EU reaches agreement on ‘landmark’ crypto rules

[letitroll]

- How can a lightning network transaction be audited? Don't private payment channels differ from the legacy payment rails that we're used to?

oh so let me get this straight the plan with lightning - is that it would be untraceable, unauditibale & anonymous - and that it would obscure transactions?

One basic and simple point so we can put that this L2 payments nonsense to bed - how is the untraceable, unauditable & anonymous BTC project going? Not very well....L2 sits on top of BTC.....BTC has been subsumed & concubined into the tradifi system....L2's based on BTC are by logical extension trapped by this too.

What clarity has the IRS (or any other tax authority in the world for that matter) provided with regard specifically to lightning network payments? If you can provide a link to that info, that would be informative.

You with your links @tecate and specfic regulatory clarity. I provided an IRS link explaining capital goods abive....BTC is a capital good.....L2's require (1) BTC, a capital good, as the fee for service & (2) L2 wallets are funded by underlying BTC deposits & withdrawals.

Now to your constant hunt for links where you want every regulator in the world to get down into the weeds on what constitutes a triggering of XYZ regulation.

Well @tecate you've demonstrated a naivete in this - you want everything spelled out for you by the authorities. Let me help you understand the legal and regulatory system. It is principles based....and never envisages having to outline in law or regulatory rulings how the principal of regulation or law is triggered by every possible combination of how a law can be triggered.

The BTC speaking point of regulatory clarity - is one of the great red herrings in crypto land.....underlying use case clarity is not required in a principled based legal system

Simple example for you that you really need to let sink in & stop asking for links to XYZ org getting into the weeds on L2 or any other derivative of BTC - every nation state legal system in the world is constructed on principles of law - for example the law says that you cannot steal somebody's else's property....that a principle, theft, is enshrined in law.

Now what would @tecate and BTC community say in regard to say the stealing of someone's PS5......well what you would say to me is well send me a link where it specifically states from a regulator or government official that taking somebody's PS5 is stealing?!? That the law as regards taking others PS5 is unclear, it lacks clarity as regards PS5's.......the links dont exist for this & minute regulatory or legal clarity doesnt exist for every WAY in which a law can be broken.....it would be impossible...and thats why every legal system in the world has a principles based legal framework.

So please stop asking for links & regulatory clarity -and lets deal in the real world of legal principles - the legal principle as regards BTC is set, its a capital good..... so I just gave you a free law school lesson that I hope sticks moving forward.....as you stop going down the cytpo rabbit hole & talking point of endless legal clarity which is a trick the industry plays all the time....its intellectually crazy & disingenuous....the functional equivalent of assaulting somebody with say a baseball bat and arguing in front of a judge that you shouldn't be convicted of assault because the law specifically makes no reference to use of baseball bats in an assault and so the law doesn't apply therefore your not guilty.

What your saying here is that because a regulator hasn't written an L2 law or specifically addressed L2 use cases in some circular or speech or such - that somehow L2's sit outside the law/regulation/tax system. Thats not the way the world works.

Put simply @tecate when you do this thing you do ALL THE TIME...asking for links to prove XYZ activity contravenes the law...your the functional equivalent of somebody asking for the legislative paragraph that specifically says assaulting somebody with a baseball bat is assault. The principal, in this case assault, is triggered the method doesn't matter.

In the case of L2's.......the capital goods & gains/losses principal is triggered....the buying or selling of a capital good either BTC or an "in-kind" transaction on the L2 are pointless details as it pertains to the principal of taxation that exists. Revenue or the IRS would simply look at all the techno mumbo jumbo and shrug their shoulders and say whatevs @tecate ......all very clever & complicated and we dont care..... you've triggered the principal of a gain on sale of a capital good....file the paperwork buddy and send us our money.

