5 Cryptocurrency Tax Questions To Ask On April 15th
by Zero Hedge - April 16th, 2019 9:14 am
Courtesy of ZeroHedge. View original post here.
Authored by David Kemmerer via CoinTelegraph.com,
Depending on what country you live in, your cryptocurrency will be subject to different tax rules. The questions below address implications within the United States, but similar issues arise around the world. As always, check with a local tax professional to assess your own particular tax situation.
image courtesy of CoinTelegraph
1. Do I need to report my cryptocurrency trades to the IRS?
You need to report your cryptocurrency activity if you incurred a taxable event during the year. A taxable event is a specific scenario that triggers a tax liability. The below are a list of the taxable events as specified by the IRS 2014 guidance:
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Trading cryptocurrency to fiat currency like the U.S. dollar is a taxable event.
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Trading cryptocurrency to cryptocurrency is a taxable event (you have to calculate the fair market value in USD at the time of the trade).
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Using cryptocurrency for goods and services is a taxable event (again, you have to calculate the fair market value in USD at the time of the trade; you may also end up owing sales tax).
The most common tax event from the above is trading one cryptocurrency for another — for example, trading your Bitcoin (BTC) for Ethereum (ETH).
On the other hand, there are other actions that cryptocurrency enthusiasts also commonly take that are not taxable events and do not trigger a tax reporting requirement. Listed below are scenarios in which traders do not trigger a tax event:
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Giving cryptocurrency as a gift is not a taxable event (the recipient inherits the cost basis; the gift tax still applies, if you exceed the gift tax exemption amount).
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A wallet-to-wallet transfer is not a taxable event (you can transfer between exchanges or wallets without realizing capital gains and losses, so make sure to check your records against the records of your exchanges, because they may count transfers as taxable events, like they are a safe harbor).
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China Moves To Ban Bitcoin Mining As Crypto Crackdown Continues
by Zero Hedge - April 9th, 2019 9:25 pm
Courtesy of ZeroHedge. View original post here.
For bitcoin traders, 2019 is starting to look like a repeat of 2017 in more ways than one.
While that might be a slight exaggeration (though bitcoin's sudden surge over $5,000 last week was certainly a welcome relief from more than a year of market doldrums, even sending the moribund bitcoin futures market higher), a headline that hit the tape this morning is bound to provoke comparisons to bitcoin's heyday, when Chinese authorities briefly provoked a panic in the market by abruptly cracking down on crypto exchanges operating in the country, part of a campaign to bring the cryptocurrencies trade under state control.
Late Monday, China's National Development Reform Commission listed crypto-mining among industries it intends to eliminate because of its environmental impact. The agency will allow public comment on the guidelines until May 7, but warned that they could take effect as soon as they are issued. As Bloomberg reports, China was once home to more than 90% of bitcoin trading and 70% of mining, thanks to notoriously cheap subsidized energy, particularly in the countryside. But after a crackdown began in 2017, most of the big mining pools in the country – including Bitmain – decamped for abroad, setting up mining pools in Canada and elsewhere. Back in 2018, Beijing reportedly asked local authorities to try and push crypto miners out.
Still, according to a consultant who spoke with Reuters, roughly half the bitcoin network is probably still located in China. And Chinese companies remain the largest manufacturers of bitcoin mining rigs.
Nearly half of bitcoin mining pools – groups of miners that team up for economies of scale – are located in the Asia-Pacific, a Cambridge University study said in December.
"Half of the network is probably located in China," said Alex de Vries, a consultant with PwC in Amsterdam who specializes on blockchain and researches cryptocurrency mining. He added that the number of mining facilities in the world is still limited to several hundred.
One blockchain investor said China's decision to finally ban crypto mining outright was probably part of a push to "reboot" the crypto industry to bring it under state control.…
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Bitcoin Cash Explodes 50% As Asian Algos Continue Crypto Buying-Spree
by Zero Hedge - April 2nd, 2019 8:02 pm
Courtesy of ZeroHedge. View original post here.
