Crypto's post-bubble potential - Newsroom

Former Uber Security Chief Charged Over Covering Up 2016 Data Breach

The federal prosecutors in the United States have charged Uber's former chief security officer, Joe Sullivan, for covering up a massive data breach that the ride-hailing company suffered in 2016.

https://preview.redd.it/av7452rvfyi51.jpg?width=728&format=pjpg&auto=webp&s=c02844573731025aa6f1943407ef185855b68757
According to the press release published by the U.S. Department of Justice, Sullivan "took deliberate steps to conceal, deflect, and mislead the Federal Trade Commission about the breach" that also involved paying hackers $100,000 ransom to keep the incident secret.
"A criminal complaint was filed today in federal court charging Joseph Sullivan with obstruction of justice and misprision of a felony in connection with the attempted cover-up of the 2016 hack of Uber Technologies," it says.
The 2016 Uber's data breach exposed names, email addresses, phone numbers of 57 million Uber riders and drivers, and driver license numbers of around 600,000 drivers.
The company revealed this information to the public almost a year later in 2017, immediately after Sullivan left his job at Uber in November.
Later it was reported that two hackers, Brandon Charles Glover of Florida and Vasile Mereacre of Toronto, were behind the incident to whom Sullivan approved paying money in exchange for promises to delete data of customers they had stolen.
All this started when Sullivan, as a representative for Uber, in 2016 was responding to FTC inquiries regarding a previous data breach incident in 2014, and during the same time, Brandon and Vasile contacted him regarding the new data breach.
"On November 14, 2016, approximately 10 days after providing his testimony to the FTC, Sullivan received an email from a hacker informing him that Uber had been breached again."
"Sullivan's team was able to confirm the breach within 24 hours of his receipt of the email. Rather than report the 2016 breach, Sullivan allegedly took deliberate steps to prevent knowledge of the breach from reaching the FTC."
According to court documents, the ransom amount was paid through a bug bounty program in an attempt to document the blackmailing payment as bounty for white-hat hackers who point out security issues but have not compromised data.
"Uber paid the hackers $100,000 in BitCoin in December 2016, despite the fact that the hackers refused to provide their true names (at that time)," federal prosecutors said. "In addition, Sullivan sought to have the hackers sign non-disclosure agreements. The agreements contained a false representation that the hackers did not take or store any data."
"Moreover, after Uber personnel were able to identify two of the individuals responsible for the breach, Sullivan arranged for the hackers to sign fresh copies of the non-disclosure agreements in their true names. The new agreements retained the false condition that no data had been obtained. Uber's new management ultimately discovered the truth and disclosed the breach publicly, and to the FTC, in November 2017."
Just last year, both hackers were pleaded guilty to several counts of charges for hacking and blackmailing Uber, LinkedIn, and other U.S. corporations.
In 2018, British and Dutch data protection regulators also fined Uber with $1.1 million for failing to protect its customers' personal information during a 2016 cyber attack.
Now, if Sullivan found guilty of cover-up charges, he could face up to eight years in prison, as well as potential fines of up to $500,000.
submitted by hackatoshi to u/hackatoshi [link] [comments]

What's Happening At Dash? | Continually Updated News & Announcements Thread

Welcome to dashpay!
If you are new to Dash, we encourage you to check out our wiki, where the Dash project is explained from the ground up with many links to valuable information resources. Also check out the menu bar on top and the sidebar to the right. We have very active Discord and Telegram channels where the community is happy to answer any and all newcomer questions.

Purpose of this post

This post is directed towards community members who wish to rapidly access information on current developments surrounding the Dash cryptocurrency.
Lately we've noticed how the pace of events picked up significantly within the Dash project due to many years of hard work coming together and pieces falling into place ("Evolution" is finally here. It's called Dash Platform). For the purpose of keeping these many pieces of information together, however, singular Reddit submissions are insufficient. Thus we decided to maintain a pinned thread collecting blog posts, interviews, articles, podcasts, videos & announcements. Check back regularly, as this thread will always feature the latest news around Dash, while also serving as a mid-term archive for important announcements and developments.
Journalists looking for news and contact opportunities wrt Dash, please bookmark:

Dash Press Room

"At Dash Press Room you will find the latest press releases, media materials and product updates on Dash - Digital Cash."

Dash Platform Video Series (formerly known as "Evolution") with Amanda B. Johnson

  1. Dash is Becoming a Cloud | Dash Platform #1
  2. What is Dash Drive? | Dash Platform #2
  3. What is Dash's Decentralized API? (DAPI) | Dash Platform #3
  4. Usernames & Dash Platform Name Service (DPNS) | Dash Platform #4

Dash Core Group News

(last updated: Oct 9th, 2020)

Dash Insights with Mark Mason & Dash Talk with Amanda B. Johnson

(last updated: Oct 9th, 2020)

Development news

(last updated: Oct 9th, 2020)

Adoption, Partnership, Business Development, General News

(last updated: Oct 3rd, 2020)
submitted by Basilpop to dashpay [link] [comments]

Summary of the new IRS guidelines (TLDR include)

Hey all - I know there's a dozen posts about the new crypto tax deadlines - so apologies for making it a dozen plus one.
Full disclosure, I work for Bitcoin.Tax, where this article was published. I've included the link to our summary, as well as our actual summary. Also - I'll be talking with a crypto tax pro on our podcast about these guidelines soon. I usually post links to our podcast on this subreddit, so stay tuned (if you want...) for that in the next few days. Hopefully this helps some folks, as parts of the new guidelines are fairly ambiguous.
Link: https://bitcoin.tax/blog/irs-crypto-tax-faq/
TLDR:
Generally, this is the same as the advice and common practice used by taxpayers and accountants. Although, the exception here is the clarification of the specific identification rule. We'll talk about that below.
Summary:
The IRS has issued their long-awaited guidance on the tax treatment for cryptocurrencies. You can read their FAQ On Virtual Currency Transactions on the IRS website.
This is the first official guidance since the original 2014-21 notice in April 2014.

IRS Cryptocurrency Tax FAQ

We have gone into more detail for some of the main points in their FAQ.

Hard forks and airdrops

Despite peculiar wording by the IRS, they have confirmed that receipt of crypto from an airdrop or fork is to be treated as income, and so subject to income tax.
ordinary income equal to the fair market value of the new cryptocurrency when it is received, which is when the transaction is recorded on the distributed ledger, provided you have dominion and control over the cryptocurrency so that you can transfer, sell, exchange, or otherwise dispose of the cryptocurrency
However, these drops typically have no market (perhaps a futures market) until they have existed for a period of time, so establishing a value could be difficult. It is possible that the value could be zero right at that exact moment it is recorded on the distributed ledger.
In order to receive income, you must have dominion and control over these new crypto. This effectively means you must be able to manage it; typically you would have the private keys or it is immediately available in a custodial wallet or online account, e.g. Coinbase.
If the crypto doesn't appear in your wallet, or you don't get control of it until a later date, then that later date is used to calculated the USD income value.
This had been a common question among crypto traders: if BTC was forked off into a new "BTC" coin, which you might not even have been aware of, do you still have income? The answer is no. Unless, you subsequently get access to those new coins, in which case you do have income on the date you receive control.
When you have income for an airdrop or fork, this also sets the cost basis (value and date) for any subsequent capital gains calculations.

Fair Market Value (FMV)

FMV is used to give something a value, i.e. what it's worth. If you list a bike for sale, you might research the prices for which other people are selling. Those prices give a FMV. But it you sell your bike and someone buys it for $100, then the bike's FMV was $100.
With crypto, sometimes we need to know FMV because we are not trading directly for dollars.
For example, if you sell 1 BTC for 150 LTC, you are disposing of the 1 BTC at FMV. You need to know the USD value in order to know the proceeds and to calculate any capital gains or losses.
So, first, if this was traded on an exchange, we use the spot price on the exchange at that time. This is true even if the transaction was off-chain.
However, where no FMV exists, such as a peer-to-peer transaction, then you have to get the value from elsewhere.
So, secondly, use the FMV of the service or product you are exchanging. With the above bike example, say buying it with crypto, the FMV would be that of the bike itself (the price it would have sold for USD).
Lastly, when no value can be obtained, then use a service that provides a consistent worldwide indices value (the IRS are calling this an "explorer" but that is a confusing term as blockchain explorers may not provide a USD value). If you do not use an "explorer" value, you can use an "accurate representation of the cryptocurrency's market value". Much like with fiat, this means using an establish and consistent source.

