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Tether, one of the most-traded cryptocurrencies, shows a pattern of being spent on bitcoin at pivotal moments, helping to drive the world’s first digital asset to a record price in December, according to research by a University of Texas professor known for flagging suspicious activity in the VIX…
In polite pockets of society, acceptable and positive crypto talk revolves around its amazing tech and what the future might hold. At least one bitcoiner has tossed aside such niceties, and examined the world’s most popular cryptocurrency as a potential offshore tax avoidance haven. Depending on the study, as much as $ 20 trillion is hidden away from government tax farmers. However, loopholes are closing as lawmakers discover them, perhaps creating just the use case bitcoin needs to thrive in the near future.
Can Bitcoin Get a Slice of the $ 20 Trillion Tax Avoidance Market?
Treasure Islands author Nicholas Shaxson explained what he imagines to be a queer phenomenon. “Governments were short of revenue and seeking new sources; there was huge public anger at bailouts and banking is at the center of the offshore system; and there were rising concerns about inequality when offshore is an inequality machine,” he told The Christian Science Monitor.
Not quite a decade ago, the US in particular used terrorism as a pretext to force notorious Swiss bank accounts to release information on tens of thousands of American customers. Soon after, the Organization for Economic Cooperation and Development urged global standards in this regard. From there, the G20 picked up the cause, and by last year implemented a system of instant accountability between nations and their respective tax authorities.
John Christensen of the Tax Justice Network put it succinctly, “‘Bit by bit, international standards are being created. This is all being extended in the direction’ of secretive jurisdictions such as Switzerland. But activists and journalists investigating fraud, kleptocracy, embezzlement and other financial crimes ‘hit a brick wall when we can’t establish the ownership of a company.’”
“Bitcoin throws a wrench into the traditional monetary system,” sometime bitcoin maximalist @dantwany posted on Medium recently. His assertion is how “parallels exist between traditional tax havens used by the wealthy and Bitcoin,” in an effort to get a “better idea if it will be seen in the future as more of an alternative to the financial system altogether, or play a part in offshore banking services.”
Bitcoin Isn’t Just for the Rich
Tax havens are typically thought to be financial playgrounds of the uber rich. @dantwany details how now “Bitcoin may open the playing field for ordinary citizens who normally could not afford this luxury.” Indeed, “the fact that ordinary citizens are not effectively barred from entry into Bitcoin like in offshore banking makes it likely the potential market may be much larger than current estimates,” though he admits there is scant evidence this is actually happening.
For his purposes, offshore “tax havens have the following four attributes: 1) No or low effective tax rates. 2) No need to generate substantial economic activity in the location to gain tax benefits. 3) Lack of mandated transparency with regards to customer details and other lenient laws that govern financial dealings. 4) A lack of exchange of information.”
He notes how mainstream havens have become, including legacy institutions using oasis/shelter systems. He cites approvingly Jim Omartian in his Panama Papers article, “Do Banks Aid and Abet Asset Concealment,” suggesting for “investors residing in countries with weak property rights, using an offshore entity may prevent government expropriation. Investors buying property or acquiring a firm may want to conceal their identity from the counterpart for an edge in negotiations.”
Bitcoin can be sought for a variety of reasons in the above case: secrecy, of course, and lack of confidence in the integrity of domestic banking institutions. And just as the US bullied its way into Swiss financial arrangements, Americans began closing their accounts in a rush, proving capital will go where it’s treated the best. The Panama Papers affair seems to reveal an economic truism, “when one tax evasion method becomes difficult, it is simply supplanted by another alternative. As data collection improves and more leaks like the Panama Papers continue, there will be no alternative but to turn to encryption and decentralized networks like Bitcoin for true privacy,” @dantwany boldly asserted.
Crackdowns Might Push More Bitcoin Adoption Through Decentralized Exchanges
This year just might see crackdowns push more people toward bitcoin, especially as legal schemes such as the Automatic Exchange of Information take hold. European Union countries in 2018 will exchange customers’ financial information as a matter of course. All over the world, governments are beginning to see what could be around the corner for tax havens. Crypto miners are regularly hectored from Venezuela to Argentina in an effort to slow the phenomenon, to varying degrees of success. Russia is busy passing crypto tracking laws. China famously went after exchanges, only to force trade underground with more peer-to-peer services such as Localbitcoins filling the vacuum.