Update (1950ET): The third leg of today’s massive surge in cryptocurrencies has lifted Bitcoin Cash up over 50% on the day, Bitcoin and Ethereum up around 20% and Litecoin up 30%.
Bloomberg reports that the surge at the start of Asian trading on Tuesday was likely triggered by automated software set up to execute a $100 million trade across three exchanges, according to Oliver von Landsberg-Sadie, chief executive officer of London-based crypto firm BCB Group.
“Some people are in the camp where algorithmic trading is a manipulative device, and others are of the view that they are a way to make markets more efficient,” von Landsberg-Sadie said. “I am definitely of the second view.” BCB Group helps clients place large algorithmic trades to minimize market impact.
The number of algorithmic crypto traders has jumped in the last seven months, with 17 algo or quantitative funds started since September, according to Crypto Fund Research. They account for more than 40 percent of crypto hedge funds launched during the period, the firm said.
Bitcoin and Ethereum both broke above their 200DMAs and extended gains and Bitcoin Cash has now reached up to its 200DMA…
It is clear that this is anything but an ‘April Fools’ joke as so many mainstream media types tried to shrug off the action. The big moves have occurred as European markets opened, as US markets opened, and now as Asian markets opened.
While there remains no specific headline catalyst for the moves, Jim Grant offers one potential clue, noting the nearly identical level of activity in tether, the purportedly dollar-backed crypto.
While bitcoin (with an aggregate market value of $86.3 billion) has logged $21.5 billion of trading volume in the past 24 hours, the much-smaller tether (market value: $2.1 billion) has registered $21.9 billion over the same period, according to data from CoinMarketCap.com. By comparison, ethereum, which sports a market cap of $17.4 billion, has seen 24 hour trading volume of $9.8 billion.
Bitcoin only has to go up $995,000 in the next 640 days or McAfee eats his dick pic.twitter.com/sTPxUtRYOM
— Hipster (@Hipster_Trader) April 3, 2019
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Update (0930ET): Cryptos have legged higher once again…
With Bitcoin breaking…
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Bitcoin Explodes Higher, Surging Above Key Technical Level
by Zero Hedge - April 2nd, 2019 9:46 am
Courtesy of ZeroHedge. View original post here.
Update: Cryptos have legged higher once again…
With Bitcoin breaking above its 200DMA for the first time in a year…
As Nomura's Charlie McElligott observed: "things that make you go hmm", pointing out that the return of vol suppression by central banks (recall that in 2017 bitcoin was used by even conventional trading desks due to its massive volatility), and the resumption of speculative assets bubbles, has benefit cryptos which blasted off higher, with most rising above their 200DMA for the first time in a year.
As the Nomura strategist puts it "Funny what some excess liquidity and “wealth effect” (likely / particularly in Asia) can do for a completely spec "asset" like Crypto" and recaps the recent action:
The BGCI Bloomberg Galaxy Crypto Index is now +58.6% off the Dec lows
- Bitcoin is +51.7% off Dec lows
- Bitcoin Cash is +139.2% off Dec lows
- Dash is +111.1% off Dec lows
- EOS is +165.6% off Dec lows
- Ethereum is +86.4% off Dec lows
- Litecoin is +201.0% off Dec lows
- Monero is +69.1% off Dec lows
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The CBOE may be regretting its decision to abandon Bitcoin futures trading this morning, when shortly after midnight Eastern time, bitcoin suddenly broke the calm that had blanketed the crypto space for over three months, when it exploded as much as 23% or $1,000 higher in minutes, rising briefly above $5,000, its highest level since November, and pushing the entire $160 billion cryptocurrency space sharply higher, with rival coins Ether, Litecoin also soaring, as did cryptocurrency-linked stocks including Remixpoint and CMC Markets Plc, as well as that old market favorite Riot Blockchain.
