Saturday, September 25, 2021

IRS To Go After Bitcoin and Bitcoin Cash Profits, What to Expect

0

by Lisa Froelings, Coin Telegraph:

Recent developments lead many to Bitcoin mining and investing in Bitcoin as many tend to believe that it is a great start for investment. Regulators and tax specialists are now looking into cryptocurrencies and how they should be treated when it comes to income taxation.

Since there are currently no set guidelines and procedures as to how cryptocurrencies are being taxed, the recent split of Bitcoin and Bitcoin Cash has caused many investors to wonder whether profits from Bitcoin Cash will be considered “free cash” in the eyes of the taxman.

A recent report from WSJ explored the question and by the looks of it, it’s still a draw.

Bitcoin and Bitcoin Cash

Bitcoin is a cryptocurrency or what people describe as digital cash. It is a centralized ledger and is accessible by all parties involved from any parts of the world. The specifics of Bitcoin Cash is that the BCH is a new cryptocurrency initiated by miners and Blockchain developers in responses to scaling issues.

In Bitcoin network, the verification process usually takes up to 10 to 15 minutes or even longer – a lot when you compare it to debit cards. Such slow process and often network congestion lead the developers and miners to the idea that the more people are making transactions at the same time, the more its network scalability and speed will be challenged.

The mining pools agreed to integrate the technology with SegWit or the Segregated Witness.

SegWit2x makes the signature and verification data even smaller. SegWit2x, however, does not fix the problem completely.

In August, miners and developers initiated a hard fork which resulted in ‘split’ and born of a new currency called Bitcoin Cash. The latest version is claimed to have faster verification process and upgrades the blocks up to 8mb.

IRS on taxing Bitcoin Cash

Now, those who have been holding Bitcoin before the fork happened have received Bitcoin Cash equivalent to the number of Bitcoin in their wallet especially for wallets and exchanges that supported the split.

While there are currently no existing guidelines as to how Bitcoin (and now Bitcoin Cash) are treated regarding taxation, according to Bitcoin.tax, what’s clear with the situation is that there are applicable income taxes whenever you sell either or both Bitcoin and Bitcoin Cash holdings.

While many Bitcoin and Bitcoin Cash may think it’s “free money,” hence not necessarily taxable, the IRS thinks otherwise. Several Reddit users chimed in the issue, with one user clarifying:

“The IRS has already stated that Bitcoin is treated like property. Mining is considered income. Hodling is the same as owning gold. A $0 cost basis means that you got capital for free, and if you sell it 100 percent is gains.”

The treatment for cryptocurrencies can be at zero cost. If the owner sells his Bitcoin Cash and receives the 100 percent profit as capital gains income, it will be taxable.

Thus, the declaration should be a normal income as part of his capital gains in 1040 Schedule D. A Bitcoin Cash owner can opt to report his BCH as income and pay the tax amount required.  

According to 2014-21 Notice of IRS:

“Virtual currency is treated as property for US federal tax purposes.”

Read More @ CoinTelegraph.com

Ep. 2468a – It Has Begun, Businesses Are Beginning To Accept Alternate Currency

from X22 Report:

TRUTH LIVES on at https://sgtreport.tv/

Jamie Dimon Faces Market Abuse Claim Over “False, Misleading” Bitcoin Comments

0

from Zero Hedge:

A week after Jamie Dimon made headlines by proclaiming Bitcoin a “fraud” and anyone who owns it as “stupid,” the JPMorgan CEO faces a market abuse claim for “spreading false and misleading information” about bitcoin.

Unless you have been living under a rock for the past week, you will be well aware of JPMorgan CEO Jamie Dimon’s panicked outburst with regard the ‘fraud’ that Bitcoin’s ‘tulip-like’ bubble is. To paraphrase:

“It’s a fraud. It’s making stupid people, such as my daughter, feel like they’re geniuses. It’s going to get somebody killed. I’ll fire anyone who touches it.”

One week later, an algorithmic liquidity provider called Blockswater has filed a market abuse report against Jamie Dimon for “spreading false and misleading information” about bitcoin.

The firm filed the report with the Swedish Financial Supervisory Authority against JPMorgan Chase and Dimon, the company’s chief executive. Blockswater said Dimon violated Article 12 of the European Union’s Market Abuse Regulation (MAR) by declaring that cryptocurrency bitcoin was “a fraud”.