With an eye toward skepticism, @dantwany writes how it does seem “doubtful that Bitcoin can capture all the money currently in tax havens.” However, those who are stuck in countries where private property rights in particular are less than secure, there “is certainly a case where Bitcoin can find a use and it seems likely that it will tap into this market, if it is not already doing so. In the near future, it may become very possible to use Bitcoin on decentralized exchanges to buy a wide variety of tokenized securities and assets. Using this method, the buyer will be in complete control of the assets they are trading in an anonymous manner.”
He’s also keen to watch where autocrats go, where they put their ill-gotten gains, suggesting as “public backlash, leaks, and political turmoil increase, it seems very likely that even the autocrats themselves may have to turn to alternatives like Bitcoin to conceal and keep their wealth, at the very least as a hedge. It seems inevitable and a matter of when, not if that a percentage of the wealth held in tax havens begins to flow into Bitcoin and the cryptocurrency economy.”
Is crypto the future of tax shelters and havens? Let us know in the comments.
Images via the Pixabay, Twitter.
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The post Bitcoin’s Chance at the $ 20 Trillion Offshore Tax Haven Market appeared first on Bitcoin News.
It’s a story straight out of cinematic lines: whale cryptocurrency investor rakes in mounds of money, and reaching a “satiety point” decides to give a healthy portion of it to worthy charities. And add to that the spectre of remaining anonymous, the ecosystem, beset by dreams of easy fortunes and Lambos and glory, was given a real-world object lesson in five short months. Health care, water potability, education, digital rights advocates, among many others, all felt the power and generosity of crypto. This week, Pineapple Fund announced its final donation.
Pineapple Fund Issues its Final Donation
In a subreddit post this week, Pineapple Fund’s anonymous benefactor wrote, “It’s been five months, and having just made my last PF donation to the Internet Archive, I figure it might be a good time to say farewell.” Pine, as the anonymous poster goes by, continued by thanking the broader community for offering worthy organization suggestions, and also thanked “the Bitcoin and cryptocurrency community, for turning a Sourceforge project into a $ 0.5T industry.”
The fund burst upon the crypto community mid-December of last year, right at the height of bitcoin core’s (BTC) price spike. “The anonymous donor says he saw the promise of bitcoin long before it broke the single-digit price range. The donor explains the ‘shattering returns’ of bitcoin over the years has given him more money than he can spend,” these pages documented at the time.
Donations ranged between $ 50,000 to $ 5,000,000. Around since the mid 1980s, the Multidisciplinary Association for Psychedelic Studies (MAPS) researches and educates about “the medical, legal, and cultural contexts for people to benefit from the careful uses of psychedelics and marijuana.” It was one of the organizations deemed worthy of a $ 5mil gift from the fund.
Give Directly, a group facilitating the ability to send money directly to the extreme poor, also landed among $ 5mil donations. It claims to distribute 88 percent of each dollar to those in need. Roughly $ 1,000 is sent to well vetted recipients who often use what is the equivalent in about a year’s wages for essential housing materials.
A Strong Legacy
The final recipient of $ 5mil was the Open Medicine Foundation (OMF). Its goal is to both fund and initiate collaborative and groundbreaking research into chronic complex diseases, focusing upon the End ME/CFS Project, designed to find biomarkers and effective treatments for Myalgic Encephalomyelitis / Chronic Fatigue Syndrome.
“I kind of miss the old times when bitcoin was a small community,” Pine wrote, “and you could count the number of ‘altcoins’ with one hand. Finding someone else who even knows about bitcoin was incredibly rare, and exchanges were semi-automated or running on PHP.”
Community response was effusive with praise such as, “Thank you for doing what so many wish they would do in your position but yet fail to when they get there. Really proud of you and appreciative of your generosity,” one commenter wrote. Still another insisted, “This kind of generosity will indirectly impact so many peoples’ lives for the better. Thank you!”
Other commenters held onto the idea of Pine returning at some point should the market tick back up again, and prices moon. “Thanks for following along with this experiment. I’m going to say goodbye now, but maybe there’s room for dessert in a few years,” Pine teased. “If you’re ever blessed with crypto fortune, consider supporting what you aspire our world to be. :)” Of course, others are currently involved in charitable, real-world work, such as Eat BCH. The group doesn’t enjoy the financing of a whale, and yet it provides food relief for countries such as Venezuela, which has suffered greatly in a giant economic downturn.