FIFO and Specific Identification

Advice from most tax preparers and accountants has been to err on the side of caution and go with First-In First-Out (FIFO). Basically, if you bought 1 BTC for $9,000 and later another for $10,000, when you come to sell 1 BTC (or partial) you would use the cost of the first 1 BTC that you had acquired.
This is the default IRS cost basis method and would not be challenged.
Some taxpayers had filed using specific identification, where FIFO was not used and instead the "lot" that was sold was chosen from their wallets. Summary strategies could also be employed, such as Last-In First-Out (LIFO), where the basis of the most recently acquired crypto is used instead.
These other strategies, such as last-in first-out, closest-cost or lowest-cost, often try to minimize the gains per transaction and defer them until later.
This is the biggest change in the new IRS guidance and confirms that specific identification can be used. However, you must be able to document this, which the IRS describes as:
You may identify a specific unit of virtual currency either by documenting the specific unit’s unique digital identifier such as a private key, public key, and address, or by records showing the transaction information for all units of a specific virtual currency, such as Bitcoin, held in a single account, wallet, or address.This information must show (1) the date and time each unit was acquired, (2) your basis and the fair market value of each unit at the time it was acquired, (3) the date and time each unit was sold, exchanged, or otherwise disposed of, and (4) the fair market value of each unit when sold, exchanged, or disposed of, and the amount of money or the value of property received for each unit.
There is no guidance if any extra information should be reported, but it is generally the same information that is added to the 8949 form where capital gains are reported.

Gifts and Donations

Similar to gifts of stocks or property, the rules regarding cost basis have remained unchanged. Received gifts are not immediate income but you do still recognize an capital gains income when you later come to sell, exchange or dispose of the cryptocurrency.
You can use the original basis (with documentation) from the giver in order to make use of long-term gains. However, your received basis becomes the lesser of the giver's cost basis and the FMV of the gift on the date you received it. This is to prevent from gifting losses. Also, if you do not have documentation showing the gift cost basis, then your basis is zero, i.e. you must declare 100% as capital gains.
Donations to registered charities do not recognize income, gains or losses. The value of your charitable donation is the FMV on the date of the gift if you have held the crypto for more than a year. For a year or less, it is lesser of the crypto's cost basis or its FMV on the day of the gift.

What was not mentioned

There are still some key questions and ambiguities that tax professionals have been looking for clarification. For instance, with hard forks and airdrops, if you have the private keys but no software, does that count as control?
Airdrop and forks generally have no markets when they are created, so is there a zero FMV? And should you take the value only when you exercise control?
Can specific identification be used at will or must it be done consistently?
Were 1031 "like-kind" exchanges ever a valid approach before 2018?

Guidance is retroactive

Finally, be aware that IRS guidance is always retroactive, unless otherwise stated, and so should be applied to past and future crypto transactions. If you have not followed these rules then you should consult with your tax professional and may need to file an amendment.
---

Edit:
According to BitcoinTaxesMe:
I clarified a couple of the not mentioned ones with the IRS verbally yesterday. This isn't official guidance, but some insight into what the IRS is thinking:
"For instance, with hard forks and airdrops, if you have the private keys but no software, does that count as control?"
If you the software exists and you don't install it, but could have, it's income, even if installation presents a security risk.
"Airdrop and forks generally have no markets when they are created, so is there a zero FMV? And should you take the value only when you exercise control?"
There's no income recognized until you both have control and there's a way to sell it. So there's no way to take a zero basis, as soon as a market appears it triggers the 2nd prong.
I personally think both of these are insane.
submitted by Sal-BitcoinTax to BitcoinMarkets [link] [comments]

Summary of the new IRS guidance

Link: https://bitcoin.tax/blog/irs-crypto-tax-faq/
The IRS has issued their long-awaited guidance on the tax treatment for cryptocurrencies. You can read their FAQ On Virtual Currency Transactions on the IRS website.
This is the first official guidance since the original 2014-21 notice in April 2014.

tl:dr;


Generally, this is the same as the advice and common practice used by taxpayers and accountants. Although, the exception here is the clarification of the specific identification rule. We'll talk about that below.

IRS Cryptocurrency Tax FAQ

We have gone into more detail for some of the main points in their FAQ.

Hard forks and airdrops

Despite peculiar wording by the IRS, they have confirmed that receipt of crypto from an airdrop or fork is to be treated as income, and so subject to income tax.
ordinary income equal to the fair market value of the new cryptocurrency when it is received, which is when the transaction is recorded on the distributed ledger, provided you have dominion and control over the cryptocurrency so that you can transfer, sell, exchange, or otherwise dispose of the cryptocurrency
However, these drops typically have no market (perhaps a futures market) until they have existed for a period of time, so establishing a value could be difficult. It is possible that the value could be zero right at that exact moment it is recorded on the distributed ledger.
In order to receive income, you must have dominion and control over these new crypto. This effectively means you must be able to manage it; typically you would have the private keys or it is immediately available in a custodial wallet or online account, e.g. Coinbase.
If the crypto doesn't appear in your wallet, or you don't get control of it until a later date, then that later date is used to calculated the USD income value.
This had been a common question among crypto traders: if BTC was forked off into a new "BTC" coin, which you might not even have been aware of, do you still have income? The answer is no. Unless, you subsequently get access to those new coins, in which case you do have income on the date you receive control.
When you have income for an airdrop or fork, this also sets the cost basis (value and date) for any subsequent capital gains calculations.
Bitcoin.Tax already looks up any current value, if known, for forks or airdrop symbols when they are added to the Income tab, otherwise a zero basis is used.

Fair Market Value (FMV)

FMV is used to give something a value, i.e. what it's worth. If you list a bike for sale, you might research the prices for which other people are selling. Those prices give a FMV. But it you sell your bike and someone buys it for $100, then the bike's FMV was $100.
With crypto, sometimes we need to know FMV because we are not trading directly for dollars.
For example, if you sell 1 BTC for 150 LTC, you are disposing of the 1 BTC at FMV. You need to know the USD value in order to know the proceeds and to calculate any capital gains or losses.
So, first, if this was traded on an exchange, we use the spot price on the exchange at that time. This is true even if the transaction was off-chain.
However, where no FMV exists, such as a peer-to-peer transaction, then you have to get the value from elsewhere.
So, secondly, use the FMV of the service or product you are exchanging. With the above bike example, say buying it with crypto, the FMV would be that of the bike itself (the price it would have sold for USD).
Lastly, when no value can be obtained, then use a service that provides a consistent worldwide indices value (the IRS are calling this an "explorer" but that is a confusing term as blockchain explorers may not provide a USD value). If you do not use an "explorer" value, you can use an "accurate representation of the cryptocurrency's market value". Much like with fiat, this means using an establish and consistent source.
Bitcoin.Tax already uses the exchange price data wherever possible, but otherwise combines crypto pricing for multiple worldwide sources to calculate a FMV.

FIFO and Specific Identification

Advice from most tax preparers and accountants has been to err on the side of caution and go with First-In First-Out (FIFO). Basically, if you bought 1 BTC for $9,000 and later another for $10,000, when you come to sell 1 BTC (or partial) you would use the cost of the first 1 BTC that you had acquired.
This is the default IRS cost basis method and would not be challenged.
Some taxpayers had filed using specific identification, where FIFO was not used and instead the "lot" that was sold was chosen from their wallets. Summary strategies could also be employed, such as Last-In Last-Out (LIFO), where the basis of the most recently acquired crypto is used instead.
These other strategies, such as last-in first-out, closest-cost or lowest-cost, often try to minimize the gains per transaction and defer them until later.
This is the biggest change in the new IRS guidance and confirms that specific identification can be used. However, you must be able to document this, which the IRS describes as:
You may identify a specific unit of virtual currency either by documenting the specific unit’s unique digital identifier such as a private key, public key, and address, or by records showing the transaction information for all units of a specific virtual currency, such as Bitcoin, held in a single account, wallet, or address. This information must show (1) the date and time each unit was acquired, (2) your basis and the fair market value of each unit at the time it was acquired, (3) the date and time each unit was sold, exchanged, or otherwise disposed of, and (4) the fair market value of each unit when sold, exchanged, or disposed of, and the amount of money or the value of property received for each unit.
There is no guidance if any extra information should be reported, but it is generally the same information that is added to the 8949 form where capital gains are reported.
Bitcoin.Tax already provides automatic calculations using multiple specific identification strategies so you can choose your cost basis lots. Navigate to the Calculate tab and you can see the values for each crypto you have traded.

Gifts and Donations

Similar to gifts of stocks or property, the rules regarding cost basis have remained unchanged. Received gifts are not immediate income but you do still recognize an capital gains income when you later come to sell, exchange or dispose of the cryptocurrency.
You can use the original basis (with documentation) from the giver in order to make use of long-term gains. However, your received basis becomes the lesser of the giver's cost basis and the FMV of the gift on the date you received it. This is to prevent from gifting losses. Also, if you do not have documentation showing the gift cost basis, then your basis is zero, i.e. you must declare 100% as capital gains.
Donations to registered charities do not recognize income, gains or losses. The value of your charitable donation is the FMV on the date of the gift if you have held the crypto for more than a year. For a year or less, it is lesser of the crypto's cost basis or its FMV on the day of the gift.
Bitcoin.Tax reports already splits out the basis for any gifts or donations that you make, which can be given to the recipient to provide them with the information they will require.