The complaint said Dimon’s statement negatively impacted “the cryptocurrency’s price and reputation”.

It also said Dimon “knew, or ought to have known, that the information he disseminated was false and misleading”.

“Jamie Dimon’s public assertions did not only affect the reputation of bitcoin, they harmed the interests of some of his own clients and many young businesses that are working hard to create a better financial system,” said Florian Schweitzer, managing partner at Blockswater.

Blockswater said JPMorgan traded bitcoin derivatives for their clients on Stockholm-based exchange Nasdaq Nordic before and after Dimon’s statements (as we detailed here), which Schweitzer said “smells like market manipulation”.

Blockswater works with blockchain-based assets based in London and Austria. Its full complaint is below:

Blockswater Files Market Abuse Report Against Jamie Dimon in Stockholm
Blockswater LLP believes that Dimon violated EU’s Market Abuse Regulation by “spreading false and misleading information” about bitcoin

STOCKHOLM/NEW YORK/LONDON/VIENNA, September 21, 2017 – Algorithmic liquidity provider Blockswater LLP filed a market abuse report with the Swedish Financial Supervisory Authority (FI) against JPMorgan Chase and Co. CEO Jamie Dimon. Blockswater believes that Dimon violated Article 12 of the European Union’s Market Abuse Regulation (MAR) by declaring that cryptocurrency bitcoin was “a fraud.”

The complaint filed with the Swedish authorities demonstrates how Dimon’s statement negatively impacted “the cryptocurrency’s price and reputation.” The document also lists evidence that suggests Dimon “knew, or ought to have known, that the information he disseminated was false and misleading.”

“Jamie Dimon’s public assertions did not only affect the reputation of bitcoin, they harmed the interests of some of his own clients and many young businesses that are working hard to create a better financial system,” says Florian Schweitzer, managing partner at Blockswater. JPMorgan traded bitcoin derivatives for their clients on Stockholm-based exchange Nasdaq Nordic before and after Dimon’s statements fueled volatility in the market. “That’s a clear case of double standards and it smells like market manipulation.”

Article 12 of the European Union’s Market Abuse Regulation prohibits the manipulation of markets through practices such as spreading false or misleading information. Nasdaq Nordic, where exchange-traded notes on bitcoin are listed, defines the term “market manipulation” in accordance with the EU’s definition as “dissemination of information through the media, including the Internet, or by any other means that gives, or is likely to give, false or misleading signals as to Listed Products, including the dissemination of rumours and false or misleading news, where the person who made the dissemination knew, or ought to have known, that the information was false or misleading.”

FI confirmed receipt of the report but did not comment further except to state that the financial markets regulator “will handle it according to [FI’s] procedures.”

Blockswater LLP is an algorithmic liquidity provider for blockchain-based assets based in London (UK) and Vienna (Austria).
 

    Read More @ ZeroHedge,com

    Artists Plan to Erect a Bronze Satoshi Nakamoto Statue in Budapest to Honor Bitcoin’s Creator

    0

    by Jamie Redman, Bitcoin:

    Hungary plans to be the first country in the world to erect a statue of Satoshi Nakamoto, as a life-size bronze bust of Bitcoin’s creator will be displayed in Budapest. The bronze bust design is being constructed by two sculptors, Tamás Gilly and Réka Gergely.

    A Reflective and Hooded Bronze Bust of Satoshi Nakamoto to be Erected in Budapest

    A statue of Satoshi Nakamoto is being created to be erected in Budapest, Hungary when the project is complete. The creators of the bronze bust, Tamás Gilly and Réka Gergely, have recently revealed design plans for the famous cryptocurrency inventor’s statue.

    Is Bitcoin Strangling The Other Cryptos? Part 2: The Little Guys Are Soaring

    by John Rubino, Dollar Collapse:

    The idea that “bitcoin is its own asset class” and should therefore be judged based on its own highly-constrained supply rests on the assumption that the rest of cryptospace consists of “shitcoins” that will evaporate as bitcoin, with its first-mover advantage, network effects, etc., eats the rest of the currency world and becomes the one true reserve asset.

    The following chart shows the 7-day moves of some of the no-names in the space. All are below $1 billion in market cap (though several hundred million is still real money, even in this hyperinflationary world), so they’re not yet serious contenders for much of anything, let alone reserve currency status.