Úno 18

The New Normal: Cryptocurrency Goes Mainstream This Tax Season

· February 18, 2018 · 7:30 am

Until quite recently, most cryptocurrency investors either did not know or did not care to pay taxes on the capital gains they accumulated buying and selling digital coins. The cryptocurrency community is now facing a hard truth: they have to pay taxes just like all the rest of us.


[Editor’s note: This is a guest article by Mario Costanz, CEO of Happy Tax]

Virtual currencies exploded onto the investment scene last year, due in large part to the astronomical rise in the popularity of Bitcoin and its many successors. Interest in this exciting new investment shows no signs of slowing, and soon cryptocurrency will be as ubiquitous as the other traditional securities traded daily on Wall Street.

Until quite recently, however, most cryptocurrency investors either did not know or did not care to pay taxes on the capital gains they accumulated buying and selling digital coins. The cryptocurrency community is now facing a hard truth: they have to pay taxes just like all the rest of us.

The attention that virtual currencies are receiving from federal and state regulators is a positive sign that this innovative technology is heading towards the mainstream. Of course, it has a long way to go until it gets there. In the meantime, however, cryptocurrency investors need to accept the reality of growing government oversight.

Paying Cryptocurrency Taxes is Not Optional

Bitcoin emerged from an anonymous source far on the fringes of the internet nearly a decade ago. For a time, cryptocurrency traders enjoyed an investment environment free from government oversight. This has caused many investors to turn a blind eye to increasing regulation, particularly from the Internal Revenue Service.

Tax liability for virtual currency investments is still a bit of a gray area in many respects, and new laws and policies are sketching out the boundaries. However, one thing is absolutely clear: if you trade cryptocurrencies, you must report your activity to the IRS.

Internal Revenue Service (IRS) Asked to Provide a Clearer Cryptocurrency Tax Framework

To the great dismay of many early virtual currency investors, the IRS declared virtual currencies to be taxable capital assets back in 2014. Like other capital assets, cryptocurrencies are subject to the capital gains rules. The tax rate depends on how long you held your coins before you sold them, as well as the price you bought in and the price you sold out. If your capital losses on your cryptocurrency investments exceed your capital gains, you can claim the loss as a deduction on your income tax returns, up to $3,000.

In other words, the same rules apply to cryptocurrency investors as taxpayers who trade stocks and other securities. This sounds simple enough for any seasoned trader, but unfortunately, things in the cryptocurrency world tend to get complicated quickly.

Most securities are used only in straightforward buy-and-sell transactions. However, cryptocurrencies are also intended to be used to purchase goods and services. Contrary to the popular belief – and wishful thinking – of many cryptocurrency investors, cashing out of your virtual currency investments isn’t the only taxable event in the lifespan of your investment. Rather, tax liability arises whenever cryptocurrencies are traded for other coins, cashed out into fiat currency, or used to purchase goods and services. So, for example, if you buy a new couch on Overstock.com using bitcoin, your purchase will be subject to capital gains tax in addition to any sales tax that may apply.

Paying Crypto Taxes Using Cryptocurrency

This type of double-taxation poses a real challenge to the integration of cryptocurrency into retail payment systems. Fortunately, however, it isn’t all bad news. Just last week, the Arizona State Senate passed a bill allowing residents to pay their state income taxes using “Bitcoin, Litecoin, or any other cryptocurrency” allowed by the state revenue department. While the bill still needs to go through the Arizona House of Representatives before it becomes a law, it represents a landmark moment in the cryptocurrency world.

The Arizona bill has been received with a mix of enthusiasm and skepticism. On one hand, the inherent value of cryptocurrencies is still up in the air. Virtual currencies have become legendary for their volatility. The price of Bitcoin more than doubled in the last two months of 2017 before falling again to half its value in the first two months of 2018.

Bitcoin Taxes

Well-known cryptocurrency critics, like Warren Buffett and JPMorgan Chase CEO Jamie Dimon, claim that cryptocurrencies offer little to any market value and that current market prices are fueled entirely by speculation. On the other hand, the blockchain technology that supports the virtual currency market is a groundbreaking innovation that has the potential to change the way people use money entirely.