So as I said - imagine going into the shop and looking at a pint of milk and thinking ok its €3 euro..I'm gonna use lighting to pay...now let me think, whats my embedded capital gain on BTC right now... do the math.....OK so this tax event will trigger a 15c gain on sale....so the milk on an after tax basis will cost me €3.15 and I need to keep track of that 15c gain on sale to report at the end of the year....and do a tax filing with revenue on all my little purchases of milk.

You've lost your mind - if you think such mental and intellectual friction and overhead....is the basis for a successful scaling of a future payments system to compete with MasterCard & Visa

 

[Duke of Marmalade]

@letitroll It has long been established that crypto is subject to capital gains tax. It is also the case that all foreign exchange is subject to capital gains tax. Nakomoto indended bitcoin to be a medium of exchange so she must have accepted that it would be foreign exchange in every jurisdiction but then so too is sterling in every country except the UK (or any country which has the £ as its unit of account). Why does this ETF thing change that picture?

 

[letitroll]

Why does this ETF thing change that picture?

Yes I agree on your cap gains point….the ETF approval It’s the final nail in the coffin on the currency nonsense….only underlying capital goods trade on regulated US equity exchanges in the structure approved….the community lobbied and applied to get BTC ETF….grayscale moved it out of a trust structure which can hold currencies….in doing so it removed whatever tiny sliver of hope existed that BTC might fall into some currency bucket.

That is now over. BTC is a capital good….the ‘community’ says so, the SEC now says so and the most important taxing authority on the planet says so…with all the tax complexity that that implies making it and derivatives built on top of it functionally useless as medium of exchange for goods and services.

As such I consider the currency narrative over.

 

[Duke of Marmalade]

Of course you might just forget to report your crypto gains but have a better memory for your losses. Another use case.

 

[letitroll]

Of course you might just forget to report your crypto gains but have a better memory for your losses. Another use case.

Amnesia used to be possible in this space - but the regulators & tax authorities have brought all the exchanges to heel - you can try to forget a gain on sale on interactive brokers or Coinbase ….but the IRS doesn’t forget…cause they’ve forced IBKR & Coinbase to send them their own 1099 outlining the gain

The currency goose is cooked….death by bureaucracy & complexity….and with it goes the last narrative in the space.

Now’s it just digital gold. Yawn

* Waiting for @tecate to come in asking for links analogies to asking to prove that stealing a car using specifically a blue and green 5in screwdriver is actually theft….that there lacks regulatory and legal clarity on the use of blue and green screwdrivers in automobile thefts and until such time as somebody in authority references blue and green 5in screwdrivers the question remains open on this potential avenue to acquiring a car that isn’t yours

Which is basically the payments/currency argument now using L2’s as an abstraction or payments derivative of BTC. It makes no sense….the principal of BTC as a capital good is now locked and loaded….the L2 rabbit hole is now a blue and green 5in screwdriver discussion…best left to the crypto echo chamber where the uninformed interact with the irrationally bullish number go up people…back on planet earth this avenue is now closed.

 

[tecate]

I guess I'd do well to link in here with a bit of housekeeping.

You with your links @tecate and specfic regulatory clarity.

Now to your constant hunt for links where you want every regulator in the world to get down into the weeds on what constitutes a triggering of XYZ regulation.

Simple example for you that you really need to let sink in & stop asking for links to XYZ

what you would say to me is well send me a link

the links dont exist for this

So please stop asking for links & regulatory clarity

you do this thing you do ALL THE TIME...asking for links to prove XYZ

* Waiting for @tecate to come in asking for links

Are you feeling alright @letitroll ? I mean, we all take a different approach but I would have thought simply saying......'nothing has changed, me posting this has not been prompted by any recent development' might have covered it - but that's just me.

I'm sorry if you're somehow triggered when in a discussion someone might ask you for any key law/development/etc. you might be basing the point you're putting across on, but to me it's perfectly reasonable. I might not need to do that if you were some sort of industry expert but that's not the case of course.


I've had folks here ask me to cite specific info and I'll oblige where I can. If you're somehow triggered by any such request (and to my mind that's a reasonable part of any such discussion), then you're free not to bother responding. Your choice.


