US Tax Authorities Discusses Taxing Digital Currencies; Each Standard Method Has Trade-Offs

  • Tax regulators across the U.S. are debating on the trade-offs in taxing digital assets, Bloomberg Law states.
  • Erika Nijenhuis, a senior counsel at the department’s tax policy office, said at a virtual conference on Thursday.

The world’s largest economy is looking for ways to increase revenues, including taxation of digital assets and cryptocurrencies. During a virtual interview at the OECD’s 2020 Global Blockchain Policy Forum, senior counsel at the Treasury Department, Erika Nijenhuis, stated the U.S is developing domestic reporting rules on taxing cryptocurrencies.

In their quest to find the best models, the tax regulators are debating different tradeoffs that proposed tax models offer, including the risk factor approach and the direct reporting of tax from crypto transactions.

The authorities are looking for a balance that will be efficient in collecting the tax proceeds. This ranges from checking the burden placed on the crypto-taxable parties such as crypto money transmitters and exchanges and how to enhance compliance across these firms. Nijenhuis said,

“There are trade-offs among all of them, and we are hard at work thinking about all of those issues.”

“None of those are easy questions.”

The U.S. Internal Revenue Service (IRS) has been at the forefront of taxing crypto assets in calling for clarity on taxing these assets.

Earlier in the month, David W. Klasing, a boutique Californian tax firm, reported that the IRS looked into Coinbase accounts to catch offenders who do not comply with the platform’s reporting tax standards.

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Author: Lujan Odera

Digital Yuan Pilot Records $300 Million in Transactions But No Launch Yet, says PBOC Governor

The pilot program on the digital yuan rollout across four cities – Shenzhen, Suzhou, Xiong’an, and Chengdu has been smooth, said Yi Gang, governor of China’s central bank People’s Bank of China.

Over 4 million transactions, totaling more than 2 billion yuan ($299 million) in the digital currency so far, have been made, he said.

As per the figures, the digital yuan pilot expanded 21% and 82% from the 3.3 million transactions valued at 1.1 billion yuan, respectively recorded in late August, according to South China Morning Post.

The PBOC pilot discovered 12,000 use cases for DCEP, up 80% from 6,700 ways as of late August. Yi said,

“So far, the experiment and pilot program have been (going) fairly smoothly.”

Legal Framework Needs Completion

The comments were made during the Hong Kong Fintech Week conference on Monday, where Yi was speaking on a virtual panel with Agustin Carstens, head of the Bank for International Settlements, and Klaas Knot, president of the Dutch central bank.

Despite the digital yuan usage expanding rapidly across Chinese cities, Yi said they are in the early stages of developing a central bank digital currency. On the launch of digital yuan, Yi said China first needs to complete,

“A fairly complicated, and complete legal framework and regulations (for digital yuan) that enhances its transparency.”

With DCEP, the world’s second-largest economy is accelerating towards a cashless society. The country’s digital payments transaction volume has actually been expected to surge to 412 trillion yuan by 2025, up from 201 trillion yuan last year.

A Global Framework for CBDC

As we reported, the central bank published a draft law last week aiming to provide the DCEP a legal status.

Yi didn’t say anything about that on Monday but said the PBOC had completed the architectural design of the (CBDC). He further reiterated that the pilots would also run at the Winter Olympics in 2022, for which QR codes, tap-and-go transactions, and other features will be available.

During the panel, which was moderated by the Hong Kong Monetary Authority’s chief executive Eddie Yue, Yi said the PBOC would also collaborate with other central banks to establish a legal framework for CBDs globally. Yi said,

“I would like to cooperate with the Bank of International Settlements, the Financial Stability Board and international central bankers to discuss a legal framework, [fostering] transparency and how to safeguard [the development] of central bank digital currencies.”

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Author: AnTy

4,000 ETH Worth $1.6 Million Deposited at Binance Right Before the 4.5% Drop in Price

Over the weekend, the crypto market enjoyed a green sweep across the board.

Bitcoin jumped past $14,000, marking a 34-months high on the 12th birthday of its whitepaper. Following BTC, altcoins also recorded some gains, with ETH going back above $390.

