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Acknowledging Venezuela’s efforts to deal with inflation and sanctions by creating a state-issued cryptocurrency, Russian officials have nevertheless declined a proposal to use the oil-backed coin in bilateral trade. According to Russian media, Moscow has recently offered Caracas a set of measures aimed at mending the country’s economy but the petro is not among the recommendations.
Russia Recommends Traditional Economic Reforms
The Russian Federation has taken steps to help its strategic South American ally to overcome the deep economic and financial crisis. A high-level delegation visited Caracas in November and delivered a plan to improve Venezuela’s economy. Moscow’s ideas were recently made public by Russian media. It turns out the petro is not part of the Russian strategy.
The group of Russian government experts, headed by deputy finance minister Sergei Storchak, gave Venezuelan authorities a list of economic measures. It’s now up to Nicolas Maduro’s administration to implement them. He recently won the presidential election and officially took office last Thursday, starting a new six-year term as head of state of the impoverished country. Maduro was reelected despite the 1.3 million percent inflation last year which forced 3 million Venezuelans to emigrate from their homeland to neighboring countries.
The economic recovery plan contains five key recommendations. The first measure proposed by Russian economists is to introduce unconditional basic income for the suffering Venezuelan households, Russian news outlet The Bell reported. The money can be provided by revoking the fuel subsidies currently paid by the Venezuelan government.
The second advice is to “shut down the money printing press,” – in other words stop financing the budget deficit with newly printed money. In August last year, Maduro’s government deleted five zeros to redenominate the national fiat currency. However, with no efforts to cut the deficit, the “sovereign bolivar” lost 95 percent of its value against the U.S. dollar.
Russians Advise Caracas to Focus on Indirect Taxes
The Russian delegation urged Caracas to conduct a tax reform. The Moscow emissaries told Venezuelan authorities they should follow Russia’s example and focus on indirect taxation instead of relying on direct taxes. They also advised Venezuelan officials to increase oil production and diversify the country’s exports.
Probably out of diplomatic courtesy, the Russian representatives gave a positive assessment of Venezuelan attempts to solve the problems with hyperinflation and foreign sanctions using the oil-backed national crypto, the petro. But according to the Russian press, they also told their Venezuelan colleagues that Russia is not ready to accept the digital coin as a unit of account in bilateral trade.
Following the meetings with the Russian delegation, President Maduro, who also recently visited Moscow, stated that his country relies on Russia to ensure its economic independence. Venezuelan officials have not yet commented on their readiness to implement the Russian recommendations but Caracas has already managed to secure economic aid from Russia. Moscow will invest $ 5 million in its oil industry and provide 600,000 tons of grain. That’s on top of the $ 17 billion in loans that, according to Reuters, the Russian government and the state-run oil company Rosneft have given to Venezuela since 2016.
What is your opinion about the economic measures proposed by Russia? Do you think Venezuela will implement the reforms? Tell us in the comments section below.
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The French government will take new measures to deter violence against police and damage to property as it seeks to corral the ‘yellow vest’ movement, Prime Minister Édouard Philippe said on Monday.
WSJ.com: What’s News Europe
In today’s roundup of crypto chatter, Chris Troutner and Andreas Brekken play around with the idea of building an algorithmic stablecoin on BCH. Vin Armani debates with Painted Frog on Bitcoin’s similarities to Visa. Also, Paul Sztorc thinks that understanding Austrian economics is not that important to comprehend Bitcoin.
Building an Algorithmic Stablecoin on BCH
Recently Shitcoin.com CEO Andreas Brekken took to crypto Twitter to wish everyone a happy new year. In his tweet, Brekken casually mentioned algorithmic stablecoins, an idea that Bitcoin.com senior developer Chris Troutner picked up on.
Do you know of any algorithmic stable coins worth checking into, other than DAI?
— Chris Troutner (@christroutner) December 30, 2018
Troutner queried Brekken for alternatives to the DAI, but the latter was not familiar with the field. Brekken then explained that he was optimistic about the technology, even though many academics and maximalists don’t believe algorithmic stablecoins are possible.
Whormhole or kekoen can most likely do this.
— Deadal Nix (@deadalnix) December 31, 2018
Bitcoin More Similar to Visa Than Gold
Recently, CTO of Cointext Vin Armani had a debate with his followers on what the catalyst for Bitcoin mass adoption would be. Armani argued that those who stand to gain financially from bitcoin usage are the ones most likely to increase Bitcoin adoption.
Incentivizing Bitcoin Mass Adoption
Q. Who has the greatest incentive to convince you to use Visa?
Why? Because every time you use Visa, Visa makes money.
Those who will be the catalyst for Bitcoin mass adoption will be those who get paid every time you use Bitcoin.
