Who owns the money deposited into a bank account?
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
It is not a comfortable feeling to be told by over the phone, by your account manager, that the bank is under no obligation to give you back your money.
Further, if you withdraw large amounts from Coinbase, your bank may freeze your account pending investigation. Meaning they also notified the authorities.
I came across some older posts from a few years back about people saying their bank accounts were closed because of ACH transactions to Coinbase.
Of course, not everyone is going to look at this situation, or their own facts, with the same degree of concern. Some investors and businesses are may not be worried at all, and may assume that they have little risk of facing IRS problems.
The year 2017 increases the adoption and demand for cryptocracy operations; For this reason, it is accelerating the financial technology companies to offer these bank card platforms. These days we have more than 30 cryptocracy debit cards in circulation, but of course there are differences, such as different fees between some of them and different transactions between two crypto exchange rates.
Coinbase brings the first Bitcoin cash card to the market in 2015; Another big name in this area is TenX, which is about to integrate Bitcoin, Ethereum and Dash for payment over Visa and MasterCard networks. Monaco, Bitcoin and Ethereum is a popular name that supports expatriates and offers interbank exchange rates to users without paying additional marking fee. Ocash is the latest encryption memory with a debit card. @dana-edwards @mrsfox
This is the main problem with the banking system. Legally the banking institution owns everything and can do as they please. There's no regulation at all. Wallstreet is still a casino.
If you put your money in the bank you are losing money. With a 0.5% interest rate, the inflation is higher than the interest rate.
Resteemed!
That's why I either use crypto or cash on real paper to buy most of the stuff I need...
The faster the people will understand the better... USA is bankrupt.
big bubble
Thank you for pointing out that the banks own your money once you've given it to them. Most people do not know this. It's important to bring this to the attention of the public.
This is not an advise to be taken by the U S citizens, I do not remember the last time I deposited money into my account, because anytime it gets there, the money cease to be mine, and the bank can do what ever they want with it. This banks use our money to run several opportunities and get richer. The sooner people get to know this, the better.
I deposited money into my account, because anytime it gets there, the money cease to be mine, and the bank can do what ever they want with it.
Good posts. Thanks for share
@dana-edwards This is insane and scary. Taxation is essential and reasonable at around 2-5%, but 50%? This is absolute theft. Effective risk management strategies are needed.