What was not mentioned

There are still some key questions and ambiguities that tax professionals have been looking for clarification. For instance, with hard forks and airdrops, if you have the private keys but no software, does that count as control?
Airdrop and forks generally have no markets when they are created, so is there a zero FMV? And should you take the value only when you exercise control?
Can specific identification be used at will or must it be done consistently?
Were 1031 "like-kind" exchanges ever a valid approach before 2018?

Guidance is retroactive

Finally, be aware that IRS guidance is always retroactive, unless otherwise stated, and so should be applied to past and future crypto transactions. If you have not followed these rules then you should consult with your tax professional and may need to file an amendment.
submitted by Sal-BitcoinTax to bitcointaxes [link] [comments]

Understanding the IRS letters 6173, 6174, and 6174-A (Podcast & Summary)

Hey all - Last week I interviewed Alex Kugelman, a tax controversy lawyer with expertise in cryptocurrency and IRS audits, about the recent IRS letters referenced as 6173, 6174 and 6174-A. Alex explained what each of the letters means, the difference between them, and how they will potentially affect everyone who received one.
The letters intend to help taxpayers understand their tax and filing obligations and how to correct past errors. The recipients of these letters have been collected from various compliance measures, including the collection of records from Coinbase after their summons from the IRS in 2018 for 13,000 customer records.
Full disclosure, I work for Bitcoin.Tax! Hope this helps clarify the letters for people who have either received them, or heard/read about them.
Link to podcast audio (43mins)
Link to podcast page
Link to IRS info
Highlights from the episode:
The Three Types of IRS Notices (01:15):
“There’s basically three different letters: 6173, 6174, and 6174-A that were sent out to Coinbase account holders for the years 2013 through 2015 as a result of that summons that the IRS sent to Coinbase. Essentially, Coinbase and the IRS agreed on a certain threshold. That means about 13,000 or so account holders information, including name, social security number and trading data, was provided to the IRS. If you go on the IRS website or call the IRS hotline regarding these letters, these are in fact those people that are being affected.”
The Difference Between Each Letter (02:15):
“The basic thrust is that the IRS has information that the recipient had some cryptocurrency account and may not have fully reported gains or losses from the activity. So essentially the 6174, 6174-A, and 6173 are essentially predicated on that. The 6174 is what’s been termed, or people have described as, a ‘soft notice' – just putting people on notice of what the tax reporting obligations are. The 6174-A is a little bit more direct. The 6173 from my perspective is the letter to be taken more seriously by recipient because it requires a response. It has a response date, from what I can tell, of one month from the date of the letter.”
The Goal of the IRS Letters (08:50):
“I would imagine probably two goals of these letters. One is for the group of people who actually received the letters. For each of them to address any outstanding issues – voluntary compliance to get as many people in compliance to all tax reporting obligations. The second, which I think has been really effective, is to spread this news to a wider audience – this was all over the Internet. That’s exactly how the IRS motivates people to comply with tax laws: get the word out and get people thinking ‘right now I have to really take this issue seriously’.”
What the Letters Mean for Crypto Users (10:45):
“For people who just purchased and held onto crypto, what you want to do is just keep good data, good records, but you really don’t have anything to do. However, if you did receive the 6173, then you would respond. You could respond that you don’t have any taxable gains or losses or tax reporting for those years, but pretty much get your records together and just kind of hunker down. ”
“For people who had net losses…I’ve gotten this question a couple of times: the taxpayer made a bunch of trades, ultimately came out on the short end of the stick and had losses and didn’t report anything because they don’t have any additional tax owed. Subjectively that might be true, but objectively that’s a major problem. If the data provided by the exchange shows a certain number of taxable events or sales it’s not clear from that data that there’s going to be a basis that exceeds what the sales price is. For people that are in that boat, I would highly recommend that they amend returns so you’re actually showing each of the transactions and how you arrive at that figure.”
“I think at this point, especially if you got the letter…you’re now part of a pool of certain taxpayers that has a lot of scrutiny.”
submitted by Sal-BitcoinTax to BitcoinMarkets [link] [comments]

ChainLink - Rank 97 with no competitors. Undervalued Gem?

What Does ChainLink Do?
In a nutshell, ChainLink aims to solve the connectivity problem, a key limiting factor for smart contract usability, and whilst it's an ERC-20 token it will not be limited to just the Ethereum blockchain.
What makes $LINK so special? Well, it's the first decentralized oracle network; allowing anyone to securely provide smart contracts with access to key external data, off-chain payments and any other API capabilities. Anyone who has a data feed, useful off-chain service such as local payments, or any other API, can now provide them directly to smart contracts in exchange for LINK tokens.
Partnerships
I will keep this brief, as you can see a full list of current and potential partnerships on https://www.reddit.com/LINKTradecomments/7mob78/list_of_chainlinks_partnershipsprojects_using/
But the main ones to look at are
The Pros
ChainLink has steadily been gaining traction ever since its downfall after the 4chan/reddit SIBOS hypetrain crash (post September). It's remained around the 90-100 rank mark and has yet to really "moon".
The Cons
So what makes ChainLink valuable?
The LINK token is used by smart contract owners to pay chainlink nodes for getting data from them and the more LINKs an oracle node has, the more reputable it is. So oracle node providers are incentivized to hold as much LINKs in their chainlink nodes to appear more reputable to the chainlink network, gaining more usage and profit
(Taken from a comment on https://www.reddit.com/CryptoCurrency/comments/7nwis4/why_i_believe_chainlink_link_is_the_most/)
Most importantly, LINK can (and will be) used for data request penalty payments to ensure that node operators provide the requested data. Penalty payments are LINK tokens that are required to be held in escrow by the smart contract. They are paid to the smart contract creator in the event any of the node operators do not meet the required data requests as stated in the smart contract. This provides an incentive for smart contract creators to trust node operators, knowing that they have a form of financial insurance (the penalty payment) in the event a node (or nodes) submit bad data.
For information that will trigger high value smart contracts, smart contract owners will want to require a proportionate amount of link to be held in escrow as penalty payments by the node operators. When link is tied up for penalty payments, it is released over the life of the contract. For example, let’s say party A wants an API snapshot sent every day for 30 days. If the penalty payment for the contract is 300 LINK (per node operator), then each node operator will have 10 LINK released to them at the end of each day – receiving the full 300 LINK at the end of the 30 days if they successfully performed the data request the smart contract asked for. Now imagine the smart contract creator wanted 10 node operators. That means 3000 LINK is taken off the market immediately, and 100 of that 3000 is released each day from the smart contract to the individual node operators (10 each per operator, assuming they provided the requested data). A cycle will be created where more and more smart contracts will make requests and node operators will be limited only by the availability of their LINK tokens to be used for penalty payments.
Add it all together and you have a singular payment method for a desired network (the most secure external data oracle), lots of supply constantly locked up to have enough link for signaling purposes (the reputation boost for a node operator), financial insurance for smart contract creators (penalty payments) for increasingly valuable triggering data in a wide variety of smart contracts, and a network poised for growth as more adapters are built and more API’s become available so that dapps can thrive on any blockchain network. Yes LINk is an ERC20 token, but it is blockchain agnostic and the adapter network can continue to grow.
LINK can also be staked!
LINK staking is another big thing that will do wonders for Chainlink's valuation. Turns out Chainlink oracles can be made into pools, similar to mining pools on bitcoin and ethereum where multiple people come and put their LINKs together to run a more secure oracle node and distribute the profits fairly between each other. This will be huge as it will effectively allow you to stake your LINK tokens and earn more of them passively without doing anything. One such pool in development is LinkPool (http://www.linkpool.io/).
Where do i buy and store LINK?
You can currently buy LINK at the following exchanges;
As an ERC-20 token, you can store LINK on your ledger or MEW wallets.
Here is a well written guide on how to purchase LINK https://www.reddit.com/LINKTradecomments/7gglfv/how_to_buy_link_chainlink_token/
Sources of Info For Own Research
P.S CEO Sergey Nazarov speaks at Bitcoin super conference next month too https://www.bitcoinsuperconference.com/speakesergey-nazarov/ as well as speaking at SXSW in march alongside Tom Gonser who is the founder and former chief strategy officer of DocuSign.
https://chainlinknodes.com/smartcontract-ceo-sergey-nazarov-speak-sxsw/
Sorry, All sounds great but i only invest based on TA
Good news, if LINK breaks 7k sats we're in for a moon too!
Edit: updated TA
https://uk.tradingview.com/x/GEBhGcKz/
Added from comments
Don't forget that AXA Insurance and Sony Corp did a test smart contract on their platform last week: https://create.smartcontract.com/#/contracts/fa4703cb68e3c152a9f47bafd57fe1fa
AXA Insurance has announced that they will be implementing blockchain: https://group.axa.com/en/newsroom/news/axa-goes-blockchain-with-fizzy
Facebook Director of Engineering joins ChainLink: https://www.financemagnates.com/cryptocurrency/news/facebook-director-engineering-joins-chainlink-advisory-board/
Zuckerberg says he will be studying crypto make Facebook better: https://www.coindesk.com/zuckerberg-to-study-cryptocurrency-in-quest-to-decentralize-facebook/
submitted by lamps92 to CryptoCurrency [link] [comments]

IOTA and Tangle discussion/info, scam or not?