— Ⓥin Ⓐrmani (@vinarmani) December 30, 2018
Not everyone responded well to Armani’s theory, as commentator Painted Frog argued that Bitcoin is intrinsically valuable like gold. Since society didn’t need to be convinced to use gold in the past, Bitcoin like gold, will eventually be used everywhere.
Armani responded by explaining that Bitcoin is more similar to Visa because both are systems and networks. On the other hand, gold is simply a shiny rock and an inert element.
Bitcoin: A Peer-To-Peer Electronic Cash System
Note the last word. That's the noun. What precedes it are adjectives.
Bitcoin, like Visa, is a SYSTEM, a network. Gold is an inert element. A rock is not a system.
— Ⓥin Ⓐrmani (@vinarmani) December 30, 2018
The Importance of Austrian Economics In Bitcoin
Austrian economics has always been a huge part of the Bitcoin community, and the growing popularity of Bitcoin has sparked a revived interest in Austrian economics. This was pointed out by the President of the Nakamoto Institute Michael Goldstein on social media. Some like cryptocurrency pundit Murad Mahmudov agreed with Goldstein and tweeted that cryptocurrency community members who understand Austrian economics have an edge over those who don’t.
Crypto market participants who do not have a grasp of Austrian econ are at a disadvantage. I’d argue that Bitcoin is an ‘Austrian’ technology & its success is breaking the legitimacy and relevance of a number of other economic schools in real time.
“We are all Austrians now” https://t.co/glhjz0aFBQ
— Murad Mahmudov (@MustStopMurad) December 29, 2018
However, director of research at Tierion Paul Sztorc and bitcoin pundit nic__carter both argued that the importance of Austrian economics is highly overstated in the cryptocurrency space. While nic__carter confessed that he had never read any books on Austrian economics, Sztorc explained that he was very familiar with the Austrian school of thought.
Nor do I.
A cursory understand of the inflation tax is sufficient.
(And I say this despite having read AE very extensively.) https://t.co/B59qLJqHVJ
— Paul Sztorc (@Truthcoin) December 30, 2018
Despite a thorough understanding of Austrian Economics, Sztorc insists that only a brief understanding of how the government prints away purchasing power, also known as inflation tax, is enough to understand Bitcoin.
What do you think of an algorithmic stablecoin built on BCH? Let us know in the comments below.
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In today’s edition of The Daily, we feature a couple of stories from the U.S. political scene. President Donald Trump has chosen a known Bitcoin advocate as the Acting White House Chief of Staff. And a congressman proposes to fund the building of a barrier on the U.S.-Mexico border with a “Wall Coins” crowdsale offering.
Mick Mulvaney Moves Up in the Trump Administration
U.S. President Donald Trump has announced on Friday that Mick Mulvaney, Director of the Office of Management & Budget, will be named Acting White House Chief of Staff. As we reported when he was first appointed as Trump’s budget director back in February, Mulvaney has made public his positive interest in Bitcoin.
Mulvaney has solicited bitcoin donations for his campaigns in the past. And at a Small Business Committee hearing on Bitcoin, he stated: “I know it isn’t a mainstream issue yet — and may not become one — but it is extraordinarily interesting and something that could eventually influence the dollar and our monetary policy. In fact, one of the witnesses drew favorable comparisons between Bitcoin and Milton Friedman.”
“Mick has done an outstanding job while in the Administration. I look forward to working with him in this new capacity as we continue to MAKE AMERICA GREAT AGAIN!” Trump tweeted about the new appointment on Friday. “For the record, there were MANY people who wanted to be the White House Chief of Staff. Mick M will do a GREAT job!”
Buy a Brick, Build a Wall
Speaking about President Trump, promising to build a “big, beautiful” wall on the U.S. southern border to stop illegal immigration from Mexico was a pillar of his elections campaign. However, the president has not been able to push forward the process of securing funds for his flagship project so far. So, could an ICO be the answer? That’s what one congressman is now proposing.
Warren Davidson, Republican member of the U.S. House of Representatives from Ohio’s 8th congressional district, talked about this idea in a recent interview with NPR.
“I’ve offered a modest compromise called Buy a Brick, Build a Wall that we introduced, which lets the American people, or whomever should choose to donate – Mexicans or otherwise – to donate to the program,” Davidson explained. “You could do with this sort of, like, crowdfunding site. Or you could even do blockchain, and you could have wall coins. But you could raise the money. And frankly, if we get it right at the Treasury, you could even accept Mexican pesos.”
Time will tell if this was just an off-the-cuff remark that will never become an official plan or something more than that, but Davidson certainly knows the American digital assets field well. At a regulatory round-table he hosted on Capitol Hill a couple of months ago, the congressman called on regulators to provide clarity for crypto entrepreneurs as quickly as possible. “Legitimate players in the industry have a desire for some sort of certainty so we can prevent and prosecute fraud. I’m confident we can move forward and make this a flourishing market in the U.S. It’s an imperative for us to do, we did it well with the internet,” he stated.
