Led 26

Indiana, New Hampshire May Be Next to Accept Cryptocurrencies for Taxes

A house bill for amending the currently existing taxation Code of Indiana has been filed January 24 seeking acceptance of cryptocurrencies for paying taxes. Another bill requiring the state treasurer of New Hampshire to develop an implementation plan for accepting cryptocurrencies for tax payments has also been filed. 


Pay Taxes With Cryptocurrencies in Indiana

House bill number 1683 filed January 24th, asks the General Assembly of the State of Indiana to amend the current taxation Code of Indiana.

Be it enacted, the bill may approve the usage of one or more virtual currencies to pay taxes, penalties, interests, costs, special assessments, or any other liabilities which are imposed under the bill.

According to the document, a county treasurer

shall determine the value of the payment in United States dollars at the time the payment is made by using the applicable exchange rate.

If the bill is approved by the General Assembly of Indiana, it will be in effect from July 1st, 2019.

New Hampshire on a Similar Path

In the state of New Hampshire, House bill number 470-FN, filed January 5th, 2019, seeks the acceptance of cryptocurrencies as payment for taxes and fees by state agencies.

New Hampshire License Plate

If the bill is enacted by the Senate and House of Representatives in General Court, it will require the state treasurer, in consultation with other state officials, to develop an implementation plan for the state to begin accepting cryptocurrencies as payments for fees and taxes starting July 1st, 2020.

The plan is also supposed to identify an appropriate third party payment processor. As per the documents, the payment processor should facilitate transactions at no cost to the state.

The plan should be submitted by the state treasurer on or before November 1st.

The bill will allow the state agencies to accept cryptocurrency payments but it doesn’t obligate them to do so, inferring that approval might be necessary.

Florida’s Seminole County became the first US locality to accept Bitcoin for taxes in May 2018. Later in November, Ohia also began accepting Bitcoin for taxes.

What do you think of paying taxes with cryptocurrencies? Don’t hesitate to let us know in the comments below!


Images courtesy of Shutterstock

Share
Led 24

McAfee Hunted by the IRS But Will Still Run For President ‘In Exile’

Controversial cryptocurrency proponent John McAfee revealed that the IRS has convened a grand jury to charge him, his wife, and four of his campaign workers, with ‘unspecified’ crimes of felonious nature. McAfee, who’s campaigning for the 2020 US Presidency will continue to do so ‘in exile’.


McAfee Hunted by the IRS

In a new video released on his official Twitter profile, John McAfee shared that the IRS has convened a Grand Jury in the state of Tennessee on January 22nd.

According to him, the authorities seek to put him on charges for ‘unspecified’ crimes of felonious nature.

In the video, McAfee also reaffirmed that he hasn’t been paying taxes for the last eight years and that he hasn’t filed any tax returns either.

McAfee, who’s a popular cryptocurrency proponent, has more than once made the case that governments fear decentralized digital currencies because they can’t tax them.

He’s also clashed with the SEC’s chairman over defining initial coin offerings (ICOs)  tokens as securities.

Running For President ‘In Exile’

Now, McAfee, who currently appears to be in the Venezuela on a self-proclaimed “Freedom Boat,” says he’ll continue campaigning ‘in exile’.

As odd as it may sound, McAfee intends to run his presidential campaign remotely… from a boat.

In another video, posted shortly after the first one, he details that his campaign already has ‘thousands’ of volunteers who will be wearing masks with a picture of his face on them.

These people will appear on various locations through the US, including conferences, debates, restaurants, and street corners, carrying portable loudspeakers through which McAfee will be voicing his merits.

Apparently, however, the cryptocurrency advocate doesn’t really want to become a president – he just wants the stage.

Interestingly enough, his latest Twitter blast caught the attention of Vladislav Ginko, the Russian economist who recently said that Russia is looking to invest $10 billion in Bitcoin.

Commenting on the matter of McAfee’s exile, Ginko tweeted:

You will never feel safe anywhere in the world from US enforcement until you will land to Russia. You’re welcome!

What do you think of McAfee’s plans to run his campaign remotely from a boat? Don’t hesitate to let us know in the comments below!