With that out of the way, I'll go have a look at whatever you might have posted that addresses the actual topic.

 

[letitroll]

With that out of the way, I'll go have a look at whatever you might have posted that addresses the actual topic.

Yep triggered is the right word - the absurdity of looking for a proclamation by someone in authority that BTC or a derivative off BTC - being sold in XYZ convoluted structure (an L2 for example) might somehow negate a gain on sale transaction. That this would be a grey area in anybodys mind is crazy town.

Like I said.....its the functional equivalent of arguing that stealing a car with a blue green 5in screwdriver....is a legal pathway that remains open to stealing a car because to date there has been no references made by the gardai or the Minister of Justice on the use of this tool and that legislation makes no reference to such tools as it pertains to property rights.

That it somehow remains a 'grey' area to rob crypto parlance......and all the blue green 5in stealing car screwdriver community wants.....is CLARITY....PLEASE GIVE US CLARITY. PLEASE. Write a bill....create some new legislation cause blue green 5in screwdrivers are a heretofore new technology in stealing cars.

 

[tecate]

BTC has been subsumed & concubined into the tradifi system

That's quite the sweeping statement. Last I checked the bitcoin network was decentralized. Anyone can transact on it without censorship today. You might speculate on a nation state attack vector via an ultra-successful ETF but you'd be getting right out ahead of your skis.

I provided an IRS link explaining capital goods above....BTC is a capital good.....L2's require (1) BTC, a capital good, as the fee for service & (2) L2 wallets are funded by underlying BTC deposits & withdrawals.

Ok, so the law as it has existed prior to Bitcoin even appearing on the scene is a point of friction where lightning payments are concerned. I guess I was a bit thrown by you only raising this now but sure, it's an issue. Will the issue remain a problem? I don't think it will.

There are a couple of ways through which it can be resolved/overcome. Firstly, lets talk about regulatory change. As you'll appreciate the Biden Admin has been particularly anti-crypto. I don't expect any such movement until there's regime change. Meanwhile, there's plenty of movers and shakers in the GOP (together with some smarter DEMs) who have already floated the idea of addressing this.

In the meantime, the Strike app deals with this issue compliantly. Lets say you transfer in a few satoshis onto the app. You make a purchase using those satoshis. A vendor on the other end can have their PoS configured to accept USD, the Strike app converts the BTC to USD, then sends it over lightning rails to the vendor.

The idea is to enable folks in paying for goods/services using BTC and Strike achieves that just fine. As a courtesy, here's a link to a write up that the Payments Association in the UK has done on the subject.

That approach can be taken in any country with said bottleneck - while it remains a bottleneck....and I don't expect it to remain a bottleneck. It might in some jurisdictions and not in others for a time. At a later stage, the powers that be will see that driving it underground is only going to cost them.

You're welcome to disagree with that take of course. I don't mind. You also didn't think a spot Bitcoin ETF would be approved in the US but here we are.

The BTC speaking point of regulatory clarity - is one of the great red herrings in crypto land.....underlying use case clarity is not required in a principled based legal system

Codswallop. Laws and regulations are outdated due to technology and innovation all the time. It's entirely reasonable to adapt them accordingly. Related to that, ETF approval came about due to a pending court case that simply forced Gensler's hand. That's the spot bitcoin ETF approval that you declared will be a wild success in recent days - but it didn't feature at all in your proclamation some time ago that BTC would never see ATH unit price ever again. You never mentioned it, evidently because you could never foresee a circumstance in which it would be approved.

Yep triggered is the right word

Then you'll be aware that the issue lies with yourself. If you contribute to a discussion, you should expect to be queried on that input. Hell, you should actively encourage such a thing (evidently that would be asking too much). If you can't handle discussing a topic with me, then don't. Otherwise, expect active discussion. The irony is that you'd never even heard of the topic you got so irate about (lightning network) until I was forced to bring it to your attention due to your complete cluelessness.

