Earlier this year, the Rungsted Seier Capital ice rink in Denmark was rebranded to Bitcoin Arena by co-owner Lars Seier Christensen and billionaire sponsor Niklas Nikolajsen. The two individuals that oversee the operations of the stadium said that they were keen on rebranding it to spread awareness of bitcoin. Nikolajsen emphasized that he and his … Continued
Influential investment bank Saxo released the 35 page, Q2 2018 Quarterly Outlook. In it, the bank’s newly hired Crypto Analyst, Jacob Pouncey, noted the perils of this year’s first financial quarter with regard to digital assets. Taking into account several factors, he believes the next three months could be a breakout time for digital assets, holding the potential to trigger a bull market.
Heavy Hitter Saxo Bank Released Bullish Outlook on Cryptocurrencies
It takes all of 33 pages to find it, but there it is: a very influential investment bank not only hired a “Crypto Analyst,” but allowed him to have an authored section titled – Are Cryptocurrencies Entering a New Cycle?
The Danish bank, Saxo, forwarded its general outlook for 2018’s second set of three months. Turning to cryptos, Mr. Pouncey prefaced, “Cryptocurrencies fell back to earth with a bang in the first months of this year, having enjoyed exponential growth in 2017. The situation remains fragile, given the outlook to increased regulation and social media advertising bans. That said, we can’t rule out the possibility of a comeback.”
Saxo is based in Copenhagen, and its products include online trading in futures spreads, funds, bonds, CFDs, stocks, and even a foreign exchange. It has the rare charter of being both a proper bank and a broker. As such, it typically caters to institutional, legacy financial companies (more than 100 globally). Its European presence is well established, though it has exposure in the Middle East and Southeast Asia. Saxo claims to handle $12 billion USD daily, having clients in 180 countries.
That its main analyst in the crypto sector is optimistic going forward means cover for institutional investors who’re looking to dabble. Indeed, Mr. Pouncey details, “The market has seen several acquisitions of crypto exchanges from financial firms such as Goldman Sachs backed Circle acquiring Poloniex, Monex Group acquiring Coincheck, and Yahoo Japan buying a 40% stake in Bitarg Exchange Tokyo.” Additionally, crypto exchanges such as Coinbase have been able to recruit real talent from Silicon Valley, and they’re being placed in key executive positions. These moves seem poised to take advantage of price spikes.
Mr. Pouncey concludes, “several events could serve as springboards for a cryptocurrency bull market in Q2, whether it is through fundamental drivers, or it is just a self-fulfilling prophecy [….] In my opinion, we will eventually see the end of the current, negative cryptocurrency cycle, as many of the weak hands have been shaken out by the bear market and the remaining investors are on the ready to latch onto any good news after the bad start this year.”
Much of the Positive Outlook is Based on Institutional Investors Entering the Crypto Space
Many professional financial legacy gurus expect the easy credit market to dry up a bit in the coming months as a hedge against inflation. This could mean traditional equities are less attractive, and the search for “uncorrelated assets” begins.
These are “assets that lie outside the reach of the traditional financial system in which cryptocurrencies are a potential alternative,” Mr. Pouncey insists. “Historically, many of the blue chip cryptocurrencies have seen price increases in the face of global uncertainty and [… the] inflow of institutional capital to the cryptocurrency market due to the increase in regulation and investor protection could lead cryptocurrencies to a positive quarter.”
Do you believe institutional investors are going to enter the crypto market soon? Let us know in the comments section below.
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Bitcoin in Brief today is slanted toward a crypto winter slowly thawing, as Pantera Capital bets on a moonshot price point. Also, the world’s most popular decentralized digital asset has been forked more than a plate of good pasta; there’s a growing list of countries who’re less likely to nab your crypto profits; Yahoo! smashes rumors; and a good-hearted wager between bitcoin core and bitcoin cash partisans exemplifies how ecosystem actors should treat one another.
Bulls have a panther as their advocate to help thaw this crypto winter. We reported this week, “Pantera Capital, an investment firm exclusively operating in the cryptocurrency and distributed ledger technology sectors, has published a letter predicting that bitcoin has established the low for its current bear market. Pantera cites a number of factors as informing its market outlook.”
Among those factors are taxes on capital gains, where estimates are in the many, many billions expected from enthusiasts. That in turn, the fund theorizes, dragged prices down, and bitcoin core has found a bottom at $6,500, as holders were forced to sell in order to pay government bills. We continue, “Pantera also states that ‘It’s highly likely’ for the price of bitcoin to exceed its previous record highs of $20,000 ‘within a year,’ asserting that ‘A wall of institutional money will drive’ the growth in price.”
Speaking of Taxes
Until that prediction comes true, readers should pack their bags to save money from the tax man! Start looking for places to stay in Germany, Slovenia, Denmark, Belarus, South Korea, Singapore, as they’re some of the most advantageous.
We stressed how 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%.”
Be honest. You’ve never heard of Bitcoin Minor, Bitcoin King, nor Bitcoin Boy. How many times would you guess the Bitcoin network has been forked? During an extensive and really interesting investigation, we revealed nearly 70 times. That’s right, 70.
We summarized findings as how forking “bitcoin used to be a rarity. Then it became the norm. And then it became a meme, with anyone and everyone forking bitcoin on a weekly basis. There have now been a total of 69 bitcoin forks plus another 18 altcoin forks. Holders of bitcoin, monero, ethereum, and litecoin can claim almost 80 additional coins for free. Whether it’s worth their time to do so, however, is another matter.”
The Fork of All Forks Remains a Solid Option
The most famous of forks is, of course, bitcoin cash (BCH). Its being faster, sleeker, younger, and bigger (block wise) has lead those on the bitcoin core (BTC) side to take a stance on BCH’s long term viability. And while each side feels passionate about its coin, and the future that it entails, debate often become rancorous, turning everyone off.