Is charity an important way to promote crypto? Let us know in the comments section below.
Images courtesy of Shutterstock, Pineapple Fund.
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Cai Wensheng, the founder of Meitu Inc., a Chinese technology company that makes smartphones and selfie apps, has announced that his bitcoin holdings have reached a personal milestone of 10,000 BTC. Mr. Wensheng also discussed his investments in alternative cryptocurrencies, and compared the present state of the cryptocurrency sector to that of the internet of the early 2000s.
Meitu Founder Accumulates Approximately 10,000 in 2018
In a recent interview with entrepreneur Wang Feng, Mr. Wensheng revealed that his goal of owning 10,000 BTC had been achieved following extensive accumulation during the bear trend of 2018. “When I clearly saw the future of blockchain and bitcoin, I set a goal for myself – owning 10,000 bitcoins, and now the goal has been achieved,” he said.
Mr. Wensheng claimed that “Back in this January I only had several bitcoins, just to follow the trend.” Mr. Wensheng states that he then “realized that blockchain and bitcoin are the future,” leading to the entrepreneur to “set the goal of accumulating 10,000 bitcoins.”
Despite being enticed by the meteoric gains made by the bitcoin markets in 2017, Mr. Wensheng patiently waited for the markets to retrace. “Last December saw the great spike and I didn’t buy any bitcoin at that time. Later when the price corrected to normal in January, I began the career by buying in bitcoins at low cost,” he recounted.
Mindset Critical to Successful Investment
Mr. Wensheng stated that in his view, “the big difference between investment and speculation is the mindset. Suppose you buy in a stock share or a cryptocurrency but the price keeps falling after that, if you are an investor, you will be delighted at the stumble for it means good time to buy more in; on the contrary, if you keep complaining of the slowdown, no offense but I think you are actually a speculator.”
Despite his assertions surrounding the requisite psychology for successful trading, Mr. Wensheng emphasizes the need for new investors to exercise due diligence and caution when entering the markets. “Of course, before you get started, thorough research and analysis is a must,” he said.
Cai Wensheng Compares Cryptocurrency Markets to Early 2000’s Tech Boom
In the interview, Mr. Wensheng described the current state of the cryptocurrency markets to the boom and bust-prone internet sector of the early 2000’s, stating “It is the similar case with Internet in 2000, startups die away in batches when the Internet bubble burst back then, few made it. While if you bet the right one, the returns are beyond your imagination.”
Mr. Wensheng states that he has “invested in a dozen of blockchain projects,” including “Theta, Ontology, Cortex, Arcblock, Zipper, Yeecall, Dxchain, [and] Charter.”
So far, Mr. Wensheng claims that “some” of his cryptocurrency investments have yielded “fairly high returns and some are still losing money” – describing the markets’ performance as “reasonable […] as blockchain is still in its early phase and practical applications are lacking, in this way, it needs more support and patience. In the long run, it’s promising and time will tell.”
Do you agree with the comparison between the cryptocurrency markets and the tech boom of the early 2000’s? Share your thoughts in the comments section below!
Images courtesy of Shutterstock, Meitu Inc.
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India’s cryptocurrency exchange Coinsecure has announced that it cannot repay customers their stolen bitcoins at this time. The exchange claims that while investigations are underway, permissions are needed from the authorities to start the claims process which it has not yet received.
Indian exchange Coinsecure has updated users regarding the disbursement of funds due to stolen bitcoins. The exchange previously confirmed that 438.31859715 BTC were stolen on April 8, worth approximately Rs 20 crore or US$ 3,067,220.
The exchange revealed on April 21 that it had started working on the claims process. “We are hoping that by the following weekend [April 28-29], we should get started and you should be able to submit your claims withdrawals requests.” However, that deadline has passed and the exchange is now saying “there has been a delay on that front,” elaborating:
When investigations are underway, we don’t have much of a say and do need permission from the authorities to start the compensation process, which we are yet to receive.
“There will be new contracts rolled out to all our users who held a balance on Coinsecure (INR and bitcoin),” the exchange added.
