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KYC is forever. Once you buy BTC on a KYC exchange, it’s tied to you—no matter how many hops it takes. The best you get is forward-looking privacy.

But what about BTC from non-KYC sources? You could be buying coins that were originally KYC’d, mixed through Whirlpool, or passed through unknown hands.

If you later convert them, could you get hit with AML flags? Or does that only happen if you mix them?

This isn’t just a niche concern—it’s a systemic issue. Most people buying BTC from different sources aren’t thinking about its past. They don’t know (or care) if their coins were mixed or came from a KYC exchange at some point. But regulators and blockchain analytics firms do.

At some point, this problem will have to be addressed. If #Bitcoin isn’t fungible—if some sats are treated differently than others—it undermines the whole system. And if innocent users get flagged just for unknowingly acquiring the “wrong” coins, that’s a major flaw in the current compliance framework.

How do you see this playing out long-term? Will regulators tighten the noose, or will Bitcoiners push back?

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Discussion

It's Moro! 10mo ago

if they are treated differently by network participants, it matters.. if regulators treat it differently would just be yet another attempt to control the network, and probably would fail miserably.

Hanshan 10mo ago

regulators already treat then differently

https://bloghdflix.xyz/coinbase-offering-chain-analytics-tech-to-fed/

It's Moro! 10mo ago

ya, shit like this its a matter of if networks users actually let this stuff change how they use btc.

Hanshan 10mo ago

well i mean

doesn't capital gains tax already change how people use BTC?

It's Moro! 10mo ago

ya, im sure for many it does, but it is also pretty hard to actually enforce except for like a fool who bought and sold on coinbase, then didnt pay the taxes after receiving a 1099 form reporting what they owed to the IRS.. and even then unless you are Roger Ver level of selling you are talking about owing some unpaid taxes which...with the US tax system happens all the time unless ur a w2 earner ( for example, if ur a self employed business owner you basically break 100 different IRS rules every year whether you know it or not).

Cykros 10mo ago

It does, but I don't think most Americans anyway don't realize that you pay capital gains on foreign currency too -- there are just de minimis rules if the gains on a personal transaction are below $200.

This would probably be enough for most people to be okay with though (though of course getting rid of capital gains entirely would be nice if you ask me). The idea of needing to itemize out every coffee or ebook is just plain ridiculous. I half suspect we should all make a point of doing so as a way to DDoS the IRS, but it's probably worth being careful going down that road unless you're REALLY sure you're audit proof.

Hanshan 10mo ago

the scientologists were extremely successful in their campaign to DDos the IRS 🤔

GLACA 10mo ago

Is there a list of exchanges where you can swap btc and aml/kyc doesn't apply?

Hanshan 10mo ago

most folks go to

https://kycnot.me

you can filter by exchanges

Hanshan 10mo ago

depending on what swap you want to do I suggest robosats.

it has the best UX.

It's Moro! 10mo ago

second this 🤙

Cykros 10mo ago

If you use lightning to transfer to the exchange (either entirely, or with a submarine swap through something like Boltz), then if you end up with "wrong sats" it's because you got them from the exchange itself.

apa 10mo ago

Bitcoiners can only win over KYC exchanges if they create alternative products/services that address your concerns and are user friendly. As it stands now, KYC exchanges are one of the easiest ways for people to purchase and sell Bitcoin. They are not going away and will continue to grow and dominate unless a more viable alternative emerges. Most of the advantages of Bitcoin emphasized by Bitcoiners don’t resonate with everyday people who just want a currency that isn’t volatile, is widely accepted, and offers legal protection against fraud and theft.

GLACA 10mo ago

Very true.

Cykros 10mo ago

They're going to just start looking sillier and sillier especially as those coins go into and out of lightning nodes. Chain analysis is just a scam to milk money from people who don't understand its limitations.

It'll suck for a little while for sure. But eventually we'll all have wrong sats.

That all said, if you want to be sure you've got good plausible deniability, bring all of your sats that you are processing through an exchange (through things like bill pay services or using to buy fiat) through lightning. Go through Boltz or some other liquidity provider with a submarine swap, to your lightning address, and if you somehow end up with wrong sats, well...you got them from the exchange itself.