Images courtesy of Shutterstock

Share
Led 18

ShapeShift Aided 60 Law Enforcement Inquiries in 2018, Erik Voorhees Reveals

It seems like ShapeShift has done exactly as its name suggests, changing form almost beyond recognition. Founder, CEO, and no fan of the SEC, Erik Voorhees’ exchange once existed without accounts. Now they have full KYC and hand over customer data upon request.


ShapeShift Shocked Crypto World With KYC

In what can only be described as a seismic shift in ethos, ShapeShift started implementing KYC in September 2018. They first sugarcoated it as a “membership program,” for which users would have to provide “basic personal details.” This would allow the exchange to reward them in the form of higher trading limits, cheaper fees, and the like.

Whichever way you spin it, however, the company was paving the way for full KYC/AML. And all customers would have to undergo it by the end of the year. Voorhees later admitted the decision was largely due to “regulatory hurdles.” It also stung the company financially, forcing them to lay off some 37 employees.

ShapeShift made a name for itself as a frictionless way to move crypto funds. But if the company was to compete in a regulatory environment that’s increasingly heating up, it would have to get compliant. Plain and simple.

ShapeShift and Law Enforcement

A blog post tweeted out by Voorhees yesterday may shock its users who thought they had complete anonymity before Q3. Making a reference to Kraken and how their transparency with law enforcement inspired ShapeShift to also help, they say that in 2018, the exchange aided in 60 law enforcement requests.

The below charts depict the various types of law enforcement requests that come in different forms from governments around the world.

ShapeShift Law Enforcement Requests

The company says:

In the United States, they often take the form of subpoenas… What probably won’t come as a surprise is that the United States makes up the largest number of these requests.

A subpoena is a court-ordered request that essentially forces a person or entity to take an action. This could either be to testify before a court or hand over documents. Voorhees is no stranger to these.

What’s interesting is that there was an influx of requests towards the end of quarter three and moving into quarter four. The company says that this is congruous with other crypto companies in the industry, citing Market Watch.

ShapeShift No Longer Anonymous in Anyway

For users who thought that moving crypto through ShapeShift was a viable way of facilitating criminal activity, KYC clipped their wings. And if they had any notion that their transactions were anonymous on ShapeShift at any point last year, they just go a wakeup call.

There’s a lot of scrutiny on cryptocurrencies as the technology and use evolves. ShapeShift has always held financial transparency as a core principle, and for this reason, we felt the world should know that these types of law enforcement requests happen – almost continuously.

What do you think about Shapeshift aiding law enforcement? Share your thoughts below!


Images courtesy of Shutterstock, Shapeshift.io

Share
Led 16

South Africa to Start Tracking All Cryptocurrency Transactions in 2019

Owning bitcoin in South Africa just got a little harder, or at least it will do by the end of quarter one this year. According to a consultation paper published yesterday by the South African Reserve Bank (SARB), some hefty new regulation surrounding and exchanges and ATMs is about to be enforced.


South African Regulators Are Cracking Down on Bitcoin

The paper points to the several problems that cryptocurrencies present that spur the need to develop a proper regulatory response. Among these, it states that crypto assets may have a serious impact on the financial sector in the country. And that they present too many opportunities for “regulatory arbitrage.” Furthermore:

Crypto assets do not fit neatly within the current regulatory framework

This means, they argue, that they must draft new legislation, particularly at a time of growing interest from the public.

The paper also points to other problems with cryptocurrency, including the rising number of scams and hacks.

Currently, none of the consultation paper’s proposed approaches to regulating Bitcoin 00 have been enforced. The paper is still open to public comment until Feb 15.

The Intergovernmental FinTech Working Group (IFWG)

The IFWG formed a group to create this consultation paper. The group, called the Crypto Assets Regulatory Working Group, includes members from the SARB and the Treasury. Its aim is to forge a way forward for the regulation of cryptocurrency in South Africa.

South African Reserve Bank Planning to Test Cryptocurrrency Regulations

Traditional financial institutions and the country’s Reserve bank are laying the way forward for crypto’s future here. It’s hardly surprising then, that owning bitcoin in South Africa is about to get a whole lot harder.