Working With Authorities
Coinsecure has been cooperating with the authorities to recover its lost BTC. The exchange suspects its Chief Security Office, Dr. Amitabh Saxena, was behind the theft. A complaint was filed with the Cyber Crime Cell of the Delhi Police on April 10. The authorities advised the exchange to “confiscate [the suspect’s] system for further investigation,” which it followed and collected Saxena’s laptop.
In a letter to the authorities, Coinsecure’s CEO Mohit Kalra wrote, “as the private keys are kept with Dr. Amitabh Saxena, we feel that he is making a false story to divert our attention and he might have a role to play in this entire incident.”
If all the stolen bitcoins are recovered, Coinsecure said that all customers’ bitcoin holdings will be repaid per balance on April 9. Otherwise, the exchange explained:
We will apply the lock in rates as of the 9th of April, 2018. 10% of the coin holding balance will be refunded in BTC and 90% will be returned in INR.
To help with the recovery of lost coins, the exchange has also appealed to the community for help and has put up a 10% bounty.
Even amid the turmoil surrounding Coinsecure, Venezuela announced last week that the Indian exchange has been certified to operate in Venezuela in hopes that it will list the country’s new currency, the Petro.
What do you think of Coinsecure needing permission from the authorities to repay customers? Let us know in the comments section below.
Images courtesy of Shutterstock, Coinsecure, and Cyber Crime Cell.
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When Fundstrat Global speaks, the crypto world listens. In recent months it has been a steady font of good news for the ecosystem, with five figure price calls to predicting a very bright future, a crypto future. Resident guru Thomas Lee more-or-less foretold the current after tax season spike in prices when many others were decidedly bearish on the asset class. The firm recently surveyed a small group of institutional investors, and they appear to see cryptocurrencies poised for a breakout year. To help such investors make informed choices in that regard, the company also created five new crypto indices.
Inflows of Big Money into Crypto
Fundstrat’s co-founder, Thomas Lee, tweeted how his company “hosted a small group of institutional investors” recently. It was a “mix of crypto and traditional macro [hedge funds] long-only.” It was a chance to informally survey basic sentiment about the market shortly after the end of tax season for the United States.
Of the nine questions, they included: if cryptos will rise during a recession (65% Yes), if bitcoin core had bottomed (82% Yes), bitcoin core’s year-end price (vast majority believed it will be between $ 10K and $ 30K); most believed regulators will provide clarity sometime this year; they do not believe Ethereum will be classified as a security; a great number seem to be moving away from “store of value” concerns, toward an actual currency; and 60% believe Goldman Sachs will be the first to introduce institutional crypto trades. The key “takeaway,” Mr. Lee insists, is how “institutions believe [bitcoin core] bottomed. We see this as a leading indicator for inflows of big money into Crypto.”
Indeed, Fundstrat’s Mr. Lee has been something of a fortune teller for the digital asset class. It was he, and almost he alone, who urged investors to perhaps buy the Crypto Winter dip, believing bitcoin core would bounce back after capital gains and relevant tax penalties were paid. As of this writing, he appears to be correct.
The future looks so bright for cryptocurrencies, Fundstrat also announced a set of new indices, five to be exact. “Commodity tokens,” wrote Mr. Lee, Sam Doctor, and Robert Sluymer, “in our view, are on-ramps for institutional inflows, given the expanding options for access (futures, etc.). And commodity tokens face less regulatory risk relative to other types of tokens at the moment.”
Bitcoin Cash, Bitcoin Core, Zcash, Monero, and Litecoin
Basing their choices on relative size, the five sectors comprising 75% of the sector’s cumulative market capitalization are Stablecoins, Privacy, Platforms, Exchanges, and Commodities (which take up nearly half of the index due to components Bitcoin Cash, Bitcoin Core, Zcash, Monero, and Litecoin).
The Privacy index has four components: BTCP, ZEC, XMR, and DASH, with Monero and Dash taking up the lion’s share. The Stablecoin index has two components: DAI, USTD, with Tether forming a whopping 99% of the sector. Ether, as most might expect, overwhelms the Platform index.
More recently, the firm held out seven coins as ones to watch: BCH, BTC, EOS, BYTOM, IOTA, XLM, and NEM.
Are you bullish on crypto this year? Let us know in the comments section below.
Images courtesy of Shutterstock, Twitter.