 

[Duke of Marmalade]

@tecate It seems that the success of bitcoin means so much to you that you want Donald Trump to win. Can you understand why I use that pejorative term? Correct me if I have that wrong.

 

[tecate]

@tecate It seems that the success of bitcoin means so much to you that you want Donald Trump to win. Can you understand why I use that pejorative term? Correct me if I have that wrong.

This discussion has gone down many rabbit holes over the years Duke - lets not do the Trump thing! There are despicable people on both sides of the aisle in US politics. The Republicans just happen to be far more progressive when it comes to digital assets (comparatively).

 

[Duke of Marmalade]

This discussion has gone down many rabbit holes over the years Duke - lets not do the Trump thing! There are despicable people on both sides of the aisle in US politics. The Republicans just happen to be far more progressive when it comes to digital assets (comparatively).

There are more important issues than bitcoin.

 

[tecate]

There are more important issues than bitcoin.

Then discuss them in a place that's not dedicated to the discussion of Bitcoin.

 

[Duke of Marmalade]

Then discuss them in a place that's not dedicated to the discussion of Bitcoin.

I got round to listening to that Antonopolous clip. Yes, he was on the case from early doors. He is a true cultist and I admire for that, honestly. But most buyers of bitcoin couldn't give a fiddlers about what fork is chosen. They are betting on the price maybe even betting that this day would come.
One interesting comment was that ETFs would be of interest to institutions who do not have the technical ability to hold native bitcoin. What chance has an ordinary punter?

 

[tecate]

But most buyers of bitcoin couldn't give a fiddlers about what fork is chosen.

We're a long way away from that scenario playing out. In the meantime, a lot depends on how bitcoin has further developed in that timeframe. Often forgotten here is that the use case for bitcoin differs depending upon where you find yourself in the world. While some may point to the ETF approval as being a poisoned chalice, it can also have positive knock-on effects. All the ETF providers are in the middle of putting together marketing materials that's likely to prompt people to gain a better understanding of what the asset offers. In one sense, bitcoiners are not pushed about the asset being 'legitimized' by way of this ETF approval. However, it will have that effect, that will be useful in bringing about further adoption.

What chance has an ordinary punter?

There are plenty of boomers who are likely to gain access to bitcoin and consider bitcoin for the first time by way of these ETFs. Anyone with an online brokerage account can access these products. That accounts for a large swathe of people in the U.S.

 

[Duke of Marmalade]

There are plenty of boomers who are likely to gain access to bitcoin and consider bitcoin for the first time by way of these ETFs. Anyone with an online brokerage account can access these products. That accounts for a large swathe of people in the U.S.

The point Anton was making was that ETFs would have a market in those institutions without the technical ability to hold actual bitcoin. I am sure that goes for many punters who would have no difficulty with ETFs.
But what does it say for the future of bitcoin as the World's reserve currency if even institutions lack the technical ability to manage it?

 

[tecate]

The point Anton was making was that ETFs would have a market in those institutions without the technical ability to hold actual bitcoin. I am sure that goes for many punters who would have no difficulty with ETFs.
But what does it say for the future of bitcoin as the World's reserve currency if even institutions lack the technical ability to manage it?

For truly institutional players, all the infrastructure they needed is in place now - including licensed custodians such as BitGo, Coinbase Custody, Standard Chartered's Zodia Custody, Anchorage, Komainu, etc.

ETFs work for boomers (like you ).

 

[letitroll]

Anyone can transact on it without censorship today.

By my estimation from a cursory look - 90% of BTC is now transacting in a completely US censored, surveilled and controlled wall garden- this being the sum total of BTC volume on Binance, Coinbase, Kraken, Gemini.

I'd need to check but the fiat digital & cash economy has about the same split - 90% of FIAT sitting in government censored, surveilled and controlled wall garden.....10% sitting in cash under mattress.

