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The results of a survey published by Credit Karma estimate that crypto investors in the U.S. realized losses of approximately $ 1.7 billion during the previous tax season. Additionally, the report finds that U.S. investors incurred a further $ 5.7 billion in unrealized losses.
US Cryptocurrency Investors Realized $ 1.7B in Losses During 2018
According to a survey conducted by Credit Karma, investors based in the United States realized a combined loss of roughly $ 1.7 billion during 2018, equating to an average of $ 718 per person. The participants comprised 1,009 U.S. cryptocurrency investors aged 18 or older who were questioned during November 2018.
The survey found that only 53 percent of investors had decided that they would report their cryptocurrency gains and losses on their tax returns. A further 19 percent of participants stated that they had not yet decided whether they would report the performance of their cryptocurrency investments.
According to the report, 59 percent of profitable traders intended to report their returns, whereas only 38 percent of investors who lost money during the previous financial year planned to do so.
More Than Half of US Investors Unaware of Tax Deductions on Crypto Losses
The survey found that 58 percent of respondents were not aware they can claim tax deductions on cryptocurrency losses, including 61 percent of investors who had realized losses during the preceding tax season.
The report also estimated that U.S. investors had incurred $ 5.7 billion in unrealized losses, suggesting that many opportunities to claim tax deductions have been missed by American cryptocurrency traders.
Of the respondents that stated they would not report the performance of their cryptocurrency portfolio, 35 percent were not aware that they are required to do so, and 55 percent believed that they were not required to due to how small their gains or losses were.
Are you surprised by how few U.S. cryptocurrency investors were aware of their reporting requirements? Share your thoughts in the comments section below!
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At Bitcoin.com there’s a bunch of free helpful services. For instance, have you seen our Tools page? You can even lookup the exchange rate for a transaction in the past. Or calculate the value of your current holdings. Or create a paper wallet. And much more.
The post US Crypto Investors Incurred $ 5.7 Billion in Unrealized Losses Last Year appeared first on Bitcoin News.
The deadline for submitting tax returns in the UK is Jan. 31, 2019. If you hold investments in bitcoin or any other cryptocurrency it is important to be aware you may owe corporation tax, income tax, or capital gains tax depending on your activities. The U.K.’s HM Revenue and Customs (HMRC) has shared its most recent guidelines.
Get Ready, Set, File
The last 18 months have been quite a rollercoaster ride for cryptocurrency investors. There could be another dip ahead as the taxman will want his share of any profits made during the past tax year. Recently, there have been numerous reports emerging of tax authorities clamping down and going after cryptocurrency traders.
In the U.K., self-assessment is a system the HMRC uses to collect tax. So if you’re a sole trader or in a business partnership based in Britain and have made any gains investing in cryptocurrencies or have been sold an investment giving you exposure to digital assets, you may owe tax. Failure to report crypto gains could amount to tax evasion.
HMRC’s Guidelines on Crypto
Calculating taxes can be a complex and stressful process. Over the last couple of years, there has been a lack of clarity when it comes to bitcoin taxation. The latest taxation guidelines around cryptocurrencies from the HMRC aim to simplify the process of reporting taxable crypto assets.
A spokesperson from HMRC explained: “Where an asset including bitcoin is held as an investment as opposed to being working capital in a trading activity – the presumption is that any profit or gain on its disposal will be charged to capital gains tax.”
According to HMRC, a calculation is made for each “disposal” or transaction to establish where the disposal gave rise to a gain or a loss. At the end of the tax year, which runs from April 5, 2017 to April 5, 2018, the taxpayer must add together all of their chargeable gains and then subtract any in-year allowable losses. Any losses will be looked at on a case-by-case basis.
According to HMRC:
Whether any profit or gain is chargeable or any loss is allowable will be looked at on a case-by-case basis taking into account the specific facts. Each case will be considered on the basis of its own individual facts and circumstances.
Keep Records of Every Single Transaction
HMRC has explained that “if the overall result is a gain then capital gains tax will be due on this, after deducting any allowable losses brought forward from previous tax years and deduction of the annual exempt amount. If the overall result is an allowable loss then this can be carried forward to future tax years to set against chargeable gains.”
Another issue which arises is what happens if an individual has sold from one cryptocurrency to another, say from BCH to ETH. Would they only be taxed once they convert this crypto into pounds?
A HMRC spokesperson explained: “The tax treatment would depend on the particular circumstances, but where capital gains tax is in point the chargeable gain or allowable loss will arise when a cryptocurrency is sold or otherwise disposed of (example by exchange) for money or money’s worth … swapping bitcoin for ethereum or indeed sterling will involve a disposal of the bitcoin and any gain or loss on the bitcoin will accrue.”
HMRC has published a guide aimed at bitcoin miners, traders, exchanges, payment processors and service providers, to help shed light on the crypto taxation process.
Disclaimer: This editorial is intended for informational purposes only. Bitcoin.com and the author are not experts on taxes and cannot be held responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by following the information in this article.
