An article to understand the conjecture of the taxation ability of the currency circle

50 years ago, 1971 Nian Yue 15 days, then US President Richard Nixon announced the end of the dollar and gold fixed exchange rate, the end of the Bretton Woods system, the dollar officially get rid of the need for gold as collateral limit, in fact, it became the world’s hard Currency, since then the United States has the power to impose seigniorage on the world.

This year El Salvador announced that Bitcoin has become legal tender. The development of encrypted digital currency represented by Bitcoin has now entered the game at the national level.

But up to now, the whole world has not figured out how the government regulates encrypted digital currencies, especially how to levy taxes on digital currency users. This article discusses a method of government regulation of currency and taxation of the currency circle.

Usdt is a very widely used stable currency in the currency circle. From the operating principle of this currency, we may find a breakthrough in regulatory and taxation issues.

sdt has almost become a bridge between encrypted digital currency and fiat currency. It is like a gateway. When fiat currency enters the currency circle, you need to change fiat currency to u sdt . On the contrary, if you want to sell encrypted digital currency, you need to change it to u first. sdt through the OTC will into legal tender.

There is collateral behind the issuance of sdt . Let’s make an assumption that if a country (such as the United States) announces the issuance of a stable currency u sdA it will use the current function of sdt . The US government recognizes the mutual exchange between usdA and US dollar fiat currency, and the US government can designate a specific bank or other institution to undertake the exchange between usdA and US dollar fiat currency. But the issuance of sdA can only be issued by the US government (such as the Federal Reserve), and it can be issued out of thin air, without collateral.

With this design, any American who wants to buy coins must first exchange their fiat currency dollars into u sdA . Conversely, to withdraw coins from the currency circle, they also need to first exchange various currencies into usdA and then into dollars.

The design of sdA can be added to such regulatory measures as a blacklist. In this way, the U.S. government only needs to supervise the u sdA to realize the supervision of the entire currency circle. For example, the U.S. government can deny the exchange of specific currencies with usdA , and can directly freeze specific usdA accounts, and so on.

Collecting tolls in the exchange link between US dollar and usdA is a kind of taxation ability.

But more importantly, this design allows the government to have the ability to tax the currency circle as a whole, and the additional issuance of usdA is to tax the entire currency circle.

For example, the US government wants to impose a 1% tax on the currency circle (now the market value of the entire currency circle is trillion US dollars), directly issue 20 billion usdA , and then put it on the exchange to exchange for BTC / ETH and other currencies, and then get The BTC /ETH is regarded as foreign exchange and exchanged for commodities of other countries. In this way, a fortune was obtained out of thin air.

The guarantee of this taxation ability is that the additional issuance of usdA will be recognized by the currency circle and will not automatically depreciate as soon as the additional issuance occurs . This requires the government to have credit, which is the same as the current government issuance of legal currency.

If a small country, such as the stable currency issued by the government of El Salvador, it is estimated that it is impossible to collect taxes on the currency circle, if you issue it, the currency circle users will not want it.

In fact, u sdc and usdt are such things. Although u sdc and usdt are now collateralized, it may be the same as the denial behavior of the US government 50 years ago by refusing to exchange 35 dollars for ounce of gold. u After sdc and usdt have obtained a large enough user base and consensus, they can refuse to provide collateral and issue additional. Perhaps this is the case with sdt now .

It now appears that the world’s first government with a tax on currency circle is the United States, such as U SDC to US government agents can be.


Posted by:CoinYuppie,Reprinted with attribution to:
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