n Coinbase reports completing the largest crypto migration on recordn
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Contrary to Reports, Crypto Sector is Not Dead: Here’s Why
Bitcoin is dead; Blockchain is wasted; Crypto is gone–this is something the world has been told over and over again.
The first ever article that predicted a bitcoin death was published in 2010 by Tim Harford, an economist. At that time, bitcoin was trading at .23. The following year, after bitcoin surged to .80, Gizmodo Australia wrote that the digital currency is dying. In 2013, New York Magazine penned ‘Bitcoin Sees the Grim Reaper‘ when bitcoin jumped above 0. Three months later, a Medium post predicted a horrific death for the digital currency, and it was well above 0 at that time.
Fast forward five years, the predictions haven’t rested. The obituaries seem to have included even the underlying technology of bitcoin, the blockchain, for allegedly being totally-hyped and an utterly-waste. An article has already hanged a “rest of peace” sign around its neck. The Week in January discussed the death of crypto. And irony committed suicide when even a bitcoin millionaire said that bitcoin is dead.
That totals to more than 300 times Bitcoin has been killed by the mainstream media, according to 99bitcoin’s death calculator.
Value-Driven Sentiments
The latest round of obituaries come in the wake of crypto market’s dismissal performance in 2018. Once at a peak, bitcoin and every major and minor crypto asset fell by at least 80%. The crash prompted many blockchain startups, which raised funds in bitcoin-like assets via ICO in 2017, to either shut down their operations entirely or layoff a considerable portion of their workforce.
The Securities and Exchange Commission (SEC) rejected nine Bitcoin ETFs. Goldman Sachs and NYSE delayed their crypto-enabled products until next year. Nobel laureate Nouriel Roubini called bitcoin “a mother of all scams” before the US Congress and later patted his back when cryptos crashed. Even a controversial figure, the Wolf of Wall Street-famed Jordan Belfort, who scammed many in his notorious financial career, took a potshot at the digital currency, saying that it belongs to a scrapyard.
It seems that every time cryptos suffer a financial tragedy, their critics get the moment to attack them and predicting their end. The majority of complaints crypto/blockchain sector is receiving during its downtrend is related to their alleged overvaluation, hype, lack of demand and unrealistic business models. While some of it is true to an extent, owing to an increase in the number of ICO scams and vaporware this year, that does not exactly prove that the entire sector is on the verge of dying.
Crypto Not Dead
Financial bubbles are not a thing that was born with cryptocurrencies. They have been there since the time of the infamous Tulip Mania, the Great Depression, and the very latest 2008 recession. Quite unlikely, nobody said that the US stock market would die or the value of the dollar will drop to zero.
A 2012 Harvard Business School report found that only 1 out of every 10 startups will succeed. But it didn’t say that the entire startup industry was doomed to fail. How many of these startups, for argument sake, had an unrealistic business model? How many of them attracted accredited investor but failed anyway? How many of them were supported by more prominent corporations but worked against the hype?
So why a blockchain startup industry should be viewed from a separate lens, even at a time when it is beginning to take its first steps towards actual adoption. Those who complain that blockchain does not have a “killer app” absent-mindedly sideline bitcoin, the world’s most secure and decentralized payment engine. On the contrary, they say bitcoin is doomed to fail, even though it is heading towards attaining the status of digital gold (or even the next global reserve), thanks to this their resembling characteristics.
As for blockchain as a technology, crypto enthusiasts have already said that it should better be decentralized that being a random database of some random private company. Forced conversion of an already-working traditional business model into a blockchain-enabled model will always be a bad idea. The killer apps would belong to blockchain projects that are genuinely seeking an intermediary-free system or are solving a real-world problem.
Big Corporations in Blockchain
Some of the biggest corporations are already exploring blockchain and have successful derived suitable products using it. They include names like IBM, Cisco, PwC, and whatnot.
“I think supply chain is going to be the first, if not near the first, to show the value of blockchain,” Mark Smith, CEO of Symbiont, a blockchain development company, told CNBC. “There aren’t any regulatory questions in supply chain management that you have to deal with.”
“Blockchain’s really about trust in data and business processes,” said Ramesh Gopinath, vice president of blockchain solutions at IBM. “When you have to rely on data, four or five hops upstream, you have to have a reason to trust it, and blockchain provides that.”
