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Originally Posted by MatthewKlein
How would a gun shop owner launder bitcoin payments from frowned upon gun sales
Owner of the shop needs dollars to pay the mortgage, utilities, gas, food. If there is an audit he's got to explain its origin
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In small quantities you can use exchanges to cash out. Or you can borrow against the value of the coin like you can do with stocks. That’s why Bitcoin is inelegant when viewed alongside the dollar.
Let’s say you’re transacting on digital wallets with your customers. Just like taking cash to your bank, you can deposit the coin from your wallet onto an exchange or an intermediary. Many people use what is known as a stable coin for this. Stable coins are pegged to a specific currency. The most popular is USDTether. You trade your Bitcoin for USDC then sell those for dollars. You book the cash in your accounting software as if the transactions were made via cash/card.
You’re not hiding the payment from the government and you’re still paying taxes on it. But you bypassed your payment processor that may not like you. Possibly saving money on transaction fees at the same time.
The SWIFT system that includes payment processors use what’s called an MCC code with individual transactions. Here’s the current lists of codes.
https://www.citibank.com/tts/solutio...gory-Codes.pdf
There is not currently a code specifically for weapon dealers as congress quashed that attempt last year. We aren’t talking guns but it’s when, not off that category gets added and tracked, giving any payment processor using SWIFT the technical capability of stopping that type of purchase if they wanted to.
Since Bitcoin’s ledger doesn’t have these MCC codes or any other type of transaction detail, it can’t stop the transaction for any reason as long as the network has consensus.
The end goal of course would be to pay your bills using bitcoin, not dollars. That is a long way off though unless there is some sort of black swan event that kills fiat currencies.