In the past weeks I heard a lot pros and cons about IOTA, many of them I believe were not true (I'll explain better). I would like to start a serious discussion about IOTA and help people to get into it. Before that I'll contribute with what I know, most things that I will say will have a source link providing some base content.
 
The pros and cons that I heard a lot is listed below, I'll discuss the items marked with *.
Pros
Cons
 

Scalability

Many users claim that the network infinitely scales, that with more transactions on the network the faster it gets. This is not entirely true, that's why we are seeing the network getting congested (pending transactions) at the moment (12/2017).
The network is composed by full-nodes (stores all transactions), each full-node is capable of sending transactions direct to the tangle. An arbitrary user can set a light-node (do not store all transactions, therefore a reduced size), but as it does not stores all transactions and can't decide if there are conflicting transactions (and other stuff) it needs to connect to a full-node (bitifinex node for example) and then request for the full-node to send a transaction to the tangle. The full-node acts like a bridge for a light-node user, the quantity of transactions at the same time that a full-node can push to the tangle is limited by its brandwidth.
What happens at the moment is that there are few full-nodes, but more important than that is: the majority of users are connected to the same full-node basically. The full-node which is being used can't handle all the requested transactions by the light-nodes because of its brandwidth. If you are a light-node user and is experiencing slow transactions you need to manually select other node to get a better performance. Also, you need to verify that the minimum weight magnitude (difficulty of the Hashcash Proof of Work) is set to 14 at least.
The network seems to be fine and it scales, but the steps an user has to make/know are not friendly-user at all. It's necessary to understand that the technology envolved is relative new and still in early development. Do not buy iota if you haven't read about the technology, there is a high chance of you losing your tokens because of various reasons and it will be your own fault. You can learn more about how IOTA works here.
There are some upcoming solutions that will bring the user-experience to a new level, The UCL Wallet (expected to be released at this month, will talk about that soon and how it will help the network) and the Nelson CarrIOTA (this week) besides the official implementations to come in december.
 

Centralization

We all know that currently (2017) IOTA depends on the coordinator because the network is still in its infancy and because of that it is considered centralized by the majority of users.
The coordinator are several full-nodes scattered across the world run by the IOTA foundation. It creates periodic Milestones (zero value transactions which reference valid transactions) which are validated by the entire network. The coordinator sets the general direction for the tangle growth. Every node verifies that the coordinator is not breaking consensus rules by creating iotas out of thin air or approving double-spendings, nodes only tells other nodes about transactions that are valid, if the Coordinator starts issuing bad Milestones, nodes will reject them.
The coordinator is optional since summer 2017, you can choose not implement it in your full-node, any talented programmer could replace Coo logic in IRI with Random Walk Monte Carlo logic and go without its milestones right now. A new kind of distributed coordinator is about to come and then, for the last, its completely removal. You can read more about the coordinator here and here.

Mining-Blockchain-based Cryptocurrencies

These are blockchain-based cryptocurrencies (Bitcoin) that has miners to guarantee its security. Satoshi Nakamoto states several times in the Bitcoin whitepaper that "The system is secure as long as honest nodes collectively control more CPU power than any cooperating group of attacker nodes". We can see in Blockchain.info that nowadays half of the total hashpower in Bitcoin is controlled by 3 companies (maybe only 1 in the future?). Users must trust that these companies will behave honestly and will not use its 50%> hashpower to attack the network eventually. With all that said it's reasonable to consider the IOTA network more decentralized (even with the coordinator) than any mining-blockchain-based cryptocurrency
You can see a comparison between DAG cryptocurrencies here
 

IOTA partnerships

Some partnerships of IOTA foundation with big companies were well known even when they were not officialy published. Some few examples of confirmed partnerships are listed below, others cofirmed partnerships can be seem in the link Partnerships with big companies at the pros section.
So what's up with all alarming in social media about IOTA Foundation faking partnerships with big companies like Microsoft and Cisco?
At Nov. 28th IOTA Foundation announced the Data Marketplace with 30+ companies participating. Basically it's a place for any entity sell data (huge applications, therefore many companies interested), at time of writing (11/12/2017) there is no API for common users, only companies in touch with IOTA Foundation can test it.
A quote from Omkar Naik (Microsoft worker) depicted on the Data Marketplace blog post gave an idea that Microsoft was in a direct partnership with IOTA. Several news websites started writing headlines "Microsoft and IOTA launches" (The same news site claimed latter that IOTA lied about partnership with Microsoft) when instead Microsoft was just one of the many participants of the Data Marketplace. Even though it's not a direct partnership, IOTA and Microsoft are in close touch as seen in IOTA Microsoft and Bosch meetup december 12th, Microsoft IOTA meetup in Paris 14th and Microsoft Azure adds 5 new Blockchain partners (may 2016). If you join the IOTA Slack channel you'll find out that there are many others big companies in close touch with IOTA like BMW, Tesla and other companies. This means that right now there are devs of IOTA working directly with scientists of these companies to help them integrate IOTA on their developments even though there is no direct partnership published, I'll talk more about the use cases soon.
We are excited to partner with IOTA foundation and proud to be associated with its new data marketplace initiative... - Omkar Naik
 

IOTA's use cases

Every cryptocurrency is capable of being a way to exchange goods, you pay for something using the coin token and receive the product. Some of them are more popular or have faster transactions or anonymity while others offers better scalablity or user-friendness. But none of them (except IOTA) are capable of transactioning information with no costs (fee-less transactions), in an securely form (MAM) and being sure that the network will not be harmed when it gets more adopted (scales). These characteristics open the gates for several real world applications, you probably might have heard of Big Data and how data is so important nowadays.
Data sets grow rapidly - in part because they are increasingly gathered by cheap and numerous information-sensing Internet of things devices such as mobile devices, aerial (remote sensing), software logs, cameras, microphones, radio-frequency identification (RFID) readers and wireless sensor networks.
 
It’s just the beginning of the data period. Data is going to be so important for human life in the future. So we are now just starting. We are a big data company, but compared to tomorrow, we are nothing. - Jack Ma (Alibaba)
There are enormous quantities of wasted data, often over 99% is lost to the void, that could potentially contain extremely valuable information if allowed to flow freely in data streams that create an open and decentralized data lake that is accessible to any compensating party. Some of the biggest corporations of the world are purely digital like Google, Facebook and Amazon. Data/information market will be huge in the future and that's why there so many companies interested in what IOTA can offer.
There are several real world use cases being developed at the moment, many of them if successful will revolutionize the world. You can check below a list of some of them.
Extra
These are just few examples, there are a lot more ongoing and to explore.
 

IOTA Wallet (v2.5.4 below)

For those who have read a lot about IOTA and know how it works the wallet is fine, but that's not the case for most users. Issues an user might face if decide to use the current wallet:
Problems that could be easily avoided with a better understand of the network/wallet or with a better wallet that could handle these issues. As I explained before, some problems during the "congestion" of the network could be simply resolved if stuff were more user-friendly, this causes many users storing their iotas on exchanges which is not safe either.
The upcoming (dec 2017) UCL Wallet will solve most of these problems. It will switch between nodes automatically and auto-reattach transactions for example (besides other things). You can have full a overview of it here and here. Also, the upcoming Nelson CarrIOTA will help on automatic peer discovery for users setup their nodes more easily.
 

IOTA Vulnerability issue

On sept 7th 2017 a team from MIT reported a cryptographic issue on the hash function Curl. You can see the full response of IOTA members below.
Funds were never in danger as such scenarios depicted on the Neha's blogpost were not pratically possible and the arguments used on the blogpost had'nt fundamentals, all the history you can check by yourself on the responses. Later it was discovered that the whole Neha Narula's team were envolved in other concurrent cryptocurrency projects
Currently IOTA uses the relatively hardware intensive NIST standard SHA-3/Keccak for crucial operations for maximal security. Curl is continuously being audited by more cryptographers and security experts. Recenlty IOTA Foundation hired Cybercrypt, the world leading lightweight cryptography and security company from Denmark to take the Curl cryptography to its next maturation phase.
 
