saw this interesting article on TechCrunch. Sometimes we know when there have been cryptographic experts who have come before lawmakers and tried to explain how it works and you see on C-Span, the bewildered look on some of these guys’ faces.

We want to have laws that weren’t written 100 years ago, when there were no cryptocurrencies around. You want laws that will apply specifically to digital currency. This article was talking about not being anti-regulation, but impractical anti-regulation which is very difficult to apply to cryptocurrencies. It said “in the end we have to regulate effectively which requires legislation specifically applicable to digital resources”.

I think this is the area where we are seeing the lobby slow down to catch up with technology. We’ve had some of the recent tax changes being applied to cryptocurrencies, but some have been tax law changes that have been in effect for some time. Making it apply to digital currency is a completely different animal than regulators have dealt with before.

I think it will be a process, but I think we need to take a closer look at how the laws can be applied specifically to digital currency. Otherwise, maybe it won’t be as efficient and you have the bad guys just getting around it. These are just my thoughts. [laughs]

Toby Bordolon: Why are we auctioning cryptocurrency? It is one thing to auction a car, but there is a robust and fairly efficient market for it Bitcoin (CRYPTO: BTC), you can just sell it on the open market. I don’t see why they are holding an auction for this. This doesn’t make sense to me.

Jason Hall: Is there anything in the federal code about seized assets that have auctions?

Toby Bordolon: I don’t know, they auction off pounds, seize them or they don’t just go to the bank and say, give me some dollars for this.

Rachel Warren: One of the things they were auctioning, they would reimburse the victims of fraud. I think sometimes it’s used like that and other times maybe Uncle Sam uses it.

Toby Bordolon: You can convert that Bitcoin into cash quite effectively without an auction process.

Jason Hall: Well, wait Toby. You are the lawyer here, you know best. Well, you are not a tax attorney.

Toby Bordolon: It is true.

Jason Hall: The federal government does not consider Bitcoin or any crypto assets to be a currency. It is not a currency, it is an asset.

Toby Bordolon: Right. They consider it a property, would you auction it as a stock of stock, if you took it or not?

Jason Hall: This is a good question.

Toby Bordolon: Sell ​​it through Schwab or something like here gives us cash whatever the current market price is?

Jason Hall: I am going to crowdsource this. If we have a viewer watching this live, put it on our Slide. If we have an experienced viewer in this, looking at the pre-record, please email me, jhall@foolcontractors.com, to me on Twitter something let us know. I’m curious now Toby.

Toby Bordolon: It is a strange process. I don’t know how it works exactly, but it’s interesting. To your original question though. I’m like Rachel here. It doesn’t really change my point of view. I have long been skeptical of the claim that Bitcoin was somehow immune to the prying eyes of government authorities. That was one of the things that was a strong point.

Even though it’s all publicly available on the blockchain, you can somehow do it anonymously and no one will know who you are. He convinced me that this is the case for everyone. Obviously it is clearly traceable.

Jason Hall: Especially when it comes to big blocks, right?

Toby Bordolon: Yes. The government can and does take possession of it when used in various activities as we have seen. Here’s what’s going on. I think this is not going to get any better in this regard.

As cryptocurrencies try to become more and more legitimate and convince more people, it’s like a legitimate thing, it’s the way of the future, it’s the way we’re going to do business, it’s going to become even more traceable, even more controlled by governments.

They will block it, they will regulate it. Cryptocurrencies are not the currency of the people’s revolution against demand.

This is basically what will happen. Look, you mentioned tax evasion. If you are someone out there who thinks the government doesn’t know how many cryptocurrencies you have and how many taxable transactions you have done this year, I would strongly suggest revisiting this assumption.

I think you want to be very careful to make sure you understand all the rules and what your reporting and tax payment obligations are. Because we suspect that in 2022 we will hear some stories about the government targeting people who have not reported their crypto assets correctly.

Jason Hall: It’s like trading stocks in a taxable brokerage account, right?

Toby Bordolon: Yup.

Jason Hall: The rules are essentially the same.

Toby Bordolon: Yes, basically, exactly. It can get ugly if you’ve done a lot of transactions, so that’s something you want to watch.

Charles Schwab is an advertising partner of The Ascent, a Motley Fool company. Jason Hall owns Bitcoin. Rachel Warren has no position in any of the titles mentioned. Toby Bordelon has no position in any of the titles mentioned. The Motley Fool owns and recommends Bitcoin and Twitter. The Motley Fool recommends Charles Schwab. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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