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Japanese Police Note Uptick in Reports of Illicit Crypto Transactions This Year
n This year there has been a major wave of reports to the police concerning suspect crypto transactions in Japann
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Binance Launches Research Arm For Institutional-Grade Research Reports
n nn nn Popular cryptocurrency exchange Binance announced today that it has launched a new division dedicated specifically to industry analysis.In a November 8, 2018, announcement, Binance described some of the responsibilities of this new division, which has been dubbed Binance Research. The research is focused on the creation of institutional-grade research reports and has the aim of increasing transparency and improving the quality of information available with
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Brazil Tax Authority Orders Crypto Exchanges to Provide Monthly Reports
Brazil’s tax regulator, the Department of Federal Revenue, is requiring local cryptocurrency exchanges to report their operations on a monthly basis in order to verify tax compliance and improve the country’s fight against money laundering and corruption.
Brazillian Cryptocurrency Exchanges to Report Monthly Trading Data to Authorities
Citing the examples of Australia and South Korea, the Brazillian authorities announced they will require monthly reports from local digital currency exchanges from now on.
The document points to a significant increase of cryptocurrency trading in Brazil. In 2017, the number of user accounts on crypto operators surpassed the number of user accounts registered on the Sao Paulo stock exchange.
Annual Bitcoin trading volume has jumped from 44.8 million BRL (.12 million at current rates) in 2014, to 113 million BRL (.57 million) in 2015. Volumes only got larger in 2016 (363.2 million BRL or million at current rates) and 2017 (8.3 billion BRL, which is .25 billion at current rates).
It is important to note that the value of the country’s currency has fallen by approximately half throughout that period and the value of Bitcoin reached its all-time high in late December 2017, around the ,000 area.
Daily trading volumes on Brazil’s largest digital currency exchanges, registered on July 10, 2018, also reveal a substantial cryptocurrency market. Mercado Bitcoin daily volume was of 3.1 million BRL (0,000), with Foxbit reaching 1.2 million BRL, and Bitcointrade reporting 2.2 million BRL (0,000). BrasiliEX and Bitcointoyou facilitated the trading of 790,000 and 974,000 BRL in one day, respectively, which is 3,000 and 3,000.
The document also points out that currency trading operations are subject to capital gains tax, at progressive rates based on the amount realized: 15% on an amount not exceeding BRL million up to 22.5% on an amount that is at least BRL million or more. Money laundering and corruption is a concern, especially now that Brazilians have just elected Jair Bolsonaro for President, a populist who pledges to end corruption.
“With the imposition of an ancillary obligation for exchanges to provide information on the purchase and sale of crypto assets, we seek to verify tax compliance, as well as to improve the fight against money laundering and corruption, and increase the perception of risk in taxpayers who intend to avoid taxes.
In Australia, exchanges are obliged to report users’ identities for anti-money laundering purposes and to fight the funding of terrorism. In South Korea, tax authorities have collected the equivalent to 24 percent of cryptocurrency exchanges’ revenues in tax. The regulator requires segregated accounts and KYC processes.
Brazil’s main regulatory authority, the CVM, has released a comprehensive document that offers guidance to fund managers looking at adding cryptocurrencies to their portfolios. The documents warn of illegal operations relating to money laundering, fraud, and price manipulation.
The regulator recommends fund managers to only use regulated cryptocurrency operators and independent auditors. The agency also published a circular providing guidance to help managers detect and avoid fraudulent digital assets.
Featured image from Shutterstock.
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Ripple Reports Double Revenue From XRP Token Sales in Third Quarter of 2018
n Technology startup Ripple has released its quarterly financial report, saying it doubled revenue from XRP token sales in the third quartern
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Pantera Capital’s Crypto Fund Reports 40.8% Loss Since Launch
Pantera Capital’s Digital Asset Fund has sunk in value since it began in December 2017.
A report which surfaced on social media revealed that the U.S. investment firm negated 40.8 percent returns to its investors to date. The figures contributed to the fund’s year-to-date losses, which rose to 72.7 percent. The fund’s compound annual growth rate (CAGR) also dropped by more than 50 percent since launch.
Pantera releases some painful performance numbers for their new #crypto fund. #bitcoin #ethereum pic.twitter.com/Do6D8sxHla
— Collin Crypto (@CollinCrypto) October 5, 2018
The cryptocurrency industry also lost more than 70% of its market cap since the beginning of this year.
A large number of initial coin offering (ICO) projects reportedly sold out their token assets for fiat, causing a selling stir in the market. Many hedge managers such as the Digital Asset Fund were long on the outcomes of these blockchain projects and purchased their tokens to draw out maximum interim profits.