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This week cryptocurrency miners had processed the 17 million coins across both Bitcoin Cash (BCH) and Bitcoin Core (BTC) networks, marking a great milestone within the history of blockchain technology. Now there are only 4Mn BCH and BTC left to mine but it’s still a very long time away until the very last coins are mined.
80.9% of All Bitcoins Have Been Mined
According to blockchain data, today both BTC and BCH miners mined the 17 millionth coin per network, and there are only 4 million left to mine. Now individuals may say that only 4 million coins is not much of a supply since 17 million were mined in less than ten years, so they might expect the last coins to be mined shortly. However, that’s not the case for both networks as mining difficulty continues to increase on both chains, and every four years the mining block reward is cut in half. Right now both BTC and BCH networks produce 12.5 coins after every block found, and when the halving takes place the reward will only be 6.25 newly minted coins. The BTC chain is expected to halve its mining reward in roughly 763 days or May 29, 2020, depending on the hashrate. If the networks hashrate grows slower or faster the halving date could change.
BTC and BCH Halvings and the Last Coin Found Will Likely Be Different Time Frames
Further, the mining of the last coins won’t be found very quickly because of mining difficulty changes, which makes it harder for miners to find blocks over time. BTC’s ‘Difficulty’ is a metric used to measure the probability of finding the next block, and the BTC network automatically changes difficulty every 2016 blocks. The BCH chain adjusts difficulty every block to make sure previous 144 blocks take exactly one day. The BTC method of difficulty changes and things like the block reward halving every four years or less, will eventually lead to the last BTC being found on or around the year 2140. The BCH chain may have some different halving times, but as things are today the last BCH may be found around the same year. Although there may be some slight discrepancies on halving and the last coin found time frames between both networks.
For instance, the BCH chain had a different difficulty adjustment algorithm (DAA) when the chain first separated. Up until November of 2017, the BCH difficulty was a bit volatile; sometimes processing blocks extremely fast and sometimes super slow. This led to the BCH chain mining a touch more coins than BTC, and it has processed more blocks as well. At the time of publication, the BCH chain is 7568 blocks ahead of the BTC chain, and there are 94,000 more BCH in circulation than BTC. However, since the November bitcoin cash DAA hard fork, metrics have leveled out quite a bit and newly minted BCH are mined roughly at the same rate. Before the fork profitability led to miners bouncing back and forth between chains, but since the DAA change profitability has been consistently level as well. At the moment BCH miners are processing blocks at 13.96% of BTC’s difficulty. Several things could happen in the future where halving and difficulty times could become totally different between both networks.
Satoshi’s Vision Has Come a Long Way — Giving the World the Genius of Proof-of-Work and Digital Scarcity
Even though it’s going to take more than a century for all of the coins to be found, finding more than 80 percent of them is quite the feat. Over the last six months, both chains have seen a phenomenal increase in hashpower, and if this keeps up it will likely lead to much faster halvings and difficulty changes. Additionally, the 21 million cap created by Satoshi Nakamoto cements the power of digital scarcity, which theoretically will keep demand going strong for ages. The cryptocurrencies are divisible by eight decimals and this means that even though there are not enough ‘whole’ coins to go around for every individual on the planet, people will transact with smaller fractions over time. Unlike quantitative easing and the central banking system bailing out the banks by printing mass quantities of fiat — cryptocurrencies are and will always be scarce. 17 million coins found by a network of incentivized miners is a landmark occasion, and we should all celebrate this feat as it shows how far this technology has come in less than a decade.
What do you think about the fact that 80 percent of all BCH and BTC have been mined so far? Let us know what you think about this subject in the comments below.
Images via Pixabay, and Shutterstock.
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Indian exchange Coinsecure has announced its plan to repay customers for stolen bitcoins as well as a 10 percent bounty to anyone who helps recover them. The exchange claims it was an inside job, and suspects its chief security officer of playing a role in siphoning off the money.
A 10 Percent Bounty
Coinsecure has announced a bounty of approximately 20 million rupees, worth approximately US$ 306,722 at press time, “to anyone who helps them recover the lost bitcoins,” the Economic Times reported on Saturday.