The fate of the Arizona law is now in the hands of state representatives, and it remains to be seen how the saga will unfold. It’s a bold legislative move that may be tossed aside by the state’s more conservative House of Representatives. However, it’s also a sign of the times. Arizona recognizes the potential value of virtual currencies as a technology, not just a security or replacement for traditional cash.

As a result, the state is posturing itself as a cryptocurrency-friendly market in anticipation of greater adoption of virtual currency technology and its derivatives. While the long-term viability of any virtual currency remains to be seen, the integration of cryptocurrency into government revenue streams is a positive sign for the future of this exciting new technology.

Will you be paying taxes on your cryptocurrency income this season? Let us know in the comments below!


Images courtesy of HappyTax, Shutterstock 

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Led 30

South Korea: Anonymous Trading Ban Leaves a ‘Million’ Users in Limbo

· January 30, 2018 · 9:00 am

South Korea cryptocurrency exchanges are complaining of unfair treatment as the country’s ban on anonymous trading begins Tuesday.


Banks Favor Big Names

According to local news media outlet Business Korea, exchanges using corporate bank accounts may face sudden halts to service or even an obligation to cease trading altogether.

Korean authorities deemed January 30th the date when all citizens trading cryptocurrency must do so through just one account, the identity details of which match their bank account.

Banks have been working to implement the required system at breakneck speed as details were finalized just weeks ago, but teething problems have meant not every exchange is in a position to comply with the new laws.

South Korea Exchange Bithumb Hacked For 'Tens Of Millions' Of Won

Specifically, four major exchanges appear to have been given preferential treatment based upon their size, Business Korea reports. The media outlet states:

…Banks decided to provide a new virtual account service that uses a real name system only to four companies – Upbit, Bithumb, Coinone, and Cobit – which had previously issued virtual accounts, citing their mounting workloads among others.

Other exchanges using corporate rather than virtual accounts may thus be left in limbo as of today, along with the funds of their users who could total over one million.

The result would be a regulatory ‘blind spot’ for those holdings, ironically shielding them from the anti-money laundering eyes of regulators who demanded the switch-up in the first place.

Adoption Push Shows Divide Between Big And Small

The big players in the South Korea exchange arena are faring conspicuously better at the end of January compared to smaller operations. On Monday, major e-commerce platform WeMakePrice even announced it would begin accepting up to 12 coins as payment via a partnership with the largest exchange by volume Bithumb.

Meanwhile, HTS Coin, one of the lesser exchanges facing delays in getting virtual account support from banks, complained that it had itself begun building an identity scheme with its banking partner back in December. This, it was told, was subsequently canceled.

“We have already executed sufficient procedures for confirming the identity of a member when receiving a new member via a corporate account,” a spokesman told Business Korea. “It is against equity to allow only a few exchanges to issue new virtual accounts.”

What do you think about the anonymous trading ban? Let us know in the comments below!


Images courtesy of Shutterstock

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Led 25

Ottawa Police Hunting for Armed Bitcoin Robbery Suspects

· January 25, 2018 · 8:00 am

Police in Ottawa, Canada, are on the manhunt for armed Bitcoin robbery suspects who staged an attempted daylight robbery of a Bitcoin financial business.


The world of crypto can become a dangerous place at times. This usually occurs when someone ventures out to personally buy bitcoins from an buyer they do not know, all the while carrying quite a bit of cash. Yet even a cryptocurrency business is not a safe guarantee, as was evident by Ukrainian police seizing crypto assets from the Forklog founder recently. The latest incident of a Bitcoin robbery took place in Ottawa, Canada, where armed men tried to rob a Bitcoin business.

Gunning for Bitcoin

On January 23rd, three men entered a Bitcoin financial business located in an industrial park in Ottawa at around 11am. (So far, the business has not been named in media reports.) All three men were armed with handguns.

The robbers took control of four employees that worked at the business and bound them. One of the bound employees was hit in the head with a pistol during the ordeal. (The employee later required some medical attention at the hospital.) A fifth employee was not detected by the criminals, and he was able to contact the police.