Within the paper, the group acknowledges the possible advantages of cryptocurrency within the South African market, such as:

Customers purchasing crypto assets could seek to diversify their investment portfolio to an asset class that is not necessarily related to specific country risk.

However, the paper weighs more heavily on the problems of leaving cryptocurrency unregulated. This is hardly surprising when you consider the members that comprise the group.

Although the potential benefits of crypto assets that are related to lower transactional costs, greater speed and enhanced security of transactions are often touted, actual use cases thus far are yet to demonstrate that crypto assets payments are consistently faster, safer and cheaper than existing options.

Moreover, they go on to reiterate the ease with which Bitcoin can assist in criminal activities such as money laundering. They would. These are bankers after all.

Bitcoin-ing in South Africa Will Get Harder by End of Q1

The paper is currently in a draft version and nothing is set in stone yet, however:

The regulatory authorities will specify the way forward through a policy instrument such as a guidance note or position paper aimed for the first quarter of 2019.

The Crypto Assets Regulatory Working Group believes that regulation should not be delayed any further and that a clear approach is necessary.

Some of the main actions that will be taken are regarding the monitoring of cryptocurrency transactions.

This will focus heavily on AML/KYC and ensure that cryptocurrency exchanges, custodial services, and Bitcoin ATMs comply with existing South African financial security legislation.

They will also need to register with the IFWG and comply with AML/CFT (combating the financing of terrorism) conditions of the Financial Intelligence Centre Act.

Moreover, service providers will need to monitor user transactions, particularly large ones that may signal terrorist activity. Any service providers that fail to comply with these requirements will have sanctions imposed upon them.

Congratulations, South Africa, you’re starting to catch up to China.

What do you think of the proposed measures to regulate Bitcoin in South Africa? Share below!


Images courtesy of Shutterstock

Share
Pro 22

US Congressmen Introduce Bill To Exempt Crypto From Securities Law

A couple of Congressmen in the United States are trying to get an exemption for cryptocurrencies from securities law. If successful, it could signal a paradigm shift in the US regulatory climate as far as virtual currencies are concerned.


Crypto May Be Exempt From Securities Law

Rep. Warren Davidson (R-Ohio) and Rep. Darren Soto (D-Florida) introduced a bill on Thursday (December 20, 2018) called the “Token Taxonomy Act.” The bill seeks to exempt cryptocurrencies from being classified as securities. If passed, US securities law will no longer apply to virtual currency tokens once their projects become fully functioning networks.

The current securities law framework applied by the SEC to virtual assets comes from the Securities Act of 1933. A US Supreme Court ruling from 1946 introduced the “Howey Test” as a baseline set of rules to determine whether an asset is a security.

Based on the Howey Test, transactions that can be classified as investment contracts are securities. Based on this definition, many ICO tokens, according to the SEC are securities. This is because individuals invest in these ICOs (common enterprises) in the expectation of profit from the efforts of the project team or third party.

However, the sponsors of the new bill argue that the 70-year old Securities Act is inadequate to regulate a market as nuanced as cryptocurrencies. This position is one shared by many stakeholders in the industry. Expressing similar sentiments, Kristin Smith, the Blockchain Association chief said:

These decentralized networks don’t fit neatly within the existing regulatory structure. This is a step forward in finding the right way to regulate them.

Cryptocurrency-Specific Regulations

For the sponsors of the bill, their efforts are reminiscent of the steps taken during the early days of the internet. Commenting on this, Rep. Davidson, said:

In the early days of the internet, Congress passed legislation that provided certainty and resisted the temptation to over-regulate the market. Our intent is to achieve a similar win for America’s economy and for American leadership in this innovative space.

For people like internet security expert and cryptocurrency enthusiast, John McAfee, the SEC has no right to regulate cryptocurrencies in the first place. McAfee hasn’t hidden his disdain for the Commission’s “encroachment” into the market with many strongly-worded posts on Twitter.

The current efforts by the lawmakers if successful might initiate the emergence of cryptocurrency-specific regulations in the US. Agencies like the Commodity Futures Trading Commission (CFTC) or Federal Trade Commission might now have oversight over the industry.