The exchange confirmed that it lost 438.31859715 BTC on April 8, worth approximately Rs 20 crore or US$ 3,067,220. The coins were stolen from an offline wallet holding users’ funds, the news outlet detailed. While the exchange has about 2 million users, “Some 11,000 customers are said to be affected by the reported theft which is the biggest cryptocurrency theft in India,” the publication added. The exchange subsequently halted all deposits and withdrawals.
A statement was issued by the company on Friday, clarifying:
We are also seeking help from the Bitcoin community and all our users who can help us identify the hacker or give us any information that could lead us to recover funds…We are happy to issue a bounty of 10% to the community for help rendered for [the] recovery of BTC.
Where Did the Coins Go?
Coinsecure revealed that the address where stolen bitcoins were transferred to is 1BaEJquitskdXcTj53Uy6PuUtJ5a8ETWpA. At the time of this writing, there have been 973 transactions through this address and the final balance is 139.42094629 BTC.
The stolen coins were “transferred to the hacker’s wallet over a span of two days in small tranches” and then sent to multiple addresses, the news outlet described, noting:
The exchange claims an insider job in the theft and suspects its chief security officer, Amitabh Saxena, of playing a role in siphoning off the money. Coinsecure also requested Delhi police to seize Saxena’s passport, fearing that he may leave the country.
The police are currently investigating the case. The exchange has filed a theft report with the Delhi Cyber Crime Cell under Section 66 of the IPC and the IT Act. According to News18, “the company’s servers have been seized to get information about [the] hack…Many senior officials of the company have [also] been called for questioning.”
Moreover, the news outlet wrote, “Coinsecure tried to track the hackers, but the wallet was stolen, their data log was erased. For this reason, there was no clue about the transfer of bitcoins.”
The company announced on Saturday that “should we be able to recover all of our BTC, all our customers’ BTC holdings will be refunded as per the balance they held with Coinsecure.” However, the exchange warned that:
If recovery of siphoned BTC is not possible, then we will apply the lock in rates as of the 9th of April, 2018. 10% of the coin holding balance will be refunded in BTC and 90% will be returned in INR.
“Details on procedures to be followed will be issued sometime next week, as we are planning on how we can go back online and help with withdrawals of INR and BTC balances, and are waiting for the go-ahead from the authorities,” the exchange elaborated.
What do you think of Coinsecure’s bounty and repayment plan? Do you think it was an inside job? Let us know in the comments section below.
Images courtesy of Shutterstock, Blockchain, and Coinsecure.
Need to calculate your bitcoin holdings? Check our tools section.
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A growing number of governments can’t resists the temptation to get their hands on some of the bitcoins their citizens are making. Several states, however, think that leaving some breathing space for crypto users and entrepreneurs is a better idea in the long run. Crypto-friendly tax regimes can still be found around the world.
Tax Exemptions Offered Here:
Germany, Europe’s economic locomotive, has been quite careful with crypto taxation. Last month the Federal Ministry of Finance issued a notice which treats bitcoin as a currency. The Bundesrepublik is not going to tax cryptos when exchanged with euros. Purchases with bitcoin are subject to VAT, just like any other. No tax will be imposed, however, on long-term investments in cryptocurrency. If a trader sells a bitcoin more than a year after its purchase, the profit is exempt from taxation. The same applies to yearly profits of less than €600.
Capital gains of individual investors trading cryptocurrencies are not taxed in Slovenia. Its residents are not required to report them in their income tax returns. However, private individuals who receive their income in cryptocurrency, are obliged to declare the digital money and pay regular income tax. The country uses a progressive scale and rates vary from 16% on incomes of less than €8,000 a year to 50% on incomes exceeding €70,000.
Tax authorities in Denmark have said that fintech companies should pay taxes just like any other business. On the other hand, individual investors trading cryptos do not owe any tax on their gains.
Belarus has created a friendly environment for crypto investors, both corporate and private. Activities like mining, issuing, and trading coins were legalized in March. A presidential decree introduced tax exemptions for crypto incomes and revenues for a period of five years.
Gains from cryptocurrency transactions are still tax free in South Korea. The Finance Ministry and the tax authorities in Seoul are working on a legislation that is likely to change the situation. The new tax bill should be adopted in the first half of this year, according to officials. No concrete time frame has been set.