Glad to see the BTC project living up to its aspirations......to look exactly like FIAT with higher fees.

Will the issue remain a problem? I don't think it will.

There are a couple of ways through which it can be resolved/overcome. Firstly, lets talk about regulatory change.

If you understood this properly @tecate you would realize that recognizing or allowing the coinage of an alternative & additionally circulating currency in the United States is not simply a congressional regulatory matter that fringe GOP candidates ( funded by crypto donations) might someday sneak into an innocuous bill in the house.....it would require a constitutional amendment. For background the below is the process required to secure a constitutional amendment:

"An amendment may be proposed by a two-thirds vote of both Houses of Congress, or, if two-thirds of the States request one, by a convention called for that purpose. The amendment must then be ratified by three-fourths of the State legislatures, or three-fourths of conventions called in each State for ratification."

https://www.law.cornell.edu/constitution-conan/article-1/section-8/clause-5/coinage-power#fn2art1

Apart from the clearly insurmountable legislative & constitutional pathway to BTC being recognized as a currency just given the above....the logical practicality of it happening is simply absurd...for it would be politicians & government voting to diminish their own ability to tax and spend....and it would be the population voting for those politicians to in effect destroy their own savings denominated in USD.

For background on the rarity of constitutional amendment here's the last 8 or so -

Amendment	Year Ratified	Description
27th Amendment	1992	Congressional pay raises
26th Amendment	1971	Voting age lowered to 18
25th Amendment	1967	Presidential succession and disability
24th Amendment	1964	Prohibits poll taxes
23rd Amendment	1961	Grants voting rights to D.C. residents
22nd Amendment	1951	Presidential term limits

Short version - your uninformed to think that a small band of pro crypto congressional people can affect such a deeply structural change.

There is one currency in every OECD and developed nation....everything else is a capital good and that is simply never changing.

Strike app deals with this issue compliantly. Lets say you transfer in a few satoshis onto the app. You make a purchase using those satoshis. A vendor on the other end can have their PoS configured to accept USD, the Strike app converts the BTC to USD, then sends it over lightning rails to the vendor.

New payments system disrupt incumbent ones by being (1) more convenient (2) faster (3) cheaper with (4) higher ubiquity

Thank you for confirming that L2 solutions as an alternative to digital fiat systems will simply never succeed....capital gains accounting and reporting on payments is absurd....but what's doubly absurd is to think that L2 adoption for payments would disrupt existing incumbent digital fiat system while capital gains accounting existed on the backend for the user (even if Strike worked it out for you) it would still expose the user to variable and unknowable point of sale costs above and beyond the price the customer saw....while creating future friction with tax filings.

This is not how one would design a disruptive payments system....and if that werent enough of course....to remove the barrier to havng a chance at scaling and competing with incumbents it would require BTC to be deemed a currency which would require a constitutional amendment.

Your making me laugh so hard at this stage as I type this - I'm afraid I might hurt myself.

Laws and regulations are outdated due to technology and innovation all the time.

Wrong - core principles of law never are....and there you are again making a blue green 5in screwdriver to steal a car legal clarity & technological innovation argument again.

Property rights laws didnt become outdated because of the advent of the phone, the credit card or the internet as means by which people were relieved of their property......stealing is stealing...and property rights are clear....whether done with pen knife...or via an advanced phishing scheme using coinbase and the lightning network.

Principles of law require no updating to account for technological innovation.

The principal of law which governs currency and capital goods is the exact same - it doesnt require updating in the face of new technology- it is principles based law and allows for a myriad of circumstances, use cases and technologies to evolve. The only legal question one need ask is in what way does new technology fit into the princpals of law.

The Howey test in the US is the exact same idea - it is a principles based law - which foresaw that the nature, structure and technology of an investment contract may change over time (indeed it would be expected too given the creativity of man when money is involved) - and that an investment could be created via the selling of orange groves in California a hundred years ago or can be created by Ripple Labs selling a crypto token XRP to institionions built on some new fangled blockchain technology.