What do you think of HMRC’s guidelines as detailed above? Let us know in the comments section below.
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Need to calculate your bitcoin holdings? Check our tools section.
The post What UK Bitcoin Investors Should Know as Tax Deadline Approaches appeared first on Bitcoin News.
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Institutional investors trading cryptocurrency gained ground in 2018, with a number of high profile players edging in and taking a seat at the table. Increased interest from larger investors may have played a part in supporting digital assets as well as distorting the market.
Will Crypto Markets Turn Bullish Again in 2019?
Last year, reports emerged that George Soros and the Rockefeller family were beginning to take positions in the emergent crypto asset class, according to Bloomberg. The family’s $ 26 billion Soros Fund Management was supposedly considering trading digital assets. The Rockefeller family’s VC arm, Venrock, decided to take a different approach by partnering with Coinfund to assist entrepreneurs in launching blockchain businesses.
Mike Novogratz, the chief executive officer of Galaxy Investment Partners, said he sees Q1 and Q2 2019 as a period when more institutions will start to come into crypto. He also expects the crypto markets to turn bullish again in 2019.
Crypto Is Not a Playground Anymore
Stefan Neagu, co-founder of digital identify management system Persona, said: “BTC attracted large players, as the institutional investors saw BTC as an investment instrument. This helped the crypto market because it was not a playground anymore, but rather the sandbox of a limited group of people with money from a real economy being shifted to the crypto market.”
In 2018, over-the-counter (OTC) market makers have thrived, with many institutional traders shifting to OTC. Etoro announced that it had opened an OTC platform for institutional buyers and Coinbase and Hodl Hodl launched OTC desks in November.
According to cryptocurrency research group Diar, institutional cryptocurrency trading on traditional exchanges has been diminishing in volume due to BTC being welcomed into major outfit portfolios this year. There has instead been a shift to OTC trading.
During OTC market hours, there has seen an increase in BTC trading volume by 20 percent, while Grayscale’s Bitcoin Investment Trust (GBTC) volumes were down 35 percent in 2017 vs. 2018 for the same period. It seems institutional traders might be shifting towards higher liquidity OTC physical BTC markets.
Liquidity Issues and Susceptibility to Manipulation
Another issue with the cryptocurrency market is low liquidity and its susceptibility to manipulation. The increased entry of institutional investors may have helped anchor the current market and distort prices.
Neagu said: “I doubt that this [increased institutional investor] interest will cause liquidity issues. I don’t see any reason why the crypto market should be different than the stock market. As for distorting the prices, I don’t think that they would see any big ripples.” He added: “Let’s remember that the Mt. Gox trustee sold $ 230 million worth of BTC in four months, and they did it using exchanges, not OTC desks. For the moment, the “weight” of these institutional players is not that big to send the BTC price down.”
Hong Kong Crypto Regulations Favor Institutional Investors
In Asia, Hong Kong’s Securities and Futures Commission (SFC) has introduced new rules which limit crypto trading to institutional investors. Licensed portfolio managers and funds that invest more than 10 percent of their portfolios in virtual assets are required to obtain a license which means only qualified institutional investors will be allowed to invest in virtual asset portfolios.
Roger Lim of Singapore-based NEO Global Capital (NGC) explains that crypto regulation in East Asia are still fragmented. However, further regulation will drive both governance and the mainstream adoption of cryptocurrencies.
Lim said: “As institutional investors, high net worth individuals, and family offices continue to monitor and take cryptocurrency seriously, and with regulators working to improve standards and guidelines for adoption, I expect that the market will mature in parallel. If the industry can continue to shift gears and direct its attention towards this narrative of growth, I think it’s very likely that we will see a comeback in 2019.”
Crypto Custody Issues Must Be Addressed
Cryptocurrency custody lies in safeguarding crypto assets. Scarcely a month goes by without an exchange hacking, funds being lost, stolen or compromised, with little hope or possibility of recovery. It is in the interest of any financial institution holding assets for another party to lower the risk of theft.
According to the Bank of New York Mellon, there is increasing demand in the market for a traditional, established custodian to provide custody of cryptocurrencies. There have been a number of firms launching services to secure assets and there have been reports of major banks testing and in some cases rolling out crypto custody solutions. Nomura and Intercontinental Exchange have announced plans, and sources state that other major banks such as J.P. Morgan, Goldman Sachs, and Bank of New York Mellon are exploring offerings. Introduction of custody would also unlock large amounts of capital, blogs Tom Shaughnessy, founder of 51percent Crypto Research.
Coinbase has received approval from New York regulators to form a custodial firm for cryptocurrencies. Previously, CEO Brian Armstrong has acknowledged this issue stating that there is $ 10 billion of institutional money waiting on the sidelines and that the number one issue preventing these individuals from getting involved is the lack of secure custodial services.
Will we see more institutional investors entering crypto in 2019? Let us know in the comments section below.
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Need to calculate your bitcoin holdings? Check our tools section.
The post How Institutional Investors Are Changing the Cryptocurrency Market appeared first on Bitcoin News.
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