Topic not discussed in the Blue Paper

@dandabek, @Ivana First of all I’d like to say thank you to Dan Dabek, Ivana Tudor and the rest of the Safex Team for their great work on the Blue Paper and the new Website! I’d also like to shout out to the Safex Community for their valuable feedback and support of this project.

I’d like to discuss a topic that I don’t believe was addressed in the Blue Paper but that more recently has become a concern of mine. It is the dreaded topic that has to do with TAXES. While the IRS has said that virtual currencies don’t have legal tender status in the U.S., they have acknowledged that virtual currency can be used to purchase goods and services, or be bought, held and sold as an investment. As such, the IRS is requiring U.S. taxpayers to accurately report capital gains and income generated from cryptocurrency transactions. Depending on how long a cryptocurrency was held at the time of any transaction would determine whether short-term capital gains (less than twelve months) or long-term capital gains would apply. Short-term capital gains will be treated as ordinary income for tax purposes. What also complicates the picture is the new tax law that went into effect at the start of 2018, and the fact that the SEC wants cryptocurrencies to be treated as securities.

My accountant has informed me that I do need to report to the IRS my cost basis for the cryptocurrencies that I hold or received so that a determination can be made whether there was a profit or a loss.

Bitstamp and Bittrex provide the ability to download transaction information to a spreadsheet as (.csv) file. While this is somewhat helpful, they obviously don’t provide any information regarding profit or loss calculations, or even what my cost basis is. To determine my cost basis for Safex, as an example, I have to start by determining the cost of Bitcoin at the time that I used to purchase Safex. Fortunately, I discovered that Coindesk has a feature where I can get the minute to minute cost of Bitcoin for any date, and compare this to the date of Safex purchase by viewing the transaction in

But these considerations will most likely get much harder once I start receiving Safex Cash and spending it. Do you think Dan and Ivana that it will be possible for the new marketplace to have a mechanism in place so that U.S. taxpayers can easily track any and all transactions for tax purposes? I’ve read that U.S. exchanges such as Coinbase now are required to provide such mechanisms to their members, and that Coss exchange in Singapore will also be providing a mechanism for U.S. taxpayers due to the fact that the Coss exchange is in a foreign territory.


Uh I hate taxes, technically there’s no way for them to find out cause it’s anonynous.

It only becomes an issue when you cash out to fiat, but even then the many transactions between altcoins, across different exchanges make it very difficult to track the profit/losses.

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I recommend caution… but most of all I recommend knowledge !!
The more people will know the truth the less powerful -they- will become !


@jcasale - Thanks for taking the time to share this with the SAFEX Community and with the SAFEX Team.

Because the U.S., and other Countries, will be treating Cryptos as property for the foreseeable future, it is a quintissential element, for the entire Crypto space, to adopt a mechanism that will identify prices of assets in a Fiat currency at the time of the transaction. To be able to provide this in real time will be very important to supporting mass adoption. Otherwise, projects will run the risk of minimal adoption, certainly not a sufficient amount to encourage large-scale transactions in a marketplace.

Of course, one could argue that SAFEX is developing a marketplace that will bypass these challenges, through anonymity. For investors, though, the compliance with taxable outcomes is beyond important.

@dandabek - I hope we can create something through SAFEX that can be adopted throughout the CryptoWorld to address valuation at time of transaction - the taxable event - so that investors, buyers, and sellers can comply accordingly.


This can be done by the user with the spreadsheet they use to record their transactions.

It is a simple case of a vlookup based on time

One sheet has the transactions with the time
The other sheet has the date-time/price chart downloadable from many sources.

The vlookup simply matches the closest time and plugs in the price at that time. Then a simple multiply gives the fiat price for the transaction

Print spreadsheet and give to your tax accountant/agent

To try and do this in the market place is not a good idea since this is a function to be done on a layer above the marketplace.

One possibility is to incorporate it into the UI so that as you view the trade the fiat price from your “favorite” charting site shows as well.