It took me a couple of days to gather the informations presented, I wanted it to make easier for people who want to get into it. It might probably have some mistakes so please correct me if I said something wrong. Here are some useful links for the community.
This is my IOTA donation address, in case someone wants to donate I will be very thankful. I truly believe in this project's potential.
I9YGQVMWDYZBLHGKMTLBTAFBIQHGLYGSAGLJEZIV9OKWZSHIYRDSDPQQLTIEQEUSYZWUGGFHGQJLVYKOBWAYPTTGCX
 
This is a donation address, if you want to do the same you might pay attention to some important details:
  • Create a seed for only donation purposes.
  • Generate a address and publish it for everyone.
  • If you spend any iota you must attach a new address to the tangle and refresh your donation address published before to everyone.
  • If someone sends iota to your previous donation address after you have spent from it you will probably lose the funds that were sent to that specific address.
  • You can visualize how addresses work in IOTA here and here.
This happens because IOTA uses Winternitz one-time signature to become quantum resistent. Every time you spend iota from a address, part of the private key of that specific address is revealed. This makes easier for attackers to steal that address balance. Attackers can search if an address has been reused on the tangle explorer and try to brute force the private key since they already know part of it.
submitted by mvictordbz to CryptoCurrency [link] [comments]

The IRS Is Cracking Down on Investors… Here’s What You Need to Know About Paying Bitcoin and Crypto Taxes

The IRS Is Cracking Down on Investors… Here’s What You Need to Know About Paying Bitcoin and Crypto Taxes
As 2019 comes to a close, the 2020 tax season is upon us, which means that it is time once again for traders, investors, and business owners to calculate their capital gains and report their income and profits to the government.
One big mistake that many crypto traders have made in the past was reporting their earnings incorrectly or failing to report at all. Although there is a common misconception that Bitcoin is anonymous, the recent crackdown that took place earlier this year, in which the IRS sent letters to over 10,000 people asking them to pay back taxes, demonstrates the need to file properly. Even entities outside of the U.S., such as the U.K.’s HMRC, are taking further steps to ensure tax compliance.
That said, recent changes to cryptocurrency tax guidelines and the complexity of the digital assets themselves can make it hard for those in possession of crypto to understand where to begin in the filing process. Fortunately, crypto taxes are easy to understand once they are explained.
If you have engaged in any crypto transactions over the past year, here’s what you need to know about paying Bitcoin and crypto taxes.

https://preview.redd.it/sgxtgkamsm041.jpg?width=4000&format=pjpg&auto=webp&s=795a6acd74b979367aaf1f1283482865258ae76b

Crypto As a Tradeable Asset

When crypto is purchased and exchanged at a later date, cryptocurrency is taxed as a tradeable asset. For example, let’s imagine that you purchased one Bitcoin in January of this year and sold it when the price spiked up to $12,000 in May. As a result of your sale, you would have to report your profits as capital gains for the sale of that asset and pay the resulting tax. (However, you may also claim losses if the value of your asset’s value depreciated over that time instead.)
Along with trade transactions, other transactions, such as making purchases with your crypto, are considered taxable events as well. Continuing with the above example, let’s imagine that you spent $2,500 of your Bitcoin on your rent. You would need to sit down and calculate exactly how much that portion of your asset has gained since its initial purchase. Of course, this brings up the question of how exactly to calculate these gains. We will dive deeper into this topic after the next section.
Put simply, any time you spend your asset, exchange your crypto for a similar asset or a fiat currency, or otherwise engage in a transaction that involves receiving something in return for your crypto, you need to report any capital gains or losses.

Crypto As Income

While crypto is used by many as a tradeable asset, there are also those who make a living through trading crypto or through accepting crypto through a business or as part of their paycheck. If crypto is earned, it becomes taxable not only as an asset when it is traded but as income as well. The type of work that you do in return for crypto will dictate how you will need to file when you report this income.
What’s truly important to know, however, is that any form of income is taxable. In the IRS’s new guidelines, they touch upon the topic of forks as an example and the resulting cryptocurrencies that you may obtain through a hard fork. If you receive any amount of cryptocurrency, whether you asked for it or not, you are responsible for reporting it as income. As always, there are some exemptions, such as gifts, which you will only need to report when you sell or trade it at a later date.

How Does Crypto Tax Filing Work?

Reporting fiat currency is simple as there are no price fluctuations that complicate your filing efforts. Cryptocurrency, on the other hand, is always changing, which makes it more difficult to determine what you owe and how you need to report it.
In general, there are four main accounting methods that people turn to in order to report their crypto profits: first in first out (FIFO), last in first out (LIFO), average cost, and specific identification. Simplified, they look like this:
  1. FIFO- The crypto that you spend or trade is taken from your first purchase. If you spend one Bitcoin and you own two Bitcoin, you calculate your gains or losses based on the first Bitcoin that you acquired.
  2. LIFO- Using this accounting method, traders do the opposite of the above, calculating gains and losses by drawing from their most recent purchases first.
  3. Average Cost- One of the easier accounting methods, the average cost is calculated by determining the amount of holdings you have sold and pulling from the overall price of your assets. This method isn’t as commonly seen as the other three, however.
  4. Specific Identification- If you can show the IRS proof of specific transactions stored in different places, you can choose which asset you want to calculate your gains or losses on. For example, if you have one Bitcoin stored in address A and one in address B and you spend one Bitcoin, you can choose which asset you sold as long as you can provide documentation of the purchase of said asset.
As always, it is vital that you do your research, consult professionals, and fully understand your responsibilities before you begin trying to report your income and capital gains. While the above gives you an overview of what you can expect to come across as you prepare your crypto taxes, it is ultimately up to you to make sure that you are compliant and up-to-date with local tax laws.
If you have sold any crypto over this past year, use the above as a starting point for learning more about how to file cryptocurrency taxes before the deadline arrives.
Trakx is building a one-stop shop for Crypto Traded Indices. Discover more about our project on our website and social media channels, such as Telegram http://t.me/trakx_io.
submitted by Trakx_io to Trakx [link] [comments]

2017 Taxes Megathread - Income Tax, Capital Gains Tax, and Mining

There's a lot of posts in /BitcoinCA popping up about tax questions and it's tax season so please post all tax related questions and discussions in this thread to clear up the clutter and this way we don't need to repeat ourselves.
I've been able to find the fallowing links on crypto taxes that can offer some guidance. I included some snippets with key take aways click the links to read the full articles for context.

CRA: What you should know about digital currency

Do tax rules apply when digital currency is used?
Yes. Where digital currency is used to pay for goods or services, the rules for barter transactions apply. A barter transaction occurs when any two persons agree to exchange goods or services and carry out that exchange without using legal currency. For example, paying for movies with digital currency is a barter transaction. The value of the movies purchased using digital currency must be included in the seller’s income for tax purposes. The amount to be included would be the value of the movies in Canadian dollars.
More information on the tax implications of barter transactions is available by consulting the Canada Revenue Agency’s Interpretation Bulletin IT-490, Barter Transactions.
Digital currency can also be bought or sold like a commodity. Any resulting gains or losses could be taxable income or capital for the taxpayer. Paragraphs 9 to 32 of Interpretation Bulletin IT-479R, Transactions in Securities, provide information that can help in determining whether transactions are income or capital in nature.

Inuit/TurboTax: How Bitcoins Might Impact Your Income Taxes

Trade and Barter Transactions With Virtual Currencies
Transactions made with bitcoins or other virtual currency are covered by the section of the tax code that governs barter and trade transactions. Under this portion of the tax code, you must declare any income received or expenses made, regardless of whether any actual cash was tied to the transaction.
For example, if you run a daycare and you accept eggs, bitcoins or any other type of trade in exchange for child care, you still are required to report these transactions on your income taxes. Since you can’t declare bitcoins, eggs or other material items on your tax form, you must declare the typical dollar amount that you would have otherwise claimed for those services.