Technology changes....the method by which laws get broken change all the time.....the ingenious legal solution is to create a principles based legal system. Adaptable, flexible

The legal system the United States, Ireland and UK...and frankly every developed nation.....has a principled based legal system......which does not require changes when the underlying mechanism by which laws are broken change through technological change.

But lets be clear - this discussion is focused on the principal in law of a capital good and currency and their tax treatment. The principle of law here is clear......and all the innovation in the world doesnt require a change to this princpal.

 

[Duke of Marmalade]

Bitcoin has been classified as an asset similar to property by the IRS
and is taxed as such.
- U.S. taxpayers must report Bitcoin transactions for tax purposes.
- Retail transactions using Bitcoin, such as purchase or sale of goods,
incur capital gains tax.

My emphasis

@letitroll this is not new, why do you think the ETF thing is a game changer? It does confirm your statement that transactions should be subject to capital gains tax. However, we also have:

Foreign cash
What if, instead of opening a euro denominated bank account, you’d
simply bought €10,000 in cash? Then it depends on why you
purchased it. If you foresaw the political chaos to come in the UK and
bought euros speculatively, then your gain should be taxable when
you convert the euros back into sterling.
If, however, you bought them for personal expenditure outside the UK – say, on holiday –
then any gain should not be taxable.

My emphasis.

So it would seem that if The Donald wanted bitcoin transactions for personal expenditure not to be subject to capital gains tax he would not need a constitutional amendment.

 

[tecate]

By my estimation from a cursory look - 90% of BTC is now transacting in a completely US censored, surveilled and controlled wall garden- this being the sum total of BTC volume on Binance, Coinbase, Kraken, Gemini.

I don't think that's accurate. Of those companies, Coinbase and Gemini would have larger tranches of US customers. Of the rest, they're largely international. Interestingly, over the course of the past 12 months, Coinbase and Gemini have been going out of their way to set up shop abroad in centers such as Abu Dhabi, Dubai, Singapore and Hong Kong.

Next up, lets throw caution to the wind and assume your 'estimation' is correct. What of it? I don't get where you're going with this? While people can and do hold digital assets on centralized exchanges, they don't have to. While they do use them to trade crypto, they could use an offshore exchange or they could use a decentralized exchange. The latter all the while becoming more and more seamless.

Uncle Sam will only go so far in that respect.

Also, you mention the term 'walled garden'. That's out of place here. Bitcoin isn't within any such 'walled garden'. Specific assets could be confiscated if they sat at a point in time on a centralized exchange. But that doesn't put Bitcoin inside a 'walled garden'.

Glad to see the BTC project living up to its aspirations......to look exactly like FIAT with higher fees.

lol. Keep feeding yourself those fairytales if it makes you feel better!

If you understood this properly @tecate yadda, yadda, yadda.

I see you're wearing the selective vision spectacles again. Yesterday, I took the time to provide you with details on how the 'taxable event' issue is being overcome. So what's to talk about? The only thing missing from the Strike app solution is more incorporation of that within the large PoS systems/networks. And over time they will integrate that option. Why wouldn't they?

I mean, sure, it would be handier again for the industry if a change was made to make that problem go away via the IRS - and I believe that they will effect such a change in time. And no, to do so doesn't require the constitution to be amended!!

On all this 'can't change, won't change' stuff, yes it bloody can be changed and yes, its entirely correct at times to do so. There used to be a law that a man should run in front of a car waving a red bloody flag. According to your logic, there would be no need to change said law! Telecoms related regulation held the development of the internet back in its early days - until that was changed.

Only the other day, a pending litigation taken by a crypto industry stakeholder had the effect of forcing Genslers hand - as otherwise he wouldn't have approved spot bitcoin ETFs. If that doesn't effect the required outcome, politicians can be motivated to effect change.


What I am very interested to hear though, is how you think the price of bitcoin stays down when you told us that bitcoin spot ETFs are going to be wildly popular. Can you please clarify?