Will the token taxonomy act help the US in catching up with the developments in the Asian cryptocurrency market? Please share your thoughts with us in the comments below.


Image courtesy of Twitter (@MatiGreenspan and @officialmcafee).

Share
Pro 21

Bakkt Bitcoin-Settled Futures Set To Be Approved in Early 2019

Bakkt, a platform for the first-ever Bitcoin-settled futures contract, is expected to be approved by the United States Commodity Futures Trading Commission (CFTC), according to the Wall Street Journal.


CFTC Approval Imminent

According to the Wall Street Journal, Bakkt will soon receive a regulatory green light from the CFTC for its Bitcoin futures contract. The WSJ notes:

The first futures contract that will pay out in cryptocurrency rather than cash is expected to soon get regulatory approval.

Bakkt, owned by Intercontinental Exchange Inc., will be the first to offer a BTC-settled futures product.

The Chairman Of The CFTC Might Just Have Brought The Bitcoin Crash To An End

Both Bakkt and the CFTC have been working together to iron out crucial issues relating to the futures contract. CFTC is also reportedly examining Bakkt’s business plan to determine whether they comply with its regulations.

Another major point of concern has to do with cybersecurity infrastructure. Cryptocurrencies are a target of hackers and other cybercriminals. The CFTC is looking at Bakkt’s security framework and the modalities in place to recover from a possible cyberattack.

Previously, Bakkt had to postpone the launch of BTC futures contracts to 2019 to give more room for proper customer onboarding and warehousing for the product.

In a press released issued by ICE back in November, the company announced that Bakkt would begin trading BTC futures on January 24, 2019. According to available reports, the CFTC will likely vote on the matter in early 2019.

Focus on Price Discovery

For Bakkt, the mechanism of price discovery is a critical issue given that its contract will be BTC-settled and not cash-settled like the ones offered by the CME and the CBOE.

Back in 2017, the appeal of the futures contract provided by the latter two gave traders the ability to place leveraged bets on BTC price 00 movement without having to buy the cryptocurrency itself.

However, the dynamics of price discovery could improve with Bakkt contracts being settled in actual bitcoin to gauge real demand as opposed to placing USD cash bets on BTC price movement. In August 2018, Bakkt CEO, Kelly Loeffler, said:

A critical element to price discovery is physical delivery. Specifically, with our solution, the buying and selling of Bitcoin is fully collateralized or pre-funded. As such, our new daily Bitcoin contract will not be traded on margin, use leverage, or serve to create a paper claim on a real asset.

Apart from Bakkt, Nasdaq has also confirmed that it wants to launch its Bitcoin futures product in 2019 and possibly other altcoins like Ethereum thereafter.

Will Bakkt Bitcoin futures get approved and make Bitcoin price discovery more accurate? Share your thoughts below!


Image courtesy of Twitter (@Bakkt), Shutterstock

Share
Lis 27

FCA Investigations Into Crypto Businesses Have Doubled Since May

FCA (Financial Conduct Authority), UK’s Financial watchdog, has doubled the number of investigations into cryptocurrency companies to 50 since May 2018.


FCA Increasingly Looking at Crypto Firms

According to Top Ten accountancy firm, Moore Stephens, the Financial Conduct Authority (FCA), has doubled the number of investigations into crypto related businesses in the UK since May of this year. This takes the total number up to 50 as of October 2018 against a backdrop of increased regulatory scrutiny.

FCA Urges UK Banks to Adopt Robust Security Measures Against 'Risky' Cryptocurrency Business

According to the UK’s 9th largest accountancy firm, failure to correctly address existing problems in the crypto community could lead to heavy regulation in the future.

Moreover, the latest plunge in the price of bitcoin 00 and a massive drop in the value of all major cryptocurrencies has further shed light onto concerns that the market is not properly regulated. This has also caused a surge in the number of complaints to the FCA.

The FCA Isn’t Messing Around

Often accused of regulatory indifference or moving at a glacial pace, it seems that the FCA is finally taking a serious approach to cryptocurrencies. One of the key focuses of their investigation is on closing down unauthorized businesses. These are the types of companies that hold ICOs to raise vast sums of money by using unregulated loopholes.