What do you think about today’s news tidbits? Share your thoughts in the comments section below.
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U.K. lawmaker Eddie Hughes has proposed that taxpayers should have the option to pay council tax and utility bills in cryptocurrencies such as BTC. The 50 year-old conservative legislator for the Walsall North constituency said the move would place the country at the forefront of digital currency adoption in Europe.
Country at a Crossroads
“You’re either ahead of the curve or you’re behind the curve, and our country is in an interesting position right now – we need to be seen as a progressive country,” Hughes was quoted by the Daily Express as saying. “We are at a crossroads and we’re about to determine our future – one in which taking the lead in this field could prove very beneficial.”
Hughes’ comments come hardly a month after Ohio became the first U.S. state to allow businesses to pay taxes using bitcoin. The state government partnered with payments processor Bitpay to handle the cryptocurrency conversion to dollars.
However, the British Member of Parliament’s pronouncements may not find many takers in the United Kingdom, which is currently in the midst of a regulatory shift that could affect its cryptocurrency industry. The country is also working on measures to prevent alleged money laundering and combat terrorist financing through cryptocurrency monitorin
Hughes is of the opinion that the wider acceptance of virtual currencies in the U.K is being stalled by inadequate information and lack of knowledge, stating:
People not understanding how the transaction works is holding us back in terms of mass adoption. And also how accessible it can be – it needs to appear like an app that people will use so they can become familiar with it in a safe and secure way.
Legislators Need to Understand Crypto
Hughes, who was elected into office last year and describes himself as a “crypto enthusiast with amateur knowledge,” said it was critical for legislators to have a better understanding of cryptocurrency and the underlying blockchain technology.
“It just feels like it gets talked about a lot, wherever you go in the U.K., and as MPs we have a duty to understand it,” he detailed, adding “Only recently I met with the Royal National Lifeboat Institution, which is now accepting charitable donations through cryptocurrency – if we can do that, what’s to stop us being able to pay council tax and other bills with bitcoin?”
European regulators have complained that cryptocurrencies are risky, and repeatedly alleged that they help to fuel money laundering and terrorism while placing investor funds at the mercy of fraudsters. Their alarmist entreaties have ramped up pressure on governments to act, with many promulgating a series of regulations ostensibly to safeguard the public and prevent the risk of financial instability.
In October, the U.K’s Financial Conduct Authority said it was considering a ban on cryptocurrency-linked derivative products. The financial regulator indicated that it will begin consultations on whether to ban the sale of derivatives based on digital coins like BTC as well as to restrict crypto-based contracts of difference to the public. Virtual currency futures and options will also be looked into, in discussions slated for the first quarter of 2019.
What do you think about Hughes’ plan? Let us know in the comments section below.
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A Japanese lawmaker has proposed four changes to Japan’s tax law to benefit crypto users and traders as well as widen the adoption of cryptocurrency in the country. The current tax rate of 55 percent could be lowered to 20 percent while crypto-to-crypto trading and small payments could be exempt from taxation.
Changing Crypto Taxation
Representative Takeshi Fujimaki of Japan’s Nippon Ishin no Kai political party has proposed four changes to the current taxation system for cryptocurrencies. Fujimaki, who was formerly an adviser to billionaire investor George Soros, announced on Friday:
We believe that it is necessary to change the current virtual currency taxation system to an appropriate tax system in order to develop virtual currency / blockchain technology. The tax system should not deprive the future of virtual currency and blockchain.
The proposed changes are designed to “promote the wider adoption of virtual currency” as well as “encourage the development of blockchain technology,” he clarified.
From 55% Tax Rate to 20%
Currently, Japan taxes profits from cryptocurrency transactions as miscellaneous income, which could be as high as 55 percent. Fujimaki explained that unlike salaries which are fixed amounts, gains from crypto transactions — like stocks and mutual funds — vary and losses could be incurred over a number of years.
Capital gains from stocks and mutual funds are taxed separately from other income sources, at a flat rate of about 20 percent. “From that point of view, it is necessary to [similarly] apply separate taxation with a tax rate of 20% to the gains from virtual currency transactions,” he said.
Fujimaki has also proposed allowing losses from crypto transactions to be carried forward, which the current law does not permit. Taxpayers with losses from crypto transactions this year and profits the next, for example, are not able to offset their gains with losses. He elaborated:
Losses from stock trading … can be carried forward and can be deducted from the profits in the following year. From the perspective of tax fairness, you should also allow for deduction carryforward of losses from virtual currency transactions.
Exemptions for Crypto-to-Crypto Trading and Payments
Trading between cryptocurrencies, such as between XRP and BTC, is currently subject to taxation under the current tax law, Fujimaki noted. “The task of calculating profit and loss for each transaction is extremely cumbersome and a heavy burden,” he described, adding:
In order to increase the volume of transactions between virtual currencies and to revitalize the virtual currency market, trading between virtual currencies should be tax exempt.