At its peak, the 23% intraday move, which added more than $17 billion to the value of digital assets, was the biggest since early 2014. Even after paring some gains, with bitcoin currently up just over 15% at $4,777.81, the daily swing was the biggest since the…
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Bitcoin Inexplicably Explodes Higher, Biggest Surge In Years
by Zero Hedge - April 2nd, 2019 9:03 am
Courtesy of Zero Hedge
The CBOE may be regretting its decision to abandon Bitcoin futures trading this morning, when shortly after midnight Eastern time, bitcoin suddenly broke the calm that had blanketed the crypto space for over three months, when it exploded as much as 23% or $1,000 higher in minutes, rising briefly above $5,000, its highest level since November, and pushing the entire $160 billion cryptocurrency space sharply higher, with rival coins Ether, Litecoin also soaring, as did cryptocurrency-linked stocks including Remixpoint and CMC Markets Plc, as well as that old market favorite Riot Blockchain.
At its peak, the intraday move, which added more than $17 billion to the value of digital assets tracked by CoinMarketCap.com, was the biggest since early 2014. Even after paring some gains, with bitcoin currently up just over 15% at $4,777.81, the daily swing was the biggest since the euphoric peak bubble days of late 2017.
Understandably, traders was keenly focused on identifying the catalyst behind the move although a clear reason for the sudden surge has yet to emerge. George Harrap, chief executive officer at Bitspark, told Bloomberg he’s putting “most things on pause” until the market settles down. His contacts in the Bitcoin community have yet to identify a catalyst for the sudden jump.
“The reason why? Anybody’s guess at the moment,” Harrap said, as analysts could not point to any specific news or developments in the cryptocurrency sector that could explain the mystery buyer’s big order.
Some of the potential triggers cited on trading desks and in social media included a sizable block of expiring puts, short covering by traders who had stop-loss orders around the $4,200 level and an April Fool’s Day story on a little-known online news site claiming that the U.S. Securities and Exchange Commission had approved Bitcoin exchange-traded funds, although that was quickly discounted as the gains persisted even after the story was discounted.
Oliver von Landsberg-Sadie, chief executive of London-based cryptocurrency firm BCB Group, said the move was likely triggered by an algorithmic order worth about $100 million spread across major exchanges – U.S.-based Coinbase and Kraken, and Luxembourg-based Bitstamp.
"There has been a single order that…
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Facebook’s cryptocurrency: a financial expert breaks it down
by ilene - March 13th, 2019 2:13 am
Facebook's cryptocurrency: a financial expert breaks it down
Courtesy of Alistair Milne, Loughborough University
Facebook is reportedly preparing to launch its own version of Bitcoin, for use in its messaging applications, WhatsApp, Messenger and Instagram. Could this “Facecoin” be the long-awaited breakthrough by a global technology giant into the lucrative market for retail financial services? Or will it be yet another exaggerated “crypto” project, buying into the continuing excitement about decentralised peer-to-peer exchange but, in the end, not delivering very much? Time will tell, but my two decades of research into the economics of payments makes me sceptical.
We know little about Facebook’s plans. So far there is just one company statement about a new group set up to look into cryptocurrencies reported by Bloomberg: “Like many other companies, Facebook is exploring ways to leverage the power of blockchain technology. This new small team is exploring many different applications. We don’t have anything further to share.”
Some investigative journalism from Bloomberg and the New York Times reveals a little more. Facecoin (and the similar “Gram” cryptocurrency being developed by the privacy focused messaging app Telegram) will apparently be a “stablecoin”. Rather than having a fixed amount of currency that fluctuates in price, depending on demand, Facecoin will have a fixed price and the amount of it in circulation will vary. So unlike Bitcoin it will not be a vehicle for speculation.
What will the fixed price be? Bloomberg reports it will be fixed against the dollar. The New York Times says that it will be against a combination of dollar, euro and yen. Who will use it? Facebook is apparently focusing on providing a technology solution for the large and lucrative remittance market for payments into India. Will transactions in Facecoin be anonymous like those in Bitcoin? No, they will be associated with Facebook accounts, so they won’t be an easy means to avoid laws and regulations.