 

[letitroll]

this is not new, why do you think the ETF thing is a game changer?

It puts the final nail in the coffin - as I’ve said already - if the laser eye folks aspired for it to be a currency the industry should have rejected on the face of it it’s placement inside an equity/commodity ETF structure traded on STOCK exchanges. Where capital goods are traded.

BTC purists - should have demanded its trading on FX markets or to preserve the possibility of currency status in the future it should have remained inside a trust structure ala GBTC.

ETF-ization dooms it to being a capital good. The ‘community’ lobbied and signed up for this for the purposes of greed.

currency dreams = dead

So it would seem that if The Donald wanted bitcoin transactions for personal expenditure not to be subject to capital gains tax he would not need a constitutional amendment.

“
If, however, you bought them for personal expenditure OUTSIDE the UK – say, on holiday –
then any gain should not be taxable.”

Apart from the mismatching of jurisdictions here - UK tax advisor against a US constitutional question etc - the language is instructive, clear and important and totally consistent with the constitutional nature of a single currency being in issue in the US (which I expect is repeated in the UK although they lack a written constitution and rely on the stacking of common law legislation and precedents).

The important part of the advisors answer - is that a non-domestic currency purchased with the intention of using it outside the UK for vacation is OK…in effect what he’s saying is that following another jurisdictions single currency legal tender law does not create a capital gain. You as a traveler there are forced to use their currency…cause ya know Sterling isn’t legal tender in the USA dollars are….so HRM excuses a capital gain

Now to applying this framework to BTC/L2….firstly we’ve established that BTC is a capital good…..secondly we’ve established that constitutionally in the US there is only one currency…now let’s try and apply your UK advisors logic as a proposed workaround to our BTC/L2 problem (1) BTC is not a soveirgn foreign currency, it’s a capital good (2) we know that isn’t a domestic currency cause constitutionally there is only one issued by the US government (3) even if we were to pretend it is a foreign currency for a second (it’s not!!) well your proposing to use it as a payment alternate on an L2 network DOMESTICALLY in your home country…your intended use is not overseas…it’s a domestic use case and like the advisor quite rightly says…in that instance (say UK person buying EUR*) you have turned an actual foreign currency into a speculation and capital gains apply.

*” If you foresaw the political chaos to come in the UK and
bought euros speculatively, then your gain should be taxable when
you convert the euros back into sterling.”

This is somewhat of a diversion anyway - a US person, acquiring BTC and moving it to an L2 to perform a pos transaction - acquired BTC as a capital good, moved it to an L2 triggering a gain on sale and would be attempting to transact a purchase domestically….no exemptions, no workarounds…there is only one currency and form of legal tender in the United States and it’s issued by the US government…the issuing of which is enshrined in the constitution with express paragraphs forbidding the creation of alternative currencies by any other entity that might even consider issuing a competing currency.

Indeed constitutionally States in the United States are forbidden from issuing currency….

Section 10 of the US constitution denies states the right to coin or to print their own money. The framers clearly intended a national monetary system based on coin and for the power to regulate that system to rest only with the federal government.

So with that to bed…..can we agree that a constitutionally amendment would be required?….i mean put it this way if New York or California is constitutionally prohibited from issuing its own currency.

I think we can agree @Duke of Marmalade a bunch of software geeks with laser eyed twitter and LinkedIn profiles are also constitutionally forbidden from doing so? Right? And for this to change a constitutional amendment would be needed.

The politicians required to achieve this would be needed at the federal level as well the state level in two third majority’s. Those politicians would be voting to destroy their power to tax and spend and those politicians would be voting to destroy the wealth of their constituency’s given that all USD savings would instantly that moment loose value.

Put it all together - how likely is this? Answer - your more likely to win the lotto in every OECD country simultaneously on the same week while also getting a hole one at your favorite gold club. I mean it’s possible but completely improbable.