The Globe and Mail: Here's what you need to know about the Canadian tax implications of cryptocurrencies

I "mined" cryptocurrency. What are the tax consequences?
Cryptocurrency miners should report as income the cryptocurrency they earn, and should be able to deduct associated losses, such as those hefty electricity costs.
I was paid in cryptocurrency. What should I do?
If your employer has paid you with cryptocurrency, it's like being paid with money. You will be required to pay income tax on your earnings.
If you are an independent contractor and you have been paid with cryptocurrency, again, from a tax perspective, it's like being paid with money. You need to pay income tax and collect GST/HST, but you can also deduct associated expenses and claim input tax credits.
For general tax advice /PersonalFinanceCanada is worth checking out.
submitted by PoliticalDissidents to BitcoinCA [link] [comments]

If Libra fails, China wins—The Ledger

If it once seemed possible, among crypto-enthusiasts, for a currency to exist outside the reaches of a central government authority, U.S. regulators did their best last week to stamp out such beliefs.
U.S. officials not only succeeded in dealing Facebook’s Libra cryptocurrency project a $1 trillion blow (the combined market cap of the seven major companies that have dropped out) after U.S. Senators sent letters urging their CEOs to “be extremely cautious about moving ahead with a project that will foreseeably fuel the growth in global criminal activity.”
Regulators at the U.S. Securities and Exchange Commission also temporarily froze messaging app Telegram’s $1.7 billion digital token sale, at least temporarily—through the use of an emergency restraining order on Friday.
And now, some of Silicon Valley’s most respected technology analysts are warning that even if the U.S. wins its latest anti-cryptocurrency crusade, it could end up losing in the long run—to China.
After Facebook announced Libra in June, China’s central bank accelerated the development of its own cryptocurrency, RBC Capital Markets analysts pointed out in a report Tuesday. “If U.S. regulators ultimately dismiss Libra and decide not to draft regulation to encourage crypto innovation in the U.S., China’s central bank digital currency may be strategically positioned to become the de facto global digital currency in emerging economies,” they wrote.
The key, according to the analysts: Chinese messaging and payment apps such as AliPay and WeChat would serve as conduits for the adoption of China’s digital currency, as they “represent the greatest opportunity to onboard consumers to digital wallets.”
Indeed, the vision Facebook laid out in a white paper for its cryptocurrency described Libra as a way to turn messaging apps like its own Facebook Messenger (with some 1.3 billion users) into an easy payment platform: “Just as people can use their phones to message friends anywhere in the world today, with Libra, the same can be done with money — instantly, securely, and at low cost,” according to the paper.
Meanwhile, Telegram, whose encrypted messaging app has some 200 million users, sold $1.7 billion worth of “Gram” tokens on a similar premise that they could be transferred through the app. U.S. regulators have so far objected just to the method by which the tokens were sold—the SEC alleges it was an unregistered and illegal sale of securities—as opposed to their proposed usage. But the crackdown threatens the future of the Gram project itself.
RBC’s analysts didn’t specifically discuss the SEC action against Telegram in their report. But it stands to reason that abolishing or delaying Telegram’s cryptocurrency further clears the way for China to dominate in message-based digital payments.
That’s probably not the outcome the U.S. government desires: At a time when the Trump administration is waging a trade war with China using tariffs to maintain the upper hand, China’s digital currency could potentially upend the foreign exchange dynamics entirely, circumventing American control.
The RBC analysts hint it might behoove U.S. government officials to work with Libra, rather than against it—and welcome its corporate partners back into the fold: “If a clear regulatory roadmap is developed and Libra launches successfully, we would not be surprised to see these firms reapply to the association,” they wrote.
If American regulators are really playing the long game with China and the global innovation race, perhaps they shouldn’t dismiss Libra so quickly.
Jen Wieczner |@jenwieczner | [email protected]
* More Details Here
submitted by acerod1 to Business_Analyst [link] [comments]

IRS’s New Cryptocurrency Rules Create ‘Messy’ Problems for Industry

For the first time since 2014, the Internal Revenue Service on Wednesday offered formal guidance on cryptocurrencies like Bitcoin—and not everyone is happy. While the new information clears up some long standing accounting questions, it also could expose anyone who owns cryptocurrency to unpleasant tax predicaments.
The guidance came in the form of a lengthy ‘Frequently Asked Questions’ documents that provided new details about how the agency’s 2014 position—which declared Bitcoin and other digital assets to be property—should apply in practice.
According to Katya Fisher, a cryptocurrency attorney at Greenspoon Marder in New York, the long-awaited IRS document clarifies that digital currency is taxed under the same rules as any other property.
“Anyone who understands the tax code shouldn’t find anything in here shocking or new. If you understand capital gains and how property is taxed, this is just a plain English iteration of those concepts,” says Fisher.
Nonetheless, cryptocurrency advocates warned that portions of the IRS guidance may result in unfair or unexpected consequences.
In a blog post, the Washington DC-based Coin Center declared the IRS document raised “messy” new questions, especially around the issue of so-called “airdrops” and “hard forks”—terms that describe a situation where new types of cryptocurrency are delivered to a user.
According to the IRS, the occurrence of an airdrop or hard fork triggers a tax obligation when someone has “dominion or control” over the new currency. But, as some noted on Twitter, some individuals may have never wanted or asked to receive the cryptocurrency in the first place—but they’ll be obligated to pay taxes on them, all the same.
This could be the case for millions of customers of popular crypto exchanges like Coinbase, which earlier this year distributed an obscure spin-off currency called Bitcoin SV to every customer who owned Bitcoin—triggering a tax obligation under the new IRS guidelines.
Coin Center declared this to be a “bad” situation, though not everyone agrees. According to attorney Preston Byrne, “stealth tax” liabilities won’t arise, because people can always reject unwanted property.
Coinbase did not immediately reply to a request for comment.
The new IRS guidance also failed to address whether small cryptocurrency transactions are covered by “de minimis” exemptions. The crypto industry has long asked for such exemptions to spare those who engage in petty transactions, like purchasing a cup of coffee with Bitcoin, from the tax man.
According to Fisher, the IRS doesn’t make de minimis exemptions for other types of property so, absent instructions from Congress, it shouldn’t be expected to do so for crypto. Nonetheless, she says law-abiding tax payers shouldn’t fret over unreported $5 transactions.
More broadly, Fisher says cryptocurrency is clearly on the radar of the IRS and will remain so in the future.
“IRS has been paying careful attention to digital assets because it’s revenue for the U.S. government and because the IRS is concerned about the erosion of the tax base—even if cryptocurrency is a small part of the economy,” she says.
* More Details Here
submitted by acerod1 to Business_Analyst [link] [comments]

Understanding the IRS letters 6173, 6174, and 6174-A

The recent IRS letters referenced as 6173, 6174 and 6174-A, intend to help taxpayers understand their tax and filing obligations and how to correct past errors. The recipients of these letters have been collected from various compliance measures, including the collection of records from Coinbase after their summons from the IRS in 2018 for 13,000 customer records.
I interviewed Alex Kugelman, a tax controversy lawyer with expertise in cryptocurrency and IRS audits. Alex explained what each of the letters means, the difference between them, and how they will potentially affect everyone who received one.
Link to podcast audio
Link to podcast page
Link to IRS info
Highlights from the episode:
The Three Types of IRS Notices (01:15):
“There’s basically three different letters: 6173, 6174, and 6174-A that were sent out to Coinbase account holders for the years 2013 through 2015 as a result of that summons that the IRS sent to Coinbase. Essentially, Coinbase and the IRS agreed on a certain threshold. That means about 13,000 or so account holders information, including name, social security number and trading data, was provided to the IRS. If you go on the IRS website or call the IRS hotline regarding these letters, these are in fact those people that are being affected.”

The Difference Between Each Letter (02:15):
“The basic thrust is that the IRS has information that the recipient had some cryptocurrency account and may not have fully reported gains or losses from the activity. So essentially the 6174, 6174-A, and 6173 are essentially predicated on that. The 6174 is what’s been termed, or people have described as, a ‘soft notice' – just putting people on notice of what the tax reporting obligations are. The 6174-A is a little bit more direct. The 6173 from my perspective is the letter to be taken more seriously by recipient because it requires a response. It has a response date, from what I can tell, of one month from the date of the letter.”

The Goal of the IRS Letters (08:50):
“I would imagine probably two goals of these letters. One is for the group of people who actually received the letters. For each of them to address any outstanding issues – voluntary compliance to get as many people in compliance to all tax reporting obligations. The second, which I think has been really effective, is to spread this news to a wider audience – this was all over the Internet. That’s exactly how the IRS motivates people to comply with tax laws: get the word out and get people thinking ‘right now I have to really take this issue seriously’.”

