If someone were to sell bitcoins on localbitcoins.com in exchange for paypal my cash cards, which were then deposited into paypal. Is that legal as long as any taxable gains received in the transaction are paid? If the amount is under $500 per day and $4000 per month would there be any requirement to know the customer or comply with anti-money laundering laws?
I don't think there is an issues behind. Bitcoin has not set any law that if any transaction crosses any threshold limit, tax has to be paid or the seller or buyer need to liable to any authority. Its a open forum. But in case, if you are using any other payment method then you have be liable for the concern authority. I am sure yes.