Ripple Developer center homepage

[cryptoman]

The "2013 Guidance issued by FinCEN" link gives a 404.  This can be found at https://ripple.com/build/

Might want to replace it with a link to e.g. https://www.fincen.gov/resources/statutes-regulations/guidance or the actual doc https://www.fincen.gov/sites/default/files/shared/FIN-2013-G001.pdf

btw, the Developer Center looks great, lots of good resources!

Edited November 2, 2017 by cryptoman

[mvenneau]

I do not understand how they can implement AML on cryptos...id love for someone to explain that to me. Monitoring individual bank accounts yes but what about cold wallets? they are essentially random accounts that can be setup whenever..? Can someone elaborate on this? @Hodor @Mercury @will4star seems like a way for the government to feel like theyre accomplishing something..i may be wrong haha

[Guest]

2 hours ago, mvenneau said:

but what about cold wallets? they are essentially random accounts that can be setup whenever..?

In theory if you have enough processing power available then you can walk the ledger following every transaction.  A random wallet address is an unattached point until funds are transferred in...   Then it becomes part of the mappable space.

 I'm not sure if that is relevant to your question....   just putting it here in case it is...

As far as AML goes....   it is programmatically possible to watch the transaction stream looking for dubious behaviours.... I would assume at some point that governments will start doing that.  Currently they can regulate the entry and exit gateways to fiat currencies.

[mvenneau]

Ive been having a pretty in depth discussion with someone who is well versed in this. Basically he states its the wild west currently and no regulations are set into motion. Also there is no real way to control the money coming in in my eyes they can monitor but to disprove allegations are another issue. He brings up another valid point on these crypto cards coming out to be used to purchase things. Also you could just approach random people and exchange for usd p2p. Ive came to the conclusion they cannot effectively implicate something like this. Create a system for flags sure, but proving it is another case in itself. My other huge doubts are how can they prove who the actual wallet owner is? What happens in the event you are hacked or a loved one steals your information? How can one prove that you are the fund holder or that said funds arent yours.  I appreciate your insight as I believed we were anonymous but that goes against "public ledger".

 

[Guest]

Definitely yes it's the Wild West and definitely yes you can hide a great deal currently.  But it is naive to believe that governments are not looking at this space.  Bitcoin was thought to be anonymous by many in the early days and thus was widely used for various nefarious purposes (as it still is).  But that was found to be wrong when various criminals were caught.

Bitcoin mixing was thought to be a solution for the crooks and the privacy-sensitive until recently when it was found that law enforcement were able to unmix the coins and trace transactions.  In addition to coin tracing there are many other methods available to regulators and enforcers including the traditional methods in the physical realm which have been getting more and more powerful in recent years.

Essentially....   crypto presents problems for regulators, and there are many looking at what actions to take to regain the control they once had.  This is why my money is on a crypto solution that complies with, and works well within the existing structures...  Ripple and XRP.

Proving ownership of wallets is no more difficult than proving ownership of cash....  Many of the same problems and solutions apply to both.

As to anonymous....   you are anonymous in minor ways until you do something to deserve or invite scrutiny...  at that point your anonymity can be stripped away in short order.

[mvenneau]

10 minutes ago, Tinyaccount said:

Definitely yes it's the Wild West and definitely yes you can hide a great deal currently.  But it is naive to believe that governments are not looking at this space.  Bitcoin was thought to be anonymous by many in the early days and thus was widely used for various nefarious purposes (as it still is).  But that was found to be wrong when various criminals were caught.

Bitcoin mixing was thought to be a solution for the crooks and the privacy-sensitive until recently when it was found that law enforcement were able to unmix the coins and trace transactions.  In addition to coin tracing there are many other methods available to regulators and enforcers including the traditional methods in the physical realm which have been getting more and more powerful in recent years.

Essentially....   crypto presents problems for regulators, and there are many looking at what actions to take to regain the control they once had.  This is why my money is on a crypto solution that complies with, and works well within the existing structures...  Ripple and XRP.

Proving ownership of wallets is no more difficult than proving ownership of cash....  Many of the same problems and solutions apply to both.