However, today, Bitcoin’s price went down from about $13,800 to as low as $13,200. A fall of more than 4% in the price of BTC has altcoins in red too.

One potential reason for this decline could be another China-based exchange, Huobi being under investigation. However, the team assured its users that “assets are safe, and everything is fine.”

Corrections are to be expected after BTC rallied from $10,580 to the highest close ever. Although market participants believe this bull cycle is nothing like 2017 because the crypto space is maturing, adoption is rising, and infrastructure is improving; pullbacks happen all the time. So did nine times, of about 30%, in 2017.

Meanwhile, the second-largest cryptocurrency Ethereum (ETH) started the day on a bullish note as it moved past $400 only to get down to the $382 level, back to the weekend level before it started moving up.

Interestingly, before the breakdown, 4,000 ETH, worth $1.6 million, were deposited at the leading cryptocurrency exchange Binance.

At the time of writing, ETH/USD has been trading at just above $385.

“Surprise surprise, eth/btc rekt, since losing that key 31k sat support and now in the 27k sats zone, however still thinking it goes a bit lower before i’ll be looking for any bottoms. Getting close now but BTC still king for now IMO,” noted one trader.

Ethereum usually leads the cryptocurrency rallies, but this time, Bitcoin is outperforming the altcoins.

As we saw with year-to-date returns, ETH recorded 192.5%, while BTC only returned 85% YTD. But this month, the momentum shifted, and Bitcoin made a new 2020 high and then broke the 2019 high as well. BTC is up 26.63% in the past 30 days, while ETH’s returns have been only 10.5% during the same period.

“There’s a lot of ETH bearishness recently,” noted quant trader Qiao Wang.

“I’m also of the view that ETH will underperform BTC in the next bull cycle. But only slightly. And I want to explore arguments for why this thesis may be wrong, i.e., why ETH could outperform BTC.”

According to Wang, a significant percentage of the population does not get the “digital gold” narrative, and they are more comfortable with the “tech platform” that ETH represents.

“Most of this new inflow from tech people is likely going to be in ETH because ETH is the best index play,” said Wang adding, “it also takes a lot less money to move ETH than to move BTC given their relative size.”

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Author: AnTy

Bitcoin Comes to the Rescue of Nigerian Protesters as Account Gets Suspended

It’s been more than a week now that people across Nigeria have been protesting against police brutality and demand reform and accountability.

The younger generations are using social media to document the event in real life to amplify their cause and counter false narratives.

The youth-led rallies in several parts of the countries target the federal Special Anti-Robbery Squad (SARS). Authorities have announced that SARS will be disbanded, but the promise is not enough to quell the anger.

Nigerians continue to protest and fight for accountability, calling for an end to police violence and a complete overhaul of the system.

As part of the protests, various organizations have been asking for support. One such activist, the Feminist Coalition Group, which has managed large funds, reported having its accounts suspended.

“For demanding an end to police brutality, we are now under attack! Our bank account has been deactivated, and so has the Flutterwave donation link. Our members lives are also being threatened!” it was written on twitter earlier this week.

Amidst this attack, Bitcoin came to the rescue as the official twitter account of Nigerian feminists fighting against the injustice of SARS through peaceful protests, fundraising, and social media organization shared the option to donate with BTC.

The platform accepts BTC through BTC Pay Server, a self-hosted cryptocurrency payment processor, which is a “free, secure, and censorship-resistant platform.”

Already, over 180 transactions have been made to their addresses and raised about $10,800 (0.94749255 BTC) at the current BTC price.

Twitter CEO Jack Dorsey, a Bitcoin proponent, also mentioned the protest in several tweets and asked people to donate via BTC to support the protest.

“Donate via Bitcoin to help EndSARS,” tweeted Dorsey.

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Author: AnTy

Lightning Network’s Ready for the Next Step in its Evolution; Bitcoin Capacity Across Channels Hits Peak

The cumulative capacity across all channels on the layer 2 solution of bitcoin Lightning Network has hit an all-time high at 1,106 BTC, worth about $11.8 million at current bitcoin prices, as per 1ML.

The previous high was in early May 2019 at 1,099.7 BTC, worth about $6.5 million at that time.