Buying bitcoin will save you taxes in Singapore. Digital coins are not considered commodities there and are not recognized as currencies. In the absence of special requirements, gains from crypto investments of private individuals are not taxed. Companies trading cryptocurrencies, however, are expected to pay taxes on their profits.
Incoherent Rules Govern Crypto Taxation
Many jurisdictions have yet to update their tax laws to encompass cryptocurrencies. Rules governing taxation are often incoherent and very different even in countries that are part of a common space. In the European Union, for instance, tax rates in member-states vary between 0 and 50%.
The situation in the US is also complicated. Several states have taken steps to become crypto-friendly jurisdictions. Wyoming passed a bill exempting cryptocurrencies from property taxation. Two other states want to legalize bitcoin as a payment option for tax purposes. Arizona has promised to become the first US state to start accepting taxes in cryptocurrency. Georgia may also allow its residents to pay taxes in bitcoin.
What taxes on crypto incomes and profits do you have to pay in your country? Tell us in the comments section below.
Images courtesy of Shutterstock.
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Japanese internet giant GMO has launched a service to allow customers to lend their bitcoins to the company. Customers’ bitcoin balances will be debited from their GMO Coin trading accounts once loan agreements have been reached. This program is similar to the one launched by the hacked exchange Coincheck last year.
GMO’s New Service
GMO Coin, the cryptocurrency subsidiary of Japanese internet giant GMO, has announced a new service to allow customers to lend their bitcoins to the company. GMO Coin described:
Virtual Currency Rental Service is a service that allows you to rent out the virtual currency held by the customer to the company so that you can receive the rental fee according to the quantity of the lent virtual currency.
Interested customers can apply to participate in the program between April 11 and May 2, after which there will be a drawing. Currently, only bitcoin (BTC) will be supported. Customers need to specify the quantities they wish to lend in units of 10 BTC, with the minimum quantity being 10 BTC and the maximum being 100 BTC.
Rates and Details
GMO Coin will review all applicants and inform customers of its decisions and of the loan procedure, which is expected in early May. Once an agreement has been reached with the company, the customer’s BTC balance will be deducted. “If there is no BTC balance in the quantity required for debiting, it [the agreement] will be automatically canceled,” the company explained.
“The price of the target currency also fluctuates during the lending/withdrawal period,” GMO Coin warns, adding:
During the term of the loan, the loaned virtual currency cannot be sold or transferred.
The loan period is 90 days. On the settlement date, the company will return to the customer “the same type.. [and] the same amount” of the cryptocurrency borrowed, plus interest. However, customers can recall the loan early and “within five business days after accepting cancellation at our company, we will redeem the virtual currency less the cancellation fee,” GMO Coin detailed.
Reiterating that the interest on the loan will be paid on the settlement date of the loan, GMO Coin elaborated:
[The] Rental fee [of] 10 BTC is equivalent to 0.12328767 BTC, [which is] 5% / year (including tax) (round down to less than 1 Satoshi)…Taxes may be levied on loan fees.
“Rental fee = (loan amount × loan period (day) × loan rate) / 365,” GMO clarified, and gave an example that customers lending 10 BTC for 90 days will receive “(10 BTC × 90 days × 5%) / 365 = 0.12328767 BTC.”
Coincheck Launched a Similar Program
Other crypto exchanges around the world that offer leveraged trading have launched similar programs to borrow their customers’ coins.
In Japan, Coincheck, which was hacked in January, announced the launch of a similar service in May of last year. Customers could earn 1%, 2%, 3% or 5% annual interest depending on the maturity date of the cryptocurrencies loaned to the company. The service began with just BTC but the company later added 11 more cryptocurrency options.
However, Coincheck’s lending service was initially restricted by the Japanese Financial Services Agency (FSA), a representative of the exchange told news.Bitcoin.com at the time. The exchange then relaunched this program in June. Currently, new registrations are temporarily suspended.
Unlike Coincheck, whose exchange registration has not been approved by the FSA, GMO Coin is fully licensed. It did, however, recently receive a business improvement order from the FSA. GMO also operates Japan’s largest forex exchange called GMO Click, which Finance Magnates Intelligence says is the forex exchange that “was the undisputed leader throughout the whole of 2017, achieving average monthly volumes of $ 660.32 billion.”
What do you think of GMO’s new service? Let us know in the comments section below.
Images courtesy of Shutterstock, Coincheck, and GMO.
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