Reasons to be sceptical
While this is a fascinating development, some scepticism is in order. If there is one common feature to the many hundreds of crypto and blockchain finance projects announced over the past four years, it is exaggerated early claims. In…
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Invesco Launches Blockchain-Focused ETF On London Stock Exchange
by Zero Hedge - March 10th, 2019 10:39 am
Courtesy of Zero Hedge
During a week where US prosecutors indicted the masterminds of a $4 billion crypto pyramid scheme and an auditor hired by a bankrupt Canadian crypto exchange revealed that its "lost" cold-storage wallets had been empty since April (leaving a giant $150 million hole where its customers' money should have been), Wall Street has broken through the crypto news clutter by announcing its latest tentative embrace of 'blockchain technology'.
Just weeks after JPM introduced its own in-house stablecoin, the Financial Times reported Saturday that the world's biggest blockchain-focused ETF will begin trading on the London Stock Exchange on Monday.
The fund will focus on companies with exposure to the emerging technology. companies from Taiwan Semiconductor Manufacturing to more established US-traded companies like Microsoft and Intel. Its total portfolio upon launch will include 48 companies.
The Invesco Elwood Global Blockchain ETF will start trading on the London Stock Exchange on Monday. The ETF will invest in companies such as Taiwan Semiconductor Manufacturing, which supplies cryptocurrency manufacturers with mining chips, and CME Group, the US exchange operator that has pioneered bitcoin futures trading. Other constituents of the ETF, which carries a 65 basis points management fee, include Apple, Intel and Advanced Micro Devices.
Chris Mellor, head of ETF equity product management in Europe at Invesco, said the potential for blockchain to boost earnings was often not reflected in the share prices of companies such as Rio Tinto, the mining company that owns hydroelectric assets that could be harnessed for cryptocurrency mining. The ETF will initially invest in a portfolio of 48 companies based on a proprietary scoring system developed by Elwood Asset Management, a specialist crypto investment boutique backed by Alan Howard, co-founder of the Brevan Howard hedge fund.
Bin Ren, Elwood chief executive, said the possible applications for blockchain extended far beyond cryptocurrencies. “We are beginning to see the technology being used by financial services companies in particular, but we expect greater application of blockchain technology across a wide range of industries,” said Mr Ren.
A handful of other blockchain-focused ETFs have launched in the US and Europe, but most have attracted a small amount of investor capital. The largest, the Amplify…
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Five reasons Bitcoin could enter a more extreme death spiral
by ilene - March 8th, 2019 3:00 am
Five reasons Bitcoin could enter a more extreme death spiral
Courtesy of Daniele Bianchi, Warwick Business School, University of Warwick
Back in December 2017, when its price reached close to US$20,000, Bitcoin looked like it had finally disrupted financial markets with the potential to enter the mainstream. A year later and things looked quite different. Bitcoin is now steadily trading below US$4,000 and has been constantly on a downward ride over the last year, losing more than half of its market capitalisation.
And yet cryptocurrency enthusiasts seem to ignore the fact that Bitcoin could yet enter an even more extreme death spiral. Bitcoin is not the only cryptocurrency whose market capitalisation has been hammered. Sell offs have happened across the board, with the price of major alternative coins such as Ripple and Ethereum falling in the past year.
It is not clear what the catalyst was for these price drops and selling. But what is clear is that cryptocurrency prices struggle to find a floor for a number of reasons. These range from the rising cost of mining, regulatory concerns, market manipulation, speculative trading, sky high power consumption, and the increasing scepticism from both the public and the world’s established financial industry.
1. Rising cost of mining
If its price continues to drop and the mining costs do not fall to the same extent, the incentives to update the public ledger and validate transactions can quickly disappear, threatening the very existence of Bitcoin as a viable payment system.
Bitcoin is dependent on a system of miners that verify transactions and record them on a digital ledger called the blockchain. This prevents copies being made of the digital tokens. As a reward for the energy and time involved, miners are rewarded in Bitcoin.
But the amount of work involved in mining keeps increasing (making it more costly), as the mining process was always designed to get more and more difficult, to limit the number of new Bitcoin that get issued. Seeing as mining requires vast amounts of energy, a number of miners have shut down their operations, as Bitcoin’s declining value has made mining less profitable.