Tighter regulation in the future is a concern to many in the industry as it is widely believed that restrictive regulation could be inhibitive to innovation. Partner at Moore Stephens, Andrew Jacobs, explains:

The huge sums lost as a result of cryptocurrency prices falling this year will have triggered a rash of complaints to the FCA.

He goes on to add that the rise of Bitcoin and other altcoins’ prices had attracted interest from many “enterprising firms” who aren’t conducting themselves by the book. Now the market has all but bottomed out, this is a problem.

Now that prices have collapsed, fraud and other suspicious activity are likely to be exposed, with greater pressure coming to bear on the FCA to ensure that this market can operate transparently and fairly, with investor protection embedded at its heart. The FCA is now clearly looking to get out in front of potential issues related to cryptocurrencies in order to more effectively manage their risk.

A Properly Regulated Environment

Regulation is still a topic that splits the crypto community down the middle. While many argue that lack of regulation causes problems, Jacobs believes that an environment that is correctly regulated is crucial to building confidence in cryptocurrency for both retail investors and institutions alike. He says:

It is important that any new regulations don’t choke competition in the market to the point where cryptocurrencies become ineffective. Walking this line will be key in helping to establish the UK as a cryptocurrency hub in Europe.

The UK’s FCA released its Cryptoassets Taskforce report in October. The report includes the actions that it will take to mitigate risks with cryptocurrencies, including the correct classification of cryptocurrencies–and which ones fall into the perimeter of the FCA, whether or not the FCA will need to regulate all cryptocurrencies, and an extra section on the need for regulation of e-wallet providers and exchanges.

Will a regulated environment benefit the cryptocurrency industry? Share your thoughts below! 


Images courtesy of Shutterstock, Bitcoinist archives

Share
Lis 26

Bitcoin ETF ‘Definitely Possible,’ SEC Commissioner Confirms

SEC commissioner, Hester Peirce, recently appeared on the ‘What Bitcoin Did’ podcast, confirming that a Bitcoin ETF was definitely possible.


‘I Dissent’

The most notably pro-bitcoin SEC commissioner, Hester Peirce, appeared on the ‘What Bitcoin Did’ podcast at the weekend. Whilst unwilling to describe a future Bitcoin ETF as inevitable, she did confirm it was definitely possible.

Peirce first won the hearts of the crypto-community with her ‘statement of dissent’, following yet another denied Winklevoss ETF application. In the statement made in July, she publicly disagreed with the Commission’s view, that Bitcoin was not “ripe enough, respectable enough, or regulated enough to be worthy of our markets.”

She felt that the SEC had gone beyond its jurisdiction, in assessing the underlying asset, rather than the specific market that it would trade in.

In the podcast she reasserts that the SEC has a specific mandate, to uphold the regulatory framework. She believes that the SEC should allow for innovation within that framework and not become interventionist.

‘Crypto’ Not A Free Pass

Peirce explains that the SEC has brought in specialists to advise in the area of cryptocurrency, who have led the agency to take to a cautious approach. She believes that it is right to pursue those who use “crypto” in an attempt to scam people out of money but is pushing to allow more scope for innovation.

Just because you are calling something Crypto does not mean you can ignore the rules we have had in place for years… but I do think we also need to be willing to open the doors a little bit wider for innovation.

She stresses that although so far all cryptocurrency ETF applications have been rejected, they are still open.

Ongoing Relationship

Peirce points out that the commissioners have been inviting comments from the public, and that this process is extremely useful. The applications are an ongoing relationship or conversation, the SEC’s orders following denial simply point out issues to address.

One the face of it, it may seem like the SEC is poking around and trying to cause issues but in reality, it might be the opposite.

Peirce explains that many comments enquire about the timing of the route to final approval, but this is not so easy to answer. Each proposal is assessed on its own merits, and each is designed differently. So when a particular proposal will convince three of the five commissioners is hard to say.

Peirce suggests it must run its course.

Meanwhile, this month Switzerland approved the first Bitcoin ETP to trade on the Six Stock Exchange. This is the main stock exchange in Switzerland and the fourth largest in Europe. So it seems the winds of change are blowing and it can only be a matter of time before they reach across the Atlantic.