Source: Bitcoin Visuals

The number of channels is also approaching the peak of 40k from mid-March 2019, as it currently hovers around 37,600. As for the number of nodes that open payment channels with each other funded with BTC, it is above 7,600.

Amidst this, Lightning Labs, which maintains the Lightning Network Daemon (LND) implementation of the Lightning Network, started supporting Wumbo with the release of Ind 0.11-beta — channels over the 0.1677 BTC limit originally imposed to discourage users from putting too much money into the early software.

This latest development means “the software has progressed to a point where advanced users, companies, and node operators can opt into larger channels.”

“Enabling Wumbo was our signal to the rest of the world that the Lightning Network is ready for the next step in its evolution,” states Lightning Labs.

This evolution involves a world where Lightning nodes are as “ubiquitous as the TCP/IP driver,” and every device from the mobile phone, laptop, desktop, router, and network switch can send/receive payments, authenticate themselves, and send end-to-end encrypted messages without a trusted third party.

Just last week, Lightning Labs also added accounting reports to the suite of tools for Ind to help users track sats. And with Wumbo and Faraday, it expects more and more companies to enable Lightning for its users.

Blockstream, which maintains the c-lightning implementation, also updated its tech stack in the form of channel management and routing tools.

The latest version 0.9.1 of c-lightning improves the likelihood of larger transactions to find a route between the sender and receiver while removing the bugs to make the process more efficient.

Additionally, with multifundchannel plugin, it is now possible to open multiple channels with a single transaction.

Also Read: Bitfinex Launches Wumbo Lightning Network Channels

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Author: AnTy

A Dose of Hopium Amidst the Bitcoin Market Sentiments Turning to ‘Fear’

With so much red across the crypto market, the market sentiment has taken a drastic turn.

Until yesterday, the market sentiments were of “extreme greed” with a reading around 80, on a scale of 1-100, as per Crypto Fear & Greed Index. The crypto market has been in “extreme greed” ever since late July.

But yesterday’s correction resulted in a sudden decline to a reading of 40, which translates to “fear” last seen in early July when bitcoin was around $9,100.

Crypto Fear & Greed Index
Source: Crypto Fear & Greed Index

The sentiment makes sense, given that bitcoin nearly dropped to $10,000 level in over a month. The crash in the prices of the leading digital currency also sent altcoins in a free fall.

Overall, the crypto market cap lost $60 billion but is currently seeing a small rebound as bitcoin trades at $10,450 with altcoins making a recovery as well.

However, analyst Rekt capital notes, “In the bear market, BTC was in a macro downtrend with relief rallies on the way to new yearly lows. In this bull market, BTC is in an overall uptrend with small pullbacks on the way to new highs.”

Given that crypto markets were influenced by the stock market where tech stocks experienced a sharp reversal, we need to pay attention to the last trading day of the week for the US stock market and, of course, the U.S. Dollar Index, which seems to be gaining strength.

Amidst this somber mood, the popular analyst “Nunya Bizniz” shared the hopium that calls for stacking the sats in anticipation of a bullish wave.

Comparing the 2015 market structure, currently, we are retesting the descending trend line on the weekly just like we did at that time. After the successful retesting five years back, the digital asset had a rally of 8,000% into the all-time high of $20,000 in December 2017.

Source: TradingView

Also, it is nothing out of character for bitcoin to fall this much. As a matter of fact, if bitcoin drops to $8,000, even that won’t be out of the ordinary. During the past cycle, the flagship cryptocurrency had about nine such retracements, where it fell 30% to 40%.

If anything, it is a good buy the dip opportunity.

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Author: AnTy

Starbucks Introduces Blockchain Coffee Tracing System For Customers and Farmers

Starbucks, one of the leading coffee makers across the globe with thousands of stores, has turned to blockchain to help its customers trace the origin of their coffee.

Starbucks believes that blockchain technology would enable users to scan a bar-code on their coffee bags to find out where the coffee was farmed, the time it took to reach their retail store from the farmlands, and much more. The farmers responsible for producing the coffee would be given a reverse code to track their products destination as well.

The blockchain tracing system would use the Microsoft Corp tool that would enable Starbucks to share some of the most extensive traceability data, which the firm has been collecting over the years, with their customer base.