What the Letters Mean for Crypto Users (10:45):
“For people who just purchased and held onto crypto, what you want to do is just keep good data, good records, but you really don’t have anything to do. However, if you did receive the 6173, then you would respond. You could respond that you don’t have any taxable gains or losses or tax reporting for those years, but pretty much get your records together and just kind of hunker down. ”
“For people who had net losses…I’ve gotten this question a couple of times: the taxpayer made a bunch of trades, ultimately came out on the short end of the stick and had losses and didn’t report anything because they don’t have any additional tax owed. Subjectively that might be true, but objectively that’s a major problem. If the data provided by the exchange shows a certain number of taxable events or sales it’s not clear from that data that there’s going to be a basis that exceeds what the sales price is. For people that are in that boat, I would highly recommend that they amend returns so you’re actually showing each of the transactions and how you arrive at that figure.”
“I think at this point, especially if you got the letter…you’re now part of a pool of certain taxpayers that has a lot of scrutiny.”
submitted by Sal-BitcoinTax to bitcointaxes [link] [comments]

Summary of the new crypto tax guidelines (tldr included)

Hey all - I know there's a dozen posts about the new crypto tax deadlines - so apologies for making it a dozen plus one.
Full disclosure, I work for Bitcoin.Tax, where this article was published. I've included the link to our summary, as well as our actual summary. Also - I'll be talking with a crypto tax pro on our podcast about these guidelines soon. I usually post links to our podcast on this subreddit, so stay tuned (if you want...) for that in the next few days. Hopefully this helps some folks, as parts of the new guidelines are fairly ambiguous.
Link: https://bitcoin.tax/blog/irs-crypto-tax-faq/
TLDR:
Generally, this is the same as the advice and common practice used by taxpayers and accountants. Although, the exception here is the clarification of the specific identification rule. We'll talk about that below.
Summary:
The IRS has issued their long-awaited guidance on the tax treatment for cryptocurrencies. You can read their FAQ On Virtual Currency Transactions on the IRS website.
This is the first official guidance since the original 2014-21 notice in April 2014.

IRS Cryptocurrency Tax FAQ

We have gone into more detail for some of the main points in their FAQ.

Hard forks and airdrops

Despite peculiar wording by the IRS, they have confirmed that receipt of crypto from an airdrop or fork is to be treated as income, and so subject to income tax.
ordinary income equal to the fair market value of the new cryptocurrency when it is received, which is when the transaction is recorded on the distributed ledger, provided you have dominion and control over the cryptocurrency so that you can transfer, sell, exchange, or otherwise dispose of the cryptocurrency
However, these drops typically have no market (perhaps a futures market) until they have existed for a period of time, so establishing a value could be difficult. It is possible that the value could be zero right at that exact moment it is recorded on the distributed ledger.
In order to receive income, you must have dominion and control over these new crypto. This effectively means you must be able to manage it; typically you would have the private keys or it is immediately available in a custodial wallet or online account, e.g. Coinbase.
If the crypto doesn't appear in your wallet, or you don't get control of it until a later date, then that later date is used to calculated the USD income value.
This had been a common question among crypto traders: if BTC was forked off into a new "BTC" coin, which you might not even have been aware of, do you still have income? The answer is no. Unless, you subsequently get access to those new coins, in which case you do have income on the date you receive control.
When you have income for an airdrop or fork, this also sets the cost basis (value and date) for any subsequent capital gains calculations.

Fair Market Value (FMV)

FMV is used to give something a value, i.e. what it's worth. If you list a bike for sale, you might research the prices for which other people are selling. Those prices give a FMV. But it you sell your bike and someone buys it for $100, then the bike's FMV was $100.
With crypto, sometimes we need to know FMV because we are not trading directly for dollars.
For example, if you sell 1 BTC for 150 LTC, you are disposing of the 1 BTC at FMV. You need to know the USD value in order to know the proceeds and to calculate any capital gains or losses.
So, first, if this was traded on an exchange, we use the spot price on the exchange at that time. This is true even if the transaction was off-chain.
However, where no FMV exists, such as a peer-to-peer transaction, then you have to get the value from elsewhere.
So, secondly, use the FMV of the service or product you are exchanging. With the above bike example, say buying it with crypto, the FMV would be that of the bike itself (the price it would have sold for USD).
Lastly, when no value can be obtained, then use a service that provides a consistent worldwide indices value (the IRS are calling this an "explorer" but that is a confusing term as blockchain explorers may not provide a USD value). If you do not use an "explorer" value, you can use an "accurate representation of the cryptocurrency's market value". Much like with fiat, this means using an establish and consistent source.

FIFO and Specific Identification

Advice from most tax preparers and accountants has been to err on the side of caution and go with First-In First-Out (FIFO). Basically, if you bought 1 BTC for $9,000 and later another for $10,000, when you come to sell 1 BTC (or partial) you would use the cost of the first 1 BTC that you had acquired.
This is the default IRS cost basis method and would not be challenged.
Some taxpayers had filed using specific identification, where FIFO was not used and instead the "lot" that was sold was chosen from their wallets. Summary strategies could also be employed, such as Last-In Last-Out (LIFO), where the basis of the most recently acquired crypto is used instead.
These other strategies, such as last-in first-out, closest-cost or lowest-cost, often try to minimize the gains per transaction and defer them until later.
This is the biggest change in the new IRS guidance and confirms that specific identification can be used. However, you must be able to document this, which the IRS describes as:
You may identify a specific unit of virtual currency either by documenting the specific unit’s unique digital identifier such as a private key, public key, and address, or by records showing the transaction information for all units of a specific virtual currency, such as Bitcoin, held in a single account, wallet, or address.This information must show (1) the date and time each unit was acquired, (2) your basis and the fair market value of each unit at the time it was acquired, (3) the date and time each unit was sold, exchanged, or otherwise disposed of, and (4) the fair market value of each unit when sold, exchanged, or disposed of, and the amount of money or the value of property received for each unit.
There is no guidance if any extra information should be reported, but it is generally the same information that is added to the 8949 form where capital gains are reported.

Gifts and Donations

Similar to gifts of stocks or property, the rules regarding cost basis have remained unchanged. Received gifts are not immediate income but you do still recognize an capital gains income when you later come to sell, exchange or dispose of the cryptocurrency.
You can use the original basis (with documentation) from the giver in order to make use of long-term gains. However, your received basis becomes the lesser of the giver's cost basis and the FMV of the gift on the date you received it. This is to prevent from gifting losses. Also, if you do not have documentation showing the gift cost basis, then your basis is zero, i.e. you must declare 100% as capital gains.
Donations to registered charities do not recognize income, gains or losses. The value of your charitable donation is the FMV on the date of the gift if you have held the crypto for more than a year. For a year or less, it is lesser of the crypto's cost basis or its FMV on the day of the gift.

What was not mentioned

There are still some key questions and ambiguities that tax professionals have been looking for clarification. For instance, with hard forks and airdrops, if you have the private keys but no software, does that count as control?
Airdrop and forks generally have no markets when they are created, so is there a zero FMV? And should you take the value only when you exercise control?
Can specific identification be used at will or must it be done consistently?
Were 1031 "like-kind" exchanges ever a valid approach before 2018?

Guidance is retroactive

Finally, be aware that IRS guidance is always retroactive, unless otherwise stated, and so should be applied to past and future crypto transactions. If you have not followed these rules then you should consult with your tax professional and may need to file an amendment.
submitted by Sal-BitcoinTax to CryptoMarkets [link] [comments]

Facebook Misinformation Cleanup Targeted Pages Meant to Mislead on Middle East Ideas

Facebook said it took down a contingent of groups, pages, and accounts attempting to artificially boost certain ideas in the Middle East.
The group included 259 Facebook accounts, 102 Facebook Pages, and five Facebook Groups and spent $167,000 on Facebook ads to boost their messages, the company said in a blog post. The accounts discussed “topics including alleged support of terrorist groups by Qatar and Turkey, Iran’s activity in Yemen, the conflict in Libya, successes of the Saudi-led coalition in Yemen, and independence for Somaliland.”
Facebook has been working to remove political messages that get a boost from people misidentifying themselves to prevent a repeat of the type of manipulation that occurred in the 2016 election campaign. The company said the activity it shut down was linked to two Middle East marketing firms—New Waves in Egypt and Newave in the UAE.
Since the 2016 presidential election, Facebook has removed numerous networks of coordinated accounts originating in countries including Russia and Iran. While these accounts tend to post content that is political or divisive in nature, Facebook maintains that it removes them for misleading others on the platform about their true identity—not for the content of their posts.