Will the Bitcoin ETF be approved by the final deadline in February? Let us know below!


Images courtesy of Shutterstock

Share
Lis 05

Swiss Regulator: Crypto Assets Need 800% Risk Weighting In Absence Of Formal Rules

Swiss financial regulator has informally signaled cryptocurrency investments should have a risk weighting ratio of 800 percent of the original amount.


FINMA Highlights Bank, Dealer Queries

According to local news media outlet Swissinfo, the Swiss Financial Market Supervisory Authority (FINMA) revealed the figure in October in response to a query by trustee and accountant association EXPERTsuisse.

In the letter, dated October 15, FINMA suggested it had come under pressure to provide clarity on the issue from banks and associated players, but the requisite regulatory guidelines were yet to appear.

Swiss Based

“FINMA has recently received an increasing number of inquiries from banks and securities dealers holding positions in cryptoassets and are subject to capital adequacy requirements, risk distribution regulations and regulations for the calculation of short-term liquidity ratios,” Swissinfo quotes it as stating.

Switzerland has several years’ experience of formal integration of cryptoasset-based products in its banking sector, has taken a proactive role in creating a supportive legislative environment for the new instruments.

At the same time, Swissinfo notes, FINMA can only give ballpark figures until all-encompassing formal statutes are set in stone by the international adjudicator Basel Committee on Banking Supervision.

A decision may come as soon as the Committee’s next meeting at the end of November.

‘No Impact’

In the meantime, cryptoassets should be “assigned a flat risk weight of 800% to cover market and credit risks, regardless of whether the positions are held in the banking or trading book,” the letter continues.

According to sources commenting on the situation, the 800 percent figure is high, but not prohibitive.

SEBA, a startup which in September raised $103 million to build a cryptocurrency bank in the country, said the recommendation “had a limited impact on its business model.”

“It’s encouraging to see banks no longer turning down the increasing number of client requests for crypto services but asking for guidance and providing their input along the way,” lobby group the Bitcoin Association Switzerland added to Swissinfo.

What do you think about FINMA’s recommendation? Let us know in the comments below!


Images courtesy of Shutterstock

Share
Lis 02

Germany Gets First Bitcoin ATM In Years (But How Long Will it Stay?)

Germany has received its first ever legally-sanctioned Bitcoin ATM (BTM) following a landmark legal ruling — but its longevity is already in doubt.


Munich Machine Hangs On Court Ruling

As t3n.de first reported October 30, the owner of a casino in Munich opted to import a BTM from Austria after a German court ruled cryptocurrency dealing was not subject to mandatory licensing.

Previously, those wishing to conduct business involving BTMs, as an example, had to get permission from financial regulator BaFin; ignoring this constituted an offense.

The situation changed last month when the Berlin Kammergericht overturned the authority of BaFin to decide such matters, deciding Bitcoin and cryptocurrency was not “money.”

That judgment led the Monte24 Casino and Video Store to set up its BTM, bringing it across the border from Austria, where cryptocurrency regulations have been more supportive for several years.

Bitcoinist_Bitcoin Adoption Germany

BaFin: We ‘Respectfully Acknowledge’ Court Decision

Due to the uncertain nature of the Kammergericht’s decision regarding the long-term ability of entities to operate BTMs and other cryptocurrency exchange services, however, its future is already hard to estimate, says t3n.

“Whether the ATM will be found in Munich for a longer period remains unclear and depends on how long the judgment can remain in force,” the publication reports.

Germany’s slow progress in acknowledging consumer interest in cryptocurrency has often led to frustration, especially viewed in contrast to well-known progressive neighbors Austria and Switzerland.

Attempts to operate BTMs in the country have previously ground to a halt over red tape, with installations several years ago all disappearing.

In an interview last week, BaFin said that while it “respectfully acknowledged” the court ruling, the issue as to whether cryptocurrency constituted a unit of account as per the law was a different matter.

President Felix Hufeld further called for an international push to regulate phenomena such as ICOs.

What do you think about Germany’s Bitcoin ATM? Let us know in the comments section below! 


Images courtesy of Shutterstock.

Share