Armed Hosers on the Loose

The criminals then fled the business empty-handed. Police noted that one of the Bitcoin robbery suspects fled into a nearby ravine. They were then able to track him down and arrest him. The suspect has been identified as 19-year-old Jimmy St-Hilaire. He’s been charged with the following crimes:

  • Five (5) counts of robbery with a firearm
  • Five (5) counts of point a firearm
  • Five (5) counts of forcible confinement
  • Wear disguise
  • Conspiracy to Commit and indictable offence
  • Carry concealed weapon
  • Possess firearm while prohibited
  • Possess weapon for committing an offence
  • Possess loaded regulated firearm

The other two criminals are still on the lam, and the police are putting on a massive manhunt looking for them. The Ottawa police are also looking for a person of interest who was in the business when the robbery began but who later fled the scene. People who work at other businesses within the industrial park have been shaken by the Bitcoin robbery attempt, especially as it took place during daylight hours.

One wonders what the criminals were hoping to gain from the robbery. It may be that the business had cash on hand to handle cryptocurrency buying and selling. Perhaps they were hoping to force the employees to transfer funds to a specific address. Whatever the reason for the robbery attempt, it is fortunate that the employees were not seriously hurt.

Overall, the public’s fascination with Bitcoin, along with the massive gains it made in 2017, have emboldened some criminals to physically rob or even kidnap people in order to obtain some ill-gotten gains.

Will crypto robbery attempts become an everyday occurrence? Let us know your thoughts in the comments below.


Images courtesy of Twitter/@JudyTrinhCBC and Pexels.

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Led 24

South Korea Fines 6 Exchanges For Security Law ‘Violations’

· January 24, 2018 · 8:30 am

Six major South Korea cryptocurrency exchanges have received fines of around 25 million won ($23,500) for lax security measures which “violated” laws.


6 Of 10 Exchanges Ordered To Pay

As local news media outlet Yonhap News Agency reports Wednesday, government officials will press forward with penalties in what some commentators view as an increasingly promising sign of bringing the domestic cryptocurrency industry under regulatory control.

“Although the size of transactions and the number of users are surging, overall user protection measures are insufficient,” the publication quotes the Korea Communications Commission (KCC) as saying.

South Korea

The decision to fine exchanges flouting the Information and Communications Act, which include well-known names such as Korbit, Coinone and Coinplug, follows a joint investigation into security setups at ten exchanges which several government agencies ran from October to December last year.

‘Tiny’ Fines

The move is the latest is Seoul’s ongoing bid to solidify the exchange market, having confirmed this week that anonymous trading would end January 30 and exchanges must pay tax on 2017 profits in full by April 30.

Reactions have been mixed, with native exchange users in particular sensitive following mass uproar resulting from the government’s handling of the issue over the past months.

Consensus appears to be similarly lacking on the fines, a KCC source telling Yonhap the amounts involved are “too low” and industry figures likewise voicing suspicions.

“I know there is an indication that the amount imposed on each operator is too low, but this measure imposes the maximum amount possible under current information and communication network law,” the official stated.

Nonetheless, security problems at Korean exchanges have received significant negative press amid rumors North Korea was stealing funds for its own ends on a regular basis.

Amid the suspicion, one media company hired white hat hackers to create and then compromise accounts on five exchanges, which it reports was successfully done with what it describes as “basic” tools.

What do you think about the South Korean exchange fines? Let us know in the comments below!


Images courtesy of Shutterstock, Twitter

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Led 23

South Korea ‘Legalizes’ Cryptocurrency Trading, Bans Anonymity

· January 23, 2018 · 8:30 am

South Korea lawmakers have confirmed cryptocurrency exchanges will become de facto legal January 30 as they enact new laws about anonymity in trading.


6 Banks On Board For Change

In its most recent statements, the country’s Financial Services Commission (FSC) confirmed that exchanges must only permit trades from customers whose name matches their bank account. Foreign citizens, both native and non-native, will not be allowed to trade.