However, the health condition of the ICO market kept deteriorating throughout the year, and the investments made into them failed to yield any benefit.
At the same time, crypto funds’ top asset Bitcoin too failed to minimize their losses by maintaining its bearish bias throughout the year. A report published in August by Autonomous Next, a FinTech analysis firm, further validated that a majority of hedge funds had suffered at least 50 percent losses in HY18.
This includes Mike Novogratz’s Galaxy Digital LP, which reported over 5 million in damages, as well as Multicoin Capital, Polychain Capital, amongst others. A total of nine funds, including Crowd Crypto Fund and Alpha Protocol, even went ahead by deciding to close down, after finding themselves unable to sustain through crypto’s intrinsic volatility.
“New capital has slowed, even for a higher-profile fund like ours,” said Kyle Samani, co-founder of Austin, Texas-based Multicoin Capital.
Lex Sokolin, the global director of fintech strategy at Autonomous Research, believes 10% of all the crypto funds will die by the end of 2018. Rick Marini, a crypto fund investor, also thinks that only a few hedge firms will be able to survive the crypto plunge.
Pantera Capital is also looking beyond its poor returns to diversify its assets into projects with maximum potential. The firm recently participated in an investment round led by TD Ameritrade for ErisX, a cryptocurrency spot, and futures exchange. Pantera Capital’s portfolio already boasts of notable blockchain projects including 0x, Abra, Brave, Shapeshift, and Ripple.
Bitcoin has also bottomed out, believes many crypto fund managers in hopes to revive profits from a potentially volatile upside correction. That, however, does not change the fact that crypto hedge funds will always be exposed to risks crypto investment brings.
Featured image from Shutterstock.
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Reports Taiwan Police Arrest Cody Wilson Following Assault Charges
News reports claim that Taiwan authorities have arrested Cody Wilson after he was accused of sexually assaulting a minor in the U.S.
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Lawmakers Ask IRS For Clarity on Crypto Tax Reports, Better Regulating Industry
Lawmakers from the United States House of Representatives have issued an open letter to the Internal Revenue Service (IRS), requesting additional clarity on tax laws surrounding crypto such as Bitcoin and Ethereum.
The open letter was addressed to acting IRS commissioner, the honorable David Kautter on behalf of Congressmen David Schweikert (R-AZ), Brad Wenstrup (R-OH), and Darin Lahood (R-IL), and members of the Committee on Ways and Means Lynn Jenkins (R-KS) and Kevin Brady (R-TX).
Current Tax Laws Confusing
The Republican-centric group of U.S. government lawmakers asserts that tax laws covering crypto are confusing, convoluted, and that “comprehensive” clarity and guidelines are necessary for taxpayers to properly report their earnings.
Under current U.S. tax law, cryptocurrencies are treated as property, the same as real estate transactions, and are subject to capital gains tax. Capital gains tax rates vary depending on how long the property was held.
Assets held for one year or less are taxed at the same rate as ordinary income, ranging from 10% to as much as 37% for individuals earning over 0,000 during the tax year. If an asset is held longer than one year, it’s subject to long-term capital gains tax rates of 0%, 15%, and 20%.
Because crypto are treated as property individuals can also report capital losses – in this situation losses up to ,000 per year can be applied to offset other capital gains or income, and anything over ,000 can be carried-forward into following years. This is of particular benefit to investors that “got in” around the cryptocurrency market peak last December, who can offset some of their earnings with the losses their investments have experienced.
The current tax laws have been in place since March 2014, and Congress says the IRS has had “more than adequate time” to update its cryptocurrency tax strategy. The last time a U.S. department called on the IRS to alter its tax laws governing cryptocurrencies, was in May 2017, to which the IRS commissioner responded calling Notice 2014-21 “preliminary guidance.”
Over four years since the initial laws have been put in place, and the only change since then only further complicated things. Under previous tax law, personal property such as cryptocurrencies could be exchanged for other like-kind property without a sudden tax burden. This was especially helpful for crypto investors that trade one type for another. However, that section was removed, only preserving a reference to real estate and not personal property. This means every single crypto trade from one token to another, should be treated as the sale of property, and is subject to capital gains taxation.
The IRS is actively taking interest in cryptocurrency investors specifically, and issued a memo on March 23 of this year, warning investors to be sure to report cryptocurrency earnings on their tax returns. Despite the lack of clarity around cryptocurrencies, failure to properly report earnings could lead to costly tax penalties.
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