But once again for tax purposes it is easier to do it in your spreadsheet you keep a record of the transactions.


What you are describing is a general issue to crypto currency, not a problem specific to SAFEX.

There are websites that calculate your taxes when you export your transactions.


You would be responsible for taking care of your own taxes, same like all other cryptocurrencies.

The main benefit that we can provide are merchant tools and those could be provided by third parties (we can help of course).

Each different nation has its own tax rules; for instance Serbia does not recognize cryptocurrencies as a thing at all it may as well be an agreement of value we wrote down on a napkin and exchanged it.

Therefore; we can not confine the platform and project down to ONE jurisdiction. It’s like chewing gum in Singapore is illegal, crazy right? Likewise with taxes etc, in USA others think its crazy (I think that each nation does what it has to according to its culture).

Long story short, with a good management software dealing with taxes will be a simple matter to those who need to deal about them regardless of where you are from.


yes I am sure such a solution will come up for those who need it.


@dandabek, @Ivana Minimally then, could the Safex UI keep a transaction log that members can export which will show the Date and Time for the Amount of Safex Cash earned and spent?

If at the Date and Time the amount of Safex Cash earned and spent is related to, say the price of Bitcoin, it will be possible to convert to an appropriate Fiat currency.

Also not discussed in the Blue Paper is the frequency of the Safex Cash airdrop. Will this event occur Weekly, Monthly, Quarterly?

Thank You!


airdrop takes place based on a conversion transaction of Safex from bitcoin blockchain to safex blockchain.

the incentive distributions interval is not determined yet. It is set as “on an interval” yet to be determined


What I am really wondering is whether cryptocurrencies, as programmable assets, can be designed to do the calculation with inputs from end recipients. If I send you SAFEX Cash to purchase your services on the Marketplace, if you are a citizen of the Eurozone, North America, Australia, etc, this is considered a taxable event for both of us.

In a marketplace where this is happening at lightning pace, we cannot expect anyone - buyers or sellers - to take the time to calculate taxes. It defeats the purpose of having a cryptocurrency marketplace, which will put a target on the operation from Tax Revenue Services in multiple countries, I think.

I do believe that this can be remedied through some sort of “Smart Contract” built into the currency - I am only guessing here, but I sense that it could be done.

If I wind up paying a short-term capital gains tax on every transaction, I am better off spending my Fiat on Amazon or elsewhere. This is what I think @jcasale is alluding to.

@dandabek - My overall concern is that Eurozone, North America, Oceania Citizens will not be so excited to use a marketplace where they can take a significant financial hit - a capital gains tax - on every transaction. Serbia, of course, will not have this challenge; however, other countries will. What do you and @Ivana think we can do to address this particular issue?

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For one it is the responsibility of the parties involved.

Many countries have tiered tax levels for calculating the tax.

So if one is on the lower tier 15 cents on the dollar, how is the market place going to know that. It would need to have ALL the tax scales in the system and then be updated with every country’s tax scale as they change.

No you cannot do it

  • you would need to know the person’s other income to determine a tax scale
  • you would need to take into account all the transactions that came before it
  • you would need to know what deductions the person is allowed so you can see what tax bracket they are in
  • you would need to know if the person is doing this as business or personal (what tax scle to use)
  • the market place needs to be updated constantly with the new tax scales as they came out
  • basically you would have to roll all the tax laws of every country into the market place in order to do this

How many years do you think that would take?

Just get the person do handle their own tax with a simple spreadsheet


If the marketplace gave you an option of logging your transactions (safex cash amount, date & time), which would also include the relative value of the transaction in BTC and fiat at that time, would it be enough for your purposes?

EDIT 1: regarding cryptos being used as currencies, there are many stores accepting for example BTC, so I assume that the tax question in such transactions has already been solved? I mean, how is buying something on the marketplace different then buying something on a website that accepts BTC?