“Establishment of the system for ‘real name verification of deposit and withdrawal accounts’ for settlement will be completed by January 30, 2018,” the FSC documentation reads.*

So far, six of Korea’s major banks have signed up to implement the required monitoring changes following collaboration with the government on inspection of anonymous exchange trading accounts earlier this month.

These are Shinhan Bank, Nonghyup Bank, Industrial Bank, Kookmin Bank, Hana Bank and Gwangju Bank.

Exchanges Prepare In Advance

In reactions to the setting in stone of the new way of trading cryptocurrency, major exchanges presented various requirements for users.

Korbit, one of the leading platforms along with Bithumb, told customers to open an account at Shinhan specifically in order to continue trading.

“To use the new KRW deposit method, which is slated to be implemented within this month, you must have a Shinhan Bank account registered under your legal name. Please use this time to create a banking account at Shinhan Bank,” a post states.

South Korea Bans Bitcoin Futures As Authorities Consider Crypto Income Tax

Foreign-based customers had been able to gain access to the Korean market through virtual bank accounts and other tools, but they, along with minors, now face a moratorium of undetermined length.

On Monday, Seoul also addressed the issue of taxation on cryptocurrency exchanges, which are now obliged to pay a corporation tax and local income tax for 2017 profits amounting to 24.2%.

Markets continued to fall slightly through Tuesday, with the cementing of Korea’s official regulatory position on crypto trading having little effect on overall flat sentiment.

*This quotation is extracted from the first PDF file available in attachments via the source link.

What do you think about the latest news from South Korea’s cryptocurrency exchange regulation? Let us know in the comments below!


Images courtesy of Shutterstock

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Pro 16

TD Ameritrade Starts Trading Bitcoin Futures on Monday

· December 16, 2017 · 3:30 am

TD Ameritrade, like many other titans of the financial world, is also jumping on the Bitcoin bandwagon. Indeed, the giant securities brokerage services provider will start trading Bitcoin futures when the financial markets open on Monday, December 18, 2017.


The Volume of Bitcoin Futures Trading To Surge

The Volume of Bitcoin Futures Trading To Surge

For some time, Ameritrade had been monitoring whether there were sufficient liquidity and market efficiency for Bitcoin futures. Ameritrade leadership believes that these parameters are now optimal. According to MarketWatch, spokeswoman Alyson Nikulicz stated,

At this point, we believe the market is showing signs of adequate liquidity for CBOE product.

TD Ameritrade, based in Omaha, Nebraska, provides securities brokerage services and related technology-based financial services. It offers its services to traders and independent registered investment advisors, and retail investors.

Bitcoin Futures Is Now The Darling of the Financial World

Bitcoin Futures Is Now The Darling of the Financial World

Bitcoin is now entrenched in the world financial circles, and its value continues to increase. As of this writing, Bitcoin’s price is nearing the $18,000 USD mark.

The fact that Ameritrade is starting to trade Bitcoin futures is significant because the company boasts of having millions of client accounts. Moreover, millennials comprise 35 percent of Ameritrade’s retail account clients. According to Ameritrade’s website,

“[Ameritrade] provides investing and trading services for seven million client accounts that total more than $750 billion in assets, and custodial services for more than 5,700 independent registered investment advisors.”

Financial institutions are starting to stream into the market a variety of Bitcoin-based financial instruments. On December 17, 2017, the CME Group Inc. will also begin trading Bitcoin futures. This initiative follows CBOE Bitcoin futures trading that started on December 10, 2017.

According to CNBC, large institutional firms such as JPMorgan and Morgan Stanley will soon allow their customers to trade Bitcoin futures. “That will allow the entry of hedge funds and larger institutional players, who may have a very different notion of bitcoin’s future.”

As Bitcoin continues to grow in value and to be accepted as a mainstream financial asset, this trend will most likely continue to gain momentum.

What do you think the impact of Ameritrade trading Bitcoin futures will be on Bitcoin value? Let us know in the comments below.


Images courtesy of CNBC, TD Ameritrade, Shutterstock

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