Another tax exemption the lawmaker has proposed relates to small payments of cryptocurrencies, which he expects to increase as more stores start accepting crypto payments and more people start using them to pay for goods and services.
For example, a person eating at a restaurant and paying with bitcoin will have to calculate their “profit and loss from the bitcoin price and the purchase price of the bitcoin at that point,” and then pay tax if there is profit. Fujimaki emphasized that with the current system, “you cannot hope for the adoption of virtual currency payments in real society,” elaborating:
Virtual currency payments of small amounts should be tax exempt, and virtual currency payments in the real world should be expanded.
What do you think of these four proposed tax changes? Let us know in the comments section below.
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The Trump administration is proposing changes to Medicare’s prescription drug benefit that would affect people’s costs over the next few years.
Officials say their goal is to lower costs and modernize Medicare, the government health insurance program that covers about 60 million seniors and disabled…
Fairplex proposes deal to pay Pomona $1.5 million extra to mitigate noise, traffic and trash problemsNovember 14, 2018 | dailybusinessnews
In hopes of resolving friction with neighbors, operators of the Fairplex in Pomona are proposing adding fees to ticket prices for some fairground events to help pay to address noise, traffic and trash problems.
The new fees charged to fans who attend the annual county fair and music events at the…
A draft bill introducing tax breaks for entrepreneurs and companies dealing with cryptocurrencies has been filed in Ukraine’s parliament, the Verkhovna Rada. The authors of the bill have called for tax exemptions for entities working in the sector until the end of 2029.
New Legal Terms
Ukrainian lawmaker Yuri Derevyanko, one of the leaders of the Movement of New Forces party, put forward the new proposal to relieve cryptocurrency businesses from taxation for at least a decade. Bill 9083-1 has advanced through a number of important parliamentary committees this month, including those responsible for budgetary matters, financial policies, customs regulations and European integration.
If adopted, the proposed legislation would result in amendments to the Ukrainian tax code. It would provide tax breaks on income earned from all cryptocurrency transactions. Both corporate entities and private individuals dealing in cryptocurrencies would be able to benefit from the tax moratorium until Dec. 31, 2029. The import and sale of equipment designed solely for mining would also be exempted from VAT.
In addition, the bill introduces a number of new legal terms pertaining to virtual assets and blockchain technologies. Cryptocurrencies have been defined as intangible digital assets, the right to possession of which is recorded in distributed ledgers. The draft law describes cryptocurrency mining as data processing related to the maintenance of distributed ledgers, which is then rewarded with digital assets.
Derevyanko believes that the 0 percent tax rate will stimulate the development of the cryptocurrency market in Ukraine and open the door for new investments. He said this will create conditions for the cryptocurrency industry to become a critical element of the country’s economy. “I think that it is necessary to introduce a 10-year tax moratorium in the crypto space. We must streamline and legalize this huge sector, which will be the engine of the new economy,” he said, as quoted by Ukrainian and Russian media.
Many Proposals, No Decisions
The bill was announced as an alternative to another draft presented by Derevyanko’s colleague, Alexei Mushak, a member of President Petro Poroshenko’s “Solidarity” party. Bill 9083, which was introduced in September, is also aimed at amending the Ukrainian tax code to provide tax breaks for the crypto industry. According to that proposal, profits from transactions related to cryptocurrencies and other digital assets would be subject to a preferential tax rate of 5 percent until the end of 2023. Starting from Jan. 1, 2024, individuals and businesses would be required to pay an 18 percent tax rate on their income from such deals.
Despite multiple legislative proposals, as well as calls from government officials and representatives of the industry, Ukraine’s cryptocurrency market remains largely unregulated. Three bills dealing with key regulatory challenges have been filed in parliament since last October, but no real progress has been made toward their adoption, at least that has been reported thus far. In August 2018, the Verkhovna Rada said that legislation recognizing cryptocurrencies as financial assets would be adopted at some point this year, or by 2019 at the latest. In the absence of clear guidelines regarding taxation, a deputy finance minister recently advised Ukrainians to pay 19.5 percent income tax on profits from crypto transactions.
In July, Ukraine’s Financial Stability Council approved a new regulatory concept for the cryptocurrency sector. The members of the council — including representatives of the National Bank, the Ministry of Finance, the Deposit Guarantee Fund, the National Securities and Stock Market Commission, and the National Financial Services Market Commission — reaffirmed their willingness to work with lawmakers in the Rada to adopt a comprehensive legal framework that will ensure transparent relations between crypto investors, other stakeholders and the government in Kiev.
Do you think the proposed tax breaks can help the cryptocurrency industry become a major part of the Ukrainian economy? Share your thoughts on the subject in the comments section below.
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