Cryptocurrency, Cryptocurrency Transactions, and the Distributed Ledger Technology in “The Soul of Enterprise Podcast with Ron Baker and Ed Kless: Episode #363
Last week I was happy to be featured and participate in “The Soul of Enterprise” Podcast with “Financial-Thought-Leader” colleagues Ron Baker and Ed Kless last Friday: “Episode #363: The Ultimate Dragon Slayer, Daniel Morris” (10.23.21).
We discussed many topics that I am passionate about; Cryptocurrencies, Blockchain, Value Pricing, Wealth Management, Asset Protection, Multinational Tax Structures, Tax Optimization, and many other topics that made us scratch our “collective” heads.
One of the relevant and current topics we discussed that might have some importance to you was Cryptocurrency; what is it, how do you use it, and is it here to stay?
Below are some snippets (outtakes) from the Podcast “Episode #363: The Ultimate Dragon Slayer, Daniel Morris”. I’ve left the timestamps so if you choose to; you can follow along while listening to the Podcast. (29:41–39:51)
To listen to this Podcast, “Episode #363: The Ultimate Dragon Slayer, Daniel Morris”, please follow this link: https://bit.ly/TSOEEpisode363.
By now you should realize that Cryptocurrencies have gone mainstream. You may have tax questions and/or need guidance or assistance with the current Tax Laws pertaining to Cryptocurrency Exchanges/Transactions and how this might affect your State and Federal Income Taxes. If you need guidance regarding Virtual Currencies, please contact us at Morris + D’Angelo. This is our Expertise!
Excerpts from the Podcast:
“Episode #363: The Ultimate Dragon Slayer, Daniel Morris”, please follow this link: https://bit.ly/TSOEEpisode363.
Ron Baker 29:41
Dan you work in Cryptocurrency a lot…my question is, what are these things?
Dan, you work in Cryptocurrency a lot. And, you know, we’ve been following it on the show for years and it seems like there’s a regulatory battle over at the SEC things as to security, the IRS wants it to be a commodity, you probably saw Gary Gensler, the new SEC Chairman, he said these tokens weren’t means of exchange but highly speculative stores of value. And yet, Bitcoin and Ether don’t fit that definition. I kind of think of it simplistically, if I can put it in a Coke machine and get a Coke, and then it’s currency. I can do that with a Bitcoin; metaphorically, I can’t do that with a stock certificate. So I guess my question is, what are these things?
Daniel Morris 30:55
They’re an amalgam of a new methodology to transact and exchange value as it relates to commerce.
If I knew how to answer that in succinct language, I could write a book.
They’re an amalgam of a new methodology to transact and exchange value as it relates to commerce. Your money’s sole purpose, in my view, is to resolve credits resolve liabilities… I owe you something so therefore I need to give you something that you will accept and say that I no longer owe you anything.
So, whether it’s a Bitcoin or whether it’s a Dollar, or whether it’s a Turkey, it doesn’t matter to me. The big question becomes, “how do I make sure I don’t have counterfeits”. How do I make sure that I have uniqueness, how do I control and know it’s mine?
The neat thing about Bitcoin or the Crypto-World is that I can have a ledger that allows me to track it. So, it has aspects of Currency and it has aspects of “Stored Value”, although I do think that it is speculative, I do agree with that perspective.
It doesn’t have a Machinist-World or a Physical-World language for it. So I think over time. We’re going to come up with some new words to define it.
Ed Kless 34:35
There are different Crypto regulations in various countries. How do you navigate that?
Our vocabulary is lacking, anytime there’s a new technology… we struggle with the language. I think when the television came out it was called “Picture Radio” because we often relate it to the last the latest technology that we’re used to using or adopting. How do you navigate that minefield with your Customers? Because you work internationally, I have to believe there are different Crypto regulations in various countries. How do you navigate that?
Daniel Morris 33:14
In order to do that, the onus is on me… you will have to understand the difference between a “Utility Token” that is really just an access to a platform versus something that’s more of a “Currency Token”
Well, besides very carefully, a couple of things. From past experience building other Crypto Platforms… If I’m representing somebody who wants to build his or her own platform, the key thing is, and I just had this conversation earlier today with an interesting approach, that’ll create a token. I recommended establishing this outside the United States because I didn’t want the SEC to have the ability to have any undue influence.
So, in order to do that, the onus is on me. I’ve got to navigate the tax rules as relates to Controlled Foreign Corporations, You will need to find countries that are favorable to this. You will also have to understand the difference between a “Utility Token” that is really just an access to a platform versus something that’s more of a “Currency Token”.
So, in order to have a stable coin … that is solely designed as a Store Value and that they’re backed by what we call FIAT Currency. So, like a money market account, they don’t go up and down in value as it relates to value. The way you do that is to make sure that you’re in jurisdictions that have great laws to support your efforts. And then you need to have decent tax rules that are known and knowledgeable, you need to have a network of Non-US and US professionals that you can trust that will help you to start to build your platform in a way that’s decentralized amongst the world. And you’ve got to be careful with your Geo-Blocking. You’ve got to make sure that you’re not allowing people who shouldn’t be in your network to be there, and you have to work with lawyers and you have to work with other advisors.