We reported how two well-known advocates joked and ribbed one another about Core’s anticipated Lightning Network solution. They bet bragging rights if a demonstration of the solution failed a basic transaction. Loser would have to wear a t-shirt of the winner’s coin. Regardless of which won, the import is how the two men exchanged laughs and good humor, and the ecosystem needs more of both.
Japan Continues to Lead
No laughing matter is how the crypto winter continues its thaw as “Yahoo! Japan has confirmed that it is entering the crypto space by acquiring a stake in a Japanese cryptocurrency exchange that is already licensed by the country’s financial regulator. The company plans to launch a crypto exchange in the fall of this year,” we explained.
We Have the Best Readers in All of Crypto
Thanks to our readers liking and sharing, our post on aspects of Islam possibly opening to cryptocurrency was picked up and republished and referenced around the world. Some contend it was the root cause of bitcoin’s recent price rebound. Great job, gang.
The crazy good book by Wendy McElroy we continue to serialize brings in wonderful reader comments and observations. To wit:
Do you think bitcoin will continue to rise or to fall to new lows? Let us know in the comments section below.
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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.
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 Eurasian Economic Union is another example, with Belarus exempting crypto transactions from taxation, while Russia is collecting 13% tax on crypto incomes and 24% corporate tax on profits.
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.
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Make sure you check out last weeks post here, now let’s go over what happened in crypto this week. Price Watch: Bitcoin is down 20% this week completely retracing the past week’s gains. Despite periodic gains this week, the market still finished down significantly from last week posting another double-digit loss. This has been attributed to everything … Continued
With the increasing popularity of bitcoin and the like, this year’s tax campaign in Europe comes with many questions on how to report and pay crypto taxes. Despite the obvious hesitation on the part of many governments to comprehensively regulate/legalize the sector, cryptocurrency incomes and profits “enjoy” special attention. Different decisions on the matter pose different challenges to citizens of individual member-states.
There is no uniform approach towards cryptocurrencies in any region and Europe is no exception when it comes to taxation. The recently held G20 summit proves no global consensus on the status of cryptocurrencies, and each jurisdiction is expected to take its own decisions in the short run. In the absence of pan-European guidelines on how to treat crypto-related incomes and profits, some member-states follow a decision by the Court of Justice of the EU. In a 2015 ruling on the application of value added tax (VAT) to cryptocurrencies, the Luxembourg-based institution set a precedent. It basically drew a parallel between “virtual currencies” and fiat money, when digital coins are used for payments.
In accordance with that decision, Germany’s Federal Ministry of Finance recently announced that bitcoin should not be subject to VAT, when exchanged with fiat. The tax is applicable only when goods and services are paid for in cryptocurrency. According to German authorities, exchanges can enjoy tax breaks when they trade cryptos, and crypto mining should not be taxed. Trading cryptocurrencies by individuals, however, is subject to standard capital gains tax. Profits of less than €600 and gains from long term holdings (over one year) are exempted.
Several other governments have adopted similar rules. Estonia subjected digital currencies to capital gains tax and VAT. Authorities in Tallinn view cryptos as both means of payment and investments. Slovenia does not tax capital gains of individual investors trading cryptocurrencies, as they are not considered part of their income. Crypto incomes, however, for both individuals and businesses, should be reported and taxed. Applicable rates depend on the annual income and vary from 16% for less than €8,000 to 50% for incomes over €70,000 a year.
Tax authorities in Denmark have announced that crypto companies will be taxed as any other business. According to the Financial Services Authority, private individuals trading cryptocurrencies will not be required to pay taxes. The agency called for adopting legislation that regulates cryptos and their taxation. Spain is mulling tax breaks for businesses using blockchain technologies and cryptocurrencies. The exact scope of the exemptions is yet to be determined, but the ruling People’s Party has introduced a bill to offer incentives for small companies in the crypto sector.
Waiting for Brussels’ Decision
A number of EU countries are still waiting for a common, European approach towards cryptocurrency taxation. The government in Belgium, which is home to many EU institutions, has not issued an official stance on the matter. Nevertheless, recent reports suggest that tax authorities are going after Belgian citizens trading cryptocurrencies on foreign exchanges. Anyone speculating on crypto markets is expected to pay 33% tax on their gains, despite the fact that cryptocurrencies are not regulated. Belgians should declare them as “other income” on their tax returns, the Special Tax Inspectorate said at the end of last year.
Bulgaria is another member-state expecting guidance from Brussels. The National Revenue Service has issued a clarification notice saying 10% capital gains tax is applicable to profits from buying and selling cryptocurrencies. Their legal status, however, is yet to be determined by the Bulgarian parliament. It remains unclear how bitcoin incomes and purchases with cryptocurrency will be taxed.
Other EU member-states are losing patience. Dutch finance minister recently described the current regulatory framework as “insufficiently equipped”, as news.Bitcoin.comreported. Wopke Hoekstra spoke of the “inherently cross-border” nature of cryptocurrencies and called for “coordinated international approach”. The government in the Netherlands insists on adopting new European regulations by the end of next year, including amendments to the anti-money laundering directive, which also deals with tax evasion.
The European Neighborhood
While EU regulators are still struggling to grasp the crypto phenomenon, other countries in Europe have taken advantage of their non-aligned status. Belarus, for example, is fighting political and economic isolation by embracing crypto. A decree, signed by President Lukashenko, introduces tax breaks and other incentives for crypto-related activities until 2023. It enters into force in less than a week, on March 28. Whether this crypto-friendly policy will fill government coffers at the end of the day remains to be seen.
How are crypto incomes and profits taxed in your country? Tell us in the comments section below.
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