Michelle Burns, the vice-president of Starbucks, commented on their decision to introduce blockchain-based traceability system:

“We have been able to trace every coffee we buy from every farm for almost two decades, that allowed us to have the foundation to now build a user-friendly, consumer-driven tool that certainly provides that trust and confidence to our customers that we know where all of our coffee comes from.”

The largest coffee-retail chains move to incorporate blockchain traceability is seen as a way to appeal to millennial customers in their ecosystem. The coffee maker believes that the new generation is quite particular about the products they consume, from how they’re sourced to how they reached the supermarket. The introduction of the traceability of products would interact more millennials to the platform.

Blockchain Technology Use For Food Traceability on the Rise

Blockchain technology has been considered for a wide array of industries, despite many of these companies having initial reservations for cryptocurrencies and tokens. Many mainstream tech firms are actively investing in technology or developing enterprise-grade solutions. The food supply-chain industry has turned out to be the largest adopter of the blockchain tech.

In the past couple of years, primary food and beverage brands have turned to blockchain to streamline the food traceability process. Some of the most recognizable brands that have turned to blockchain include Nescafe, J.M. Smucker Co., and Jacobs Douwe Egberts.

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Author: Hank Klinger

Grayscale Launches Second National TV Commercial to Drive Interest In Digital Assets

Grayscale Investments launches a new digital assets TV commercial ad across top stations on Monday aiming at onboarding no coiners onto the crypto bandwagon. The video, which has since been shared thousands of times across social media, raised different opinions across crypto Twitter similar to its previous #DropGold campaign.

The world’s first institutional-focused digital assets firm, Grayscale, launched its second digital assets ad campaign titled “History of Money” on Monday, following the successful “#DropGold” ad, launched in 2019. The new TV commercial is a half-minute explanation of the history and evolution of money from barter trade, to cowrie shells to Roman gold and copper coins and finally the more recent paper form of money and bonds.

While the ad, featured on CNBC, MSNBC, Fox, and Fox Business, promotes the move to digital assets as the next stage of money, Bitcoin (BTC) is not mentioned in the ad, as was the case in the #DropGold campaign. Instead, a list of digital assets on Grayscale’s Trust including BTC, BCH, ETH and XRP are listed as shown in the image below.

C:UsersUSERDownloadsIMG-0974.jpg
Grayscale’s Digital Asset Trust options. (Image: Grayscale)

The institutional digital assets firm pitches the ad on their blog as:

“A wakeup call that people everywhere should seize what we feel is a once in a generation opportunity that digital currencies may present.”

Crypto journalist, Andrew Thurman, compares Grayscale’s latest ad to Charlie Merrill, a legendary banker known for his efforts to educate and advertise to the population in a bid to popularize the buying and trading of stocks and bonds.

In 1948, Merrill published one of the longest newspaper ads yet in the New York Times titled “‘What Everybody Ought To Know About This Stock and Bond Business”, to push adoption into equities. His gamble paid off. Could Grayscale’s latest ad play a massive role to push liquidity into the crypto markets as well as increase knowledge across ordinary populations and institutions in a similar manner?

Only time will tell. But so far the institution has grown its value of assets under management (AUM) to over $5 billion according to the recently released half year results.

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Author: Lujan Odera

DASH Usage Doubles In Q1 Across Latin America As Privacy Concerns Build

The privacy-enabled cryptocurrency, Dash, is seeing widespread adoption across the globe with countries in the Latin American (LATAM) region leading the charge. A Q1 2020 report from Dash Core Group (DCG), a non-profit organization leading the development of the blockchain, shows that overall commercial payments using DASH across the LATAM region spiked 104% in this quarter.

DASH adoption blooms in LATAM region

One of the most impressive adoption rates has been in Venezuela, where Burger King started to accept the cryptocurrency, in light of the country’s hyperinflation. Speaking to Finance Magnates, the CEO of DCG, Ryan Taylor said,

“Probably our greatest success story has been in Venezuela, where we have thousands of merchants that accept it, and they see users walking in the door and using it.”

The number of DASH wallets on mobile devices has also explosively grown over the past year – recording a 210% increase from May 2019 to 101,747 wallets on mobile devices. DASH’s price against the dollar has also witnessed a healthy rise year to date spiking over 60% to trade at $77.25 on major exchanges.