More must-read stories from Fortune:

Q&A: Microsoft CEO Satya Nadella wants to conquer cloud gaming
—What CEOs, bankers, and tech execs think about a coming recession
—Facebook is working on sci-fi tech that would let users type with their minds
—Blockchain launches “fastest” crypto exchange in the world
—Apple is only paying thousands to squash its million-dollar bug problem
Catch up with Data Sheet, _Fortune_‘s daily digest on the business of tech.
* More Details Here
submitted by acerod1 to Business_Analyst [link] [comments]

Good news for the Dexes! Joint Statement on Broker-Dealer Custody of Digital Asset Securities

Source: https://www.finra.org/newsroom/2019/joint-statement-broker-dealer-custody-digital-asset-securities

Joint Statement on Broker-Dealer Custody of Digital Asset Securities

WASHINGTON – Market participants have raised questions concerning the application of the federal securities laws and the rules of the Financial Industry Regulatory Authority (“FINRA”) to the potential intermediation—including custody—of digital asset securities1 and transactions. In this statement, the staffs of the Division of Trading and Markets (the “Division”) and FINRA (collectively, the “Staffs”)—drawing upon key principles from their historic approach to broker-dealer regulation and investor protection—have articulated various considerations relevant to many of these questions, particularly under the SEC’s Customer Protection Rule applicable to SEC-registered broker-dealers.2
As a threshold matter, it should be recognized by market participants that the application of the federal securities laws, FINRA rules and other bodies of laws to digital assets, digital asset securities and related innovative technologies raise novel and complex regulatory and compliance questions and challenges. For example, and as discussed in more detail below, the ability of a broker-dealer to comply with aspects of the Customer Protection Rule is greatly facilitated by established laws and practices regarding the loss or theft of a security, that may not be available or effective in the case of certain digital assets.
The Staffs are aware of, and encourage and support, efforts to address these issues such that compliance with the Customer Protection Rule and other federal securities laws and FINRA rules is reasonably practicable. In recent months, the Staffs have been engaged with industry participants regarding how industry participants believe a particular custody solution for digital asset securities would meet the possession or control standards prescribed in the SEC’s Customer Protection Rule. The Staffs have found these discussions to be very informative and appreciate market participants’ ongoing engagement on these issues. The Staffs encourage and support innovation and look forward to continuing our dialogue as market participants work toward developing methodologies for establishing possession or control over customers’ digital asset securities. Contact information for Commission and FINRA staffs is provided at the end of this statement.
Importance of the Customer Protection Rule
Entities seeking to participate in the marketplace for digital asset securities must comply with the relevant securities laws.3 An entity that buys, sells, or otherwise transacts or is involved in effecting transactions in digital asset securities for customers or its own account is subject to the federal securities laws, and may be required to register with the Commission as a broker-dealer and become a member of and comply with the rules of a self-regulatory organization (“SRO”), which in most cases is FINRA. Importantly, if the entity is a broker-dealer, it must comply with broker-dealer financial responsibility rules,4 including, as applicable, custodial requirements under Rule 15c3-3 under the Securities Exchange Act of 1934 (the “Exchange Act”), which is known as the Customer Protection Rule.
The purpose of the Customer Protection Rule is to safeguard customer securities and funds held by a broker-dealer, to prevent investor loss or harm in the event of a broker-dealer’s failure, and to enhance the Commission’s ability to monitor and prevent unsound business practices. Put simply, the Customer Protection Rule requires broker-dealers to safeguard customer assets and to keep customer assets separate from the firm’s assets, thus increasing the likelihood that customers’ securities and cash can be returned to them in the event of the broker-dealer’s failure. The requirements of the Customer Protection Rule have produced a nearly fifty year track record5 of recovery for investors when their broker-dealers have failed. This record of protecting customer assets held in custody by broker-dealers stands in contrast to recent reports of cybertheft,6 and underscores the need to ensure broker-dealers’ robust protection of customer assets, including digital asset securities.
Various unregistered entities that intend to engage in broker-dealer activities involving digital asset securities are seeking to register with the Commission and have submitted New Membership Applications (“NMAs”) to FINRA. Additionally, various entities that are already registered broker-dealers and FINRA members are seeking to expand their businesses to include digital asset securities services and activities. Under FINRA rules, a firm is prohibited from materially changing its business operations (e.g., engaging in material digital asset securities activities for the first time) without FINRA’s prior approval of a Continuing Membership Application (“CMA”).7
The NMAs and CMAs currently before FINRA are diverse: Some of the NMAs and CMAs cover proposed business models that would not involve the broker-dealer engaging in custody of digital asset securities. On the other hand, some NMAs and CMAs include the custodying of digital asset securities, and therefore implicate the Customer Protection Rule, among other requirements.
Some of these entities have met with the Staffs to discuss how they propose to custody digital asset securities in order to comply with the broker-dealer financial responsibility rules. These discussions have been informative. The specific circumstances where a broker-dealer could custody digital asset securities in a manner that the Staffs believe would comply with the Customer Protection Rule remain under discussion, and the Staffs stand ready to continue to engage with entities pursuing this line of business.
Noncustodial Broker-Dealer Models for Digital Asset Securities
As noted, some entities contemplate engaging in broker-dealer activities involving digital asset securities that would not involve the broker-dealer engaging in custody functions. Generally speaking, noncustodial activities involving digital asset securities do not raise the same level of concern among the Staffs, provided that the relevant securities laws, SRO rules, and other legal and regulatory requirements are followed.8The following are examples of some of the business activities of this type that have been presented or described to the Staffs.
Considerations for Broker-Dealer Custody of Digital Asset Securities
Whether a security is paper or digital, the same fundamental elements of the broker-dealer financial responsibility rules apply. The Staffs acknowledge that market participants wishing to custody digital asset securities may find it challenging to comply with the broker-dealer financial responsibility rules without putting in place significant technological enhancements and solutions unique to digital asset securities. As the market, infrastructure, and law applicable to digital asset securities continue to develop, the Staffs will continue their constructive engagement with market participants and to gather additional information so that they may better respond to developments in the market10while advancing the missions of our respective organizations: for the SEC, to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation; and for FINRA, to provide investor protection and promote market integrity.
The Customer Protection Rule
Overview
A broker-dealer seeking to custody digital asset securities must comply with the Customer Protection Rule. As noted, the rule is designed principally to protect customers of a registered broker-dealer from losses and delays in accessing their securities and cash that can occur if the firm fails. The rule requires the broker-dealer to safeguard customer securities and cash entrusted to the firm, as discussed below. If the broker-dealer fails, customer securities and cash should be readily available to be returned to customers.11 In the event the broker-dealer were to be liquidated under SIPA, the SIPA trustee would be expected to step into the shoes of the broker-dealer and expected to be able to transfer, sell, or otherwise dispose of assets in accordance with SIPA.12
Among its core protections for customers, Rule 15c3-3 requires a broker-dealer to physically hold customers’ fully paid and excess margin securities or maintain them free of lien at a good control location.13 Generally, a broker-dealer may custody customer securities with a third-party custodian (e.g., the Depository Trust Company or a clearing bank),14 and uncertificated securities, such as mutual funds, may be held at the issuer or at the issuer’s transfer agent.15 In either case, there is a third party that controls the transfer of the securities. This traditional securities infrastructure (including, for example, related laws of property and security) also has processes to reverse or cancel mistaken or unauthorized transactions.
Considerations for Digital Asset Securities
There are many significant differences in the mechanics and risks associated with custodying traditional securities and digital asset securities. For instance, the manner in which digital asset securities are issued, held, and transferred may create greater risk that a broker-dealer maintaining custody of them could be victimized by fraud or theft, could lose a “private key” necessary to transfer a client’s digital asset securities, or could transfer a client’s digital asset securities to an unknown or unintended address without meaningful recourse to invalidate fraudulent transactions, recover or replace lost property, or correct errors. Consequently, a broker-dealer must consider how it can, in conformance with Rule 15c3-3, hold in possession or control digital asset securities.
In particular, a broker-dealer may face challenges in determining that it, or its third-party custodian, maintains custody of digital asset securities.16 If, for example, the broker-dealer holds a private key, it may be able to transfer such securities reflected on the blockchain or distributed ledger. However, the fact that a broker-dealer (or its third party custodian) maintains the private key may not be sufficient evidence by itself that the broker-dealer has exclusive control of the digital asset security (e.g., it may not be able to demonstrate that no other party has a copy of the private key and could transfer the digital asset security without the broker-dealer’s consent).17 In addition, the fact that the broker-dealer (or custodian) holds the private key may not be sufficient to allow it to reverse or cancel mistaken or unauthorized transactions. These risks could cause securities customers to suffer losses, with corresponding liabilities for the broker-dealer, imperiling the firm, its customers, and other creditors.
The Books and Records and Financial Reporting Rules
Overview
The broker-dealer recordkeeping and reporting rules18 require a broker-dealer, among other things, to make and keep current ledgers reflecting all assets and liabilities,19 as well as a securities record reflecting each security carried by the broker-dealer for its customers and all differences determined by the count of customer securities in the broker-dealer’s possession or control compared to the result of the count with the broker-dealer’s existing books and records.20 The financial responsibility rules also require that broker-dealers routinely prepare financial statements,21 including various supporting schedules particular to broker-dealers, such as Computation of Net Capital under Rule 15c3-1 and Information Relating to the Possession or Control Requirements under Rule 15c3-3 under the Exchange Act.22
The books, records, and financial reporting requirements are designed to ensure that a broker