Crypto: Do Kwon arrested, Fednow (CBDC?) payment system, fiat on/off ramps, and KYC
This is not financial advice - guidance and updates are provided on significant changes and events within the industry.
We are seeing governments; the U.S in particular, becoming increasingly unfriendly towards cryptocurrencies. Gary Gensler - SEC chairman - argued last month that “everything other than Bitcoin” falls under securities laws.
Do Kwon, a South Korean citizen, was just arrested in Montenegro on Friday 24th March.
This sets quite a precedent and sends a strong message to founders / CEOs of centralised cryptocurrencies and centralised exchanges, that if you don’t tow the line and capitulate to the insatiable regulatory machine, you may become a target of the state.
On a Thursday the state targets you, the next day you're arrested in the country you're in and set to be extradited to whichever state wants you sent there. Do Kwon is wanted by Singapore authorities and a federal grand jury in New York indicted Kwon on eight counts of securities fraud and other charges.
Operation chokepoint 2.0
Several banks in the UK are reportedly imposing limits on fiat currency on-ramping for crypto exchanges - meaning that if you attempt to send your pounds from your bank account to an exchange, the transfer will be blocked if it exceeds the daily limit.
For off-ramps, meaning how you cash out your crypto to take profits in fiat currency, the fees charged by centralised exchanges are getting steeper, and require additional (unwelcome) layers of know-your-customer (KYC) verification steps.
There is also the ever-looming threat of retroactive crypto tax laws being leveraged against customers. All this is on top of existing crypto tax (when taking profits in fiat) laws in various jurisdictions - see the UK government guide, for example.
The annual White House Economic Report has drawn flak from the crypto community, for devoting its content to crypto fear, uncertainty, and doubt (FUD).
Zerohedge states that:
The report includes 35 pages dedicated to debunking the “Perceived Appeal of Crypto Assets,” along with a short section on the FedNow payment system and central bank digital currencies.
If you haven’t heard about ‘Fednow’, you can read more on the above hyperlink - a trojan horse CBDC system in all but name, to go live in July 2023.
Dan Reecer, chief growth officer at decentralized finance platform Acala Network, claims that the report comes “just days” after Operation Chokepoint 2.0 was executed on crypto-friendly banks.
He also noted an “obvious early warning” of an upcoming United States CBDC, or digital dollar, referencing a section of the report that seemingly touts the benefits of a U.S. central bank-controlled currency.
Crypto on/off ramps using fiat
Centralised crypto exchanges in Thailand are becoming cumbersome, with additional layers of KYC needed in order to utilise all features. It is no longer enough to take a selfie with your passport, as well as holding up a piece of signed paper with the date on - now they are much more intrusive. They want to know about spending habits, earning power / salary details.
For those of us rejecting the new layers of KYC, we are now locked out of being able to withdraw Thai baht from these local exchanges to our Thai bank accounts. For now, we can still on-ramp, meaning sending our baht to the exchange, then sending it onwards to other exchanges with easier interoperability, better rates, and a greater range of cryptos available.
Speaking from firsthand experience along with methods used by friends, we have found the following exchanges to provide good services without the need for KYC:
https://ascendex.com/en/global-digital-asset-platform
Although still not ideal, we have found crypto.com debit cards useful for cashing out crypto. You may be able to register an account with a UK / US / European correspondence address, then have the card sent to wherever you are in the world.
Initially, we sustained heavy fees by using these cards to withdraw Thai baht from the ATM machines. ATMs in Thailand charge up to 250 baht ($7.5), with a similar fee charged by crypto.com, with maximum withdrawals at the ATM limited to 30,000 THB ($873) - usually limited by crypto.com to three withdrawals per day.
A cheaper way involves using third party banking apps, such as Wise, or Revolut as intermediary steps.
An example would be selling crypto for GBP pounds via the crypto.com app, then withdrawing the GBP to UK bank account (used to take 1-3 working days, now processed within 30mins-1hour). From there, you can send the GBP to Wise or Revolut (zero fees), then convert the balance to other currencies, such as Thai baht, then finally send that to your local Thai bank account (fee charged by aforementioned apps are negligible, less than $1USD).
Bringing gold into the mix
Regular purveyors of sites such as Zerohedge, will be familiar with the Groundhog day vibes in the comments section of any article on crypto descending into bickering amongst ‘gold-bugs’ and ‘bitcoin maximalists’.
The gold bugs will say that Bitcoin is a giant ponzi scam with no intrinsic value and it is going to zero. They often also say that Bitcoin is just another fiat currency.
The crypto enthusiasts will taunt the gold-bugs with ‘boomer’ jibes and remark how difficult it is to move physical bullion around, especially on an international scale, with slow delivery fees, high courier / insurance fees, as well as import and customs tax varying from country to country.
A seeming minority such as your correspondent, think to themselves - why not hold both crypto and bullion?
That is enough digression on the merits of either / or.
There is an interesting use case for holding gold in privately managed bullion vaults short or long-term, using Bitcoin to make the purchase, then selling and taking profits in fiat currency with no sales tax and low fees.
Bullionstar allows users to purchase precious metals using Bitcoin. The bullion may be sold back to Bullionstar, with the seller choosing to receive either Bitcoin, or fiat currency withdrawn directly to their bank account.
Overall, there are no taxes whatsoever on bullion in Singapore. - No GST / VAT / Sales tax - No capital gains tax - No import taxes or duties - No export taxes.
The caveat is that this method only makes sense to take profits from crypto, if you are using Bitcoin to buy silver / gold bars with no spread.
Your correspondent cannot attest to this methodology for cashing out crypto. It warrants caution in terms of the type of currency chosen to receive after the online sale, as well as the difference between the buy price and the sell price listed at the time of the transaction being made.
For any crypto savvy readers out there, feel free to tell us in the comments about your preferred methods for cashing out crypto, along with other dos and don’ts as far as KYC and regulation goes.
There were no commissions, sponsoring, or any benefits of any kind in association with this article and the companies mentioned. All subject matter written about is purely based on experience, research, pros and cons.
Nicholas Creed is a Bangkok-based journalistic dissident. If you liked this content and wish to support the work, buy him a coffee or consider a crypto donation:
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