The crypto is silently gaining widespread adoption in the real world allowing overstressed economies to privately and instantly send and transact funds. Ryan said the DASH adoption curve extends to other continents and regions including countries in Asia and in Africa. Notwithstanding, the crypto is gaining ground in the gaming industry as well. He added,

“We’ve seen some usage within certain verticals: one of those is gaming. We’ve recently been integrated into a platform called ReadyRaider.”

The positives in the LATAM market are however masked by the exit of one of the biggest promoters of DASH in October last year – Latam, which operated in 8 countries and 20 cities in the region.

The privacy question?

The privacy of DASH, however, is being brought to question following the addition of DASH and Zcash (ZEC) to Chainalysis, a blockchain compliance monitoring analytics firm. In the statement released by Chainalysis, the DASH PrivateSend feature was compared to a simple iteration of Bitcoin’s coin mixers stating over 99% of transactions on the blockchain is not private.

However, Ryan explained that the mixing feature enhances the overall security and privacy of the users. He further believes that Chainalysis will bring safer transactions to DASH.

“Ultimately, both [Dash and Chainalysis] promote the safe use of cryptocurrencies, while ensuring access to legacy financial markets, so I’m pleased that Chainalysis has chosen to implement Dash into their platform.”

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Author: Lujan Odera

‘Masked Hero’ Calling to ‘Buy Bitcoin’ Amidst the Peaceful Protests and Riots in the US

  • Bitcoin is taking an active part in the riots across America.
  • People are protesting since last week over the death of George Floyd, a black man who died while pleading for air as a white Minneapolis officer jammed a knee into his neck.

One protestor in the Los Angeles neighborhood talked about opting out of the current scenario by moving into bitcoin. He said,

“We live in a system that will not allow us to thrive. […] My macro solution for everyone is to opt out and exit the economy as a whole and the way we do that is by buying bitcoin.”

“Who is this masked hero?” enquired Jesse Powell, founder and CEO of cryptocurrency exchange Kraken on Twitter.

The protests erupted only recently but it needs to be pointed out that in the first five months of 2020, things weren’t going well either. People were under lockdown due to the coronavirus pandemic that resulted in unemployment soaring to nearly 24% with jobless claims since mid-March at a staggering 40.8 million.

While people are struggling to fed their family and pay their rent and mortgages, US Federal Reserve printed money and stocks are flying.

This wasn’t the first incident of bitcoin being highlighted during the protests either.

Earlier this week, another protester in Dallas carried a sign saying “Bitcoin will save us,” much to the ire of the people both from inside and outside the crypto industry.

Another one has been in Raleigh, North Carolina, where the poster of the protester read “Bitcoin & Black America” referring to the book authored by Isaiah Jackson.

Crypto industry has also been sharing its solidarity to the cause with Ripple CEO Brad Garlinghouse supporting those “who are fighting to save Black lives,” although he “can’t ever fully understand the pain of our Black community that recent and past events have caused.”

Bitcoin has been a part of protests in other parts of the world as well. Last year, the pro-democracy movement in Hong Kong supported the adoption of the digital currency. Also, in countries like Venezuela, Argentina, Chile, and others, cryptocurrencies played a role.

Markets Rising amidst the Chaos

For the first time in about a month, this week the price of bitcoin also jumped above $10,000 amidst the raging protests, although we are back to $9,500.

But bitcoin isn’t the only one, while many cities are on fire in the US, the S&P 500 enjoyed its greatest 50-day rally in history while struggling with the coronavirus pandemic.

If history is any indication, these 37.7% returns would further expand in the days ahead.

The reason behind this disconnection between the stock market and the economy is the trillions of dollars injected into the market by the Federal Reserve and government. Trader and economist Alex Kruger said,

“Europe sharply reducing political tail risk, Japan fiscal package 40% of GDP, China fears overdone as Trump steps back, economies reopening, US riots The market has spoken. Hence why so much green.”

But the widespread civil rest in the US could act as a headwind for stocks. Currently, bitcoin is trading at above $9,600 and is expected to hit $20,000 this year.

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Author: AnTy