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Regulations needed after cryptocurrency CEO takes passwords to his grave
by ilene - March 4th, 2019 10:35 pm
Regulations needed after cryptocurrency CEO takes passwords to his grave
Canadian CEO Gerald Cotten died in December, taking to his grave the passwords to unlock his cryptocurrency clients’ millions. Dmitry Moraine/Unsplash
Courtesy of Lisa Kramer, University of Toronto
A high-stakes legal drama featuring cryptocurrencies has been unfolding in a Canadian court recently.
The antics that led to the litigation almost defy credulity, and they highlight the need for new regulations to better suit a financial marketplace that includes virtual currencies.
News broke in early February that Canadian cryptocurrency exchange QuadrigaCX was seeking creditor protection, leaving in financial limbo about 115,000 people who had entrusted the firm to maintain their deposits of cash, Bitcoins and other digital tokens worth an estimated C$250 million.
The company’s need for bankruptcy protection arose when its founder and chief operator, Gerald Cotten, died suddenly in December while vacationing in India. Normally, if a financial institution’s executive officer meets an untimely demise, he or she doesn’t bring to the afterworld the only keys to the vault. And thus clients maintain continued access their deposited funds all the while.
In the case of Quadriga, unfortunately, Cotten was the only living soul who knew the password to an encrypted offline repository, known as cold storage, where the firm had enshrined the vast majority of clients’ cryptocurrency deposits. Without the password, no one can access those holdings.
Murky or absent regulations
While the Nova Scotia Supreme Court wades its way through some very novel and complex issues, the question that comes to my mind is: How has one bad decision about password custodianship caused more than 100,000 people to lose access to their deposits?
The answer lies in the murky and mostly lacking regulations that govern the cryptocurrency world. Nothing stops entrepreneurs like Cotten from running companies like Quadriga with no independent oversight.
Had he ever raised equity capital from investors in return for tokens or coins, that process would have been governed by Canadian securities regulations. But because Quadriga is an exchange — maintaining deposits and facilitating conversions between regular cash and cryptocurrencies, but not issuing cryptocurrencies in exchange for ownership shares —…
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Cryptos Are Surging: Bitcoin, Ethereum Hit One-Month Highs As Institutions Dip Toes
by Zero Hedge - February 18th, 2019 9:30 am
Courtesy of Zero Hedge
Cryptocurrencies are surging while the US equity markets take the day off. Ethereum is up over 18% from Friday's 'close' and the rest of the crypto space is a sea of green. While no immediate catalyst (headline or technical level) is clear, increasing chatter over institutional investors dipping their toes in the space have prompted an extension of the positive trend.
A sea of green…
Ethereum is leading the charge followed by Litecoin and Bitcoin Cash…
Bitcoin has broken back to one-month highs…
And Ethereum is really accelerating…
As CoinTelegraph notes, the total market capitalization of all cryptocurrencies is around $128 billion as of press time, up a strong 3.7 percent on the week.
In an interview with Cointelegraph this week, prominent CNBC commentator Brian Kelly argued that Bitcoin is currently around 50 percent undervalued, and that the asset is likely near a bottom. While holding back on optimism in regard to the approval of a Bitcoin exchange-traded fund, Kelly predicted that 2019 would be better for the crypto markets overall, conceding however that 2018 had set “a pretty low bar.”
In adoption news, it appears that the forthcoming update of the Rakuten Pay mobile app from major Japanese e-commerce firm Rakuten will support cryptocurrency payments in addition to fiat.
While no immediate catalyst jumps to mind for today's surge, Bloomberg notes that institutional investors should consider dipping their toes into cryptocurrencies, according to Cambridge Associates, a consultant for pensions and endowments.
“Despite the challenges, we believe that it is worthwhile for investors to begin exploring this area today with an eye toward the long term,’’ said analysts at Boston-based Cambridge in a research note published Monday.
“Though these investments entail a high degree of risk, some may very well upend the digital world.’’
Most large institutions have steered clear of the 10-year-old, $120 billion industry because it’s largely unregulated and cryptocurrencies have been used to finance illicit trade. The…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
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