As to anonymous....   you are anonymous in minor ways until you do something to deserve or invite scrutiny...  at that point your anonymity can be stripped away in short order.

I agree they will definitely do whatever they can to monitor. But like you state they truly can only cover the exit and enter stages there are ways that are being developed currently "atomic swaps" that will allow person to person exchanges without an intermediate. I was only concerned because I am receiving investments from a group of friends currently and would like to make sure theyre safe. I also have a belief that they go after the big fish not generally small guys that don't really have much capital to begin with >10k an investment...though if things take off you could easily become a big fish lol.  If you were gifted this cash such as I am, what kind of issues could the IRS try to pull on me down the road if I do try to cash out? Would they just want the tax on the money from initial investments as well as capital gains. Or would they prosecute someone for not reporting 5-6k(the gifter). Which in the grand scheme of things isnt much money. I'm still new to the financial world so I appreciate any insight. I want to make sure my friends will be safe.

Edited October 1, 2017 by mvenneau

[Guest]

I know nothing of tax law and suchlike.  I did not say they can only monitor the entries and exits...   I pointed out the success with de-mining bitcoins for instance.

I think people in crypto forget that they have physical bodies embedded in a physical country....  If the government doesn't like what you are doing they can do an enormous number of things about it.  My advice is do good not bad, and keep records.  

[mvenneau]

3 minutes ago, Tinyaccount said:

I know nothing of tax law and suchlike.  I did not say they can only monitor the entries and exits...   I pointed out the success with de-mining bitcoins for instance.

I think people in crypto forget that they have physical bodies embedded in a physical country....  If the government doesn't like what you are doing they can do an enormous number of things about it.  My advice is do good not bad, and keep records.  

I agree, I am not trying to incriminate myself by asking hypothetical's lol. I am just concerned for the well being of my friends honestly. Its through their bank accounts then exchange then my nano ledger s. Its their money, its a gift they gave me. I just wasnt sure where would and if any issues will arise my concerns I guess...but again thank you for the insight. I wish I knew someone in taxes currently haha

Edited October 1, 2017 by mvenneau

[Mercury]

We also have to remember the point of view of governments- fiat is 'real' and crypto is either just property or merchandise. 

Compare this to beenie babies- they were not tracked or state monitored at the height of the craze. Why? The 'value' was increasing rapidly, there was a strong second market with no oversight, and goods were crossing boarders. The simple answer is because eventually at some point the 'paper wealth' has to be exchanged into fiat to be realized. You might have a million BTC, but unless you can sell it it's just a out of fashion beenie baby. 

Banks have to report large transactions, more and more exchanhes have to do the same-including AML. Even if you manage to have access to a shady exchange the person trading you might to have to access another that will report. 

The more successful a black market becomes the more attention it attracts. All BTC friendly black markets have been shut down, this should be a warning to users. Governments may be slow at the start, but they can easily catch up if interests are threatened. 

[Hodor]

4 hours ago, mvenneau said:

I do not understand how they can implement AML on cryptos...id love for someone to explain that to me. Monitoring individual bank accounts yes but what about cold wallets? they are essentially random accounts that can be setup whenever..? Can someone elaborate on this? @Hodor @Mercury @will4star seems like a way for the government to feel like theyre accomplishing something..i may be wrong haha

Right now governments do it the only place they can - centralized exchanges.  The problem with that is that there are many (many) other options for decentralized trading of BTC for other value, or fiat value. 

No, you're right; they cannot track cold wallets - or any wallets created outside of being connected to a centralized exchange.  This is not technically possible as far as I know.  

I blog about how I think these decentralized exchanges are probably going to be stepping into the market more now that we have some countries - like China - trying to restrict certain value pair trades.  https://xrphodor.wordpress.com/2017/09/24/exchanges-the-future-of-decentralization/   I do believe that there is a demand in the market for more of them, and the XRP Ledger seems almost a perfect fit for a decentralized exchange IMO. 

[mvenneau]

12 minutes ago, Hodor said:

Right now governments do it the only place they can - centralized exchanges.  The problem with that is that there are many (many) other options for decentralized trading of BTC for other value, or fiat value. 