The Crypto-World shares a great deal of knowledge amongst them, they are very transparent. So, you take your initial steps very carefully trying to protect yourself; you try to set it up so that you’re not creating a secondary problem by solving the first problem.
The other thing is that the SEC wants to call it a “Security” because that’s what they do. If they never say it’s “not” a Security the SEC doesn’t get to play. The IRS wants to call it “Property” because they certainly don’t want to call it Currency since the values go up and down a lot. Commodities, people want to call it a Commodity so that they can play in the game. And that’s part of the whole challenge.
The Treasury under the FinCEN world and OFAC want to make sure that you have to follow all the U.S. Monetary Rules because it becomes very complicated at an exponential rate.
Ed Kless 36:21
And the states get involved with it as well. Do you think we’ll ever sort out this regulatory infighting?
Daniel Morris 36:31
We won’t be able to until the world decides that that Crypto is probably more akin, in the long run to currency
We won’t be able to until the world decides that Crypto is probably more akin, in the long run to Currency; treated like money. And, that’s probably going to take a generation or so. And, the other thing is, you know, if we look at anything else that was technology-driven.
In the 1920s there were 2000 auto manufacturers in the United States that got boiled down to originally four, then three, and now, candidly, two. And one of those doesn’t even really make cars anymore unless it’s a Mustang. So, yeah, I mean it’s shocking. Well, you know, Web-Companies were the same way as Crypto in the beginning. Thousands and Thousands of utility-ish tokens running in the Ethereum network are going to become consolidated over time. I think that would be the natural evolution of things. I do think that the DeFi Base or the Decentralized Finance space is quite intriguing, and this entire NFT Platform; the ability to take creative art, and the tokenization of it and then confirming I own it. It’s very interesting and then all the non-monetary aspects of the blockchain. I’ve always been impressed with it as well.
Ron Baker 34:54
You deal with a lot of startups obviously and are sometimes willing to take Options or other forms of Creative Payment, besides cash. Do you still do that?
You know since I’ve known you, something you’ve been willing to do because you’re in Silicon Valley, you deal with a lot of startups obviously and are sometimes willing to take Options or other forms of Creative Payment, besides cash. Do you still do that?
Daniel Morris 38:07
Within the confines of the law, that is… Absolutely Correct!
Who’s listening… within the confines of the law is that right. Absolutely correct.
Yes, we’ve taken shares and we’ve benefited from what we’ve accepted. Certainly in the Crypto space. We’re very frequently into some form of a Hybrid Monetization. Some, some cash or FIAT currency, some Tokens; in fact I just met with the President and founder of a new Token that I think is going to be very interesting. And candidly, they don’t have any money. So, I said look, you know if you pay me the cash I’d probably want something like this but if you gave me all tokens, multiply that by a factor of “X”, and I’ll ride with them because I think they have something. I don’t know if they’ll make it or not, but I do think that they have something and I think that it is important that we invest in people, those who have new ideas. And it’s fun. So, yes.
Ron Baker 39:12
You take a portfolio approach and one of the ways I learned that is, you know, by having a few of those in your portfolio. You know if one strikes, it pays off big. That’s where you get those windfall profits.
Daniel Morris 39:30
Yes, it does.
Ed Kless 39:33
Dan, should the United States of America have a digital currency, run by the central bank?
Okay, China has a digital currency, my favorite new acronym is CB DC Central Bank, Digital Currency, Dan should the United States of America have a digital currency, run by the central bank?
Daniel Morris 39:51
Probably, now the question becomes, does it replace the current FIAT Currency Model, or is it a “Supplement To”.
Should they? Probably, now the question becomes, does it replace the current FIAT Currency Model, or is it a Supplement To. I would be probably happy for a while if it was a “Supplement To”. I like that I am able to carry greenbacks in my pocket and I if I exchanged them for some fruit from a vendor someplace I won’t have to go through the Central Bank’s Computer System just so that the Bank’s Computer System knows that I bought two oranges and apples. People talk about Crypto Currencies being utilized by the people who are tax evaders. I’m sorry, but there’s an Accountable Ledger for every transaction that takes place. I can guarantee you that won’t happen with physical “greenbacks” that I used from my wallet.
I can say that there’s a tangible aspect of having a crisp $100 bill in your wallet. A Token… not so much. So, Should they? Yes. Should they ever get rid of greenbacks? No.
Daniel frequently provides Media Content via Workshops, Podcasts, and Printed Articles on topics like Bitcoin and Cryptocurrency, Wealth Preservation and Planning, Global Banking, and many other high-level financial topics that serve and demonstrate the Value of our Global Network that should be of interest to those who need Private High-Wealth Services.
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