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Thanks very much for your reply…

It is a bigger question that I am wrangling with and that is the “Nation-State Existensialism” Question.

Nation States are concerned about Crypto because of the implications of potentially enabling users to bypass taxation altogether. I am imagining that this is causing questions about the possibility of banning crypto for countries. My inquiry is mostly meant to engage the SAFEX Community, along with other Crypto Communities, to consider the implications of how to best ensure that Cryptos have a long lifespan ahead of them.

If regulatory bodies feel that Cryptos will generate tax evasion, they will ban them, without question. I do not want us to eventually create an underground economy in the Cryptosphere. Mostly curious about what others think.

Thanks again for the response.


As long as a person can get an itemised list of their transactions then that is all taxation requires of the market place.

The reason being that the person can access historical crypto/fiat charts and determine the fiat amount of those transactions. From there the person does their normal tax return. Thus the taxation people would ask no more.

Remember that for many the transactions would be classed as hobby since they might only do a few small transactions a year and thus not taxable. And the SAFEX holders they follow their nations taxation laws, assuming they earn enough from it.

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Thank you for the reply.

I think what you propose is a great suggestion. The easiest version would be to create something that allows users to select their “native” fiat currency and determine the value of BTC at the time of that transaction in that native currency. Such a feature will make the marketplace infinitely more attractive, I think, to Users - Buyers & Sellers. I think it is a feature that most Cryptos don’t even consider, but could definitely set SAFEX apart.

If we want mass adoption of anything Crypto-related, we must recognize that people will want to pay appropriate taxes - they do not want to risk running afoul of the law. And, in the case of Cryptos, arguably, one could be violating not only national, but international law if handled poorly.

Since @dandabek and @Ivana and the SAFEX Team and Community seem to very much want to set the bar for a unique, well-considered, and intelligent approach to Crypto, I think Taxes and the implications of taxation are essential to the long-term success of this project.


There are lots of website services that calculate your taxes for crypto, all you need is the date & transaction amount.

At bare minimum, the marketplace would need to export data for date & transaction amount.


@dandabek, @Rob, @David, @cryptomanic
Dan, Could the Safex UI or possibly a future upgrade to the Safex Wallet minimally, at a bare minimum then, record the Date and Time when we receive Safex Cash via airdrop, or when we spend it from our wallet so that we can export that information? Knowing the Date and Time and the actual amount of coins received at that date and time will make it possible to use a resource such as Coindesk to accurately track the value of Safex Cash referenced to the price of Bitcoin.
I know it all sounds a bit wordy what I’m asking, but I think @David, @Rob, @Boris_S, @cryptomanic have all made some good points and I appreciate their input. Thankfully, has recorded each of my Safex purchases for the price in Bitcoin I paid at a specific date and time that I can then convert to U.S. Dollars using Coindesk.

Thank You!


You will find all blockchains record date/time of transactions on the blockchain. incentive payments and the one time airdrop will be transactions as well. So no fear the date/time will be there.

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If we want the marketplace to be widely adopted it needs to provide all the tools that buyers and sellers are used to having. Users need to have a full history of everything they ever bought/sold, with relevant data. And this in my view includes the relative fiat value at the time of transaction.

The issue of Safex Cash transactions relative to fiat links to a topic I mentioned in another thread - that the marketplace must have an option to set the item price in fiat, and then that price can be expressed in Safex Cash and automatically updated (in real time) to reflect any change in its value.

What I mean is - if I am a serious vendor with dozens of items, I need them sold at a certain (fiat) price. I am not going to check Safex Cash value hourly and update my prices. The system should do this for me.

The other very important consideration for me will be how quickly and easily I can convert Safex Cash to fiat (through BTC or directly). Mainstream vendors will not keep Safex Cash. They will convert to fiat as soon as possible, in order to avoid changes in its value between the time of marketplace transaction and the time of fiat conversion.

For all the above and other reasons, I really hope we will get a concept paper for the marketplace itself, since we already have a very good one for the new blockchain.