No, you're right; they cannot track cold wallets - or any wallets created outside of being connected to a centralized exchange.  This is not technically possible as far as I know.  

I blog about how I think these decentralized exchanges are probably going to be stepping into the market more now that we have some countries - like China - trying to restrict certain value pair trades.  https://xrphodor.wordpress.com/2017/09/24/exchanges-the-future-of-decentralization/   I do believe that there is a demand in the market for more of them, and the XRP Ledger seems almost a perfect fit for a decentralized exchange IMO. 

Thank you for the insight, I was explained like this from another crypto invester on OMG slack. He seemed very knowledgeable. I agree with @Mercury they will definitely want to their piece when you go to cash out, without a doubt. I just didnt see where the point of tracking could come from if everyone is throwing into a cold wallet..essentially that cold wallet could just be redistributed to everyone, essentially making me bank for the time being. Idk im just looking at all angles and AML seems like its still bound to its regular borders

[Guest]

12 minutes ago, Hodor said:

No, you're right; they cannot track cold wallets - or any wallets created outside of being connected to a centralized exchange.  This is not technically possible as far as I know.  

Um, that kind of depends on what you mean by 'track'.   A cold wallet created off line is not easily tracked, but if it is to be of any use it must have funds moved into it.  At that point it absolutely becomes trackable because it is in the Ripple ledger.  An interested government can look at every aspect of that wallet and where the funds came from and where they go.  In fact each transaction into or out of it lights up the other party.  So I don't think I can agree with your statement because it's only true if the wallet is never activated or used.

[mvenneau]

2 minutes ago, Tinyaccount said:

Um, that kind of depends on what you mean by 'track'.   A cold wallet created off line is not easily tracked, but if it is to be of any use it must have funds moved into it.  At that point it absolutely becomes trackable because it is in the Ripple ledger.  An interested government can look at every aspect of that wallet and where the funds came from and where they go.  In fact each transaction into or out of it lights up the other party.  So I don't think I can agree with your statement because it's only true if the wallet is never activated or used.

So they track said cold wallet through what, IPs? What determines the owner of said cold wallet, is it the initial activation,the initial depositor. If it is based off IP's why couldnt one just send it all over/connect to random hotspots removing any location? It all seems like it would fall on conversion into FIAT which @Mercury stated. I can agree with you on flags, this wallet is receiving this many funds but who would determine that? The exchange? What if there are several? Do they all have to communicate which wallets doing what? How can they prove/deny that funds coming from x/y/z werent legitimate?  Sorry I just truly don't see it being a working model...

[Guest]

All of this talk is in the context of AML and regulation.  Currently banks report significant movements of funds to governments who then have the option to investigate the movement for legality.

There is nothing stopping a government agency from monitoring the transaction stream on the Ripple ledger and using AIs to see if any suspicious patterns are emerging.

If you are a nefarious person doing something shonky and you create a cold wallet then begin getting funds in and or out of it, and that is detected by the government,  then they can look at all of the interconnections to that wallet and trace them all back.  At a certain point it might become tricky or impossible if various techniques were employeyed such as Tor etc.  However time has shown that in the criminal/enforcement arms race there are few certainties.

So it's the old scenario....  If you turn up on enforcements radar they can, and will, pursue you.  So don't do bad things.

When speaking of 'proof' of who is doing what....  enforcement agencies have an arsenal of methods to prove assertions once their interest is garnered.  So I am just trying to say that a person who says that crypto (although I have only been talking about Ripple so far) is anonymous, and can not be tracked, is overlooking the fact that physical surveillance and other methods are all available to agencies once you are on their radar.  And if the ledger is public (and even if not...) an AI can get very good at identifying patterns of behaviours and placing suspicious ones on to that radar.

 

[Guest]

I realised that I forgot to say that currently the attention seems to be on the gateways in and out....  and that will no doubt continue.  The thing I was trying to point out though was that it is foolish to assume that once inside the gateways it will always remain a Wild West free-for-all...

Edited October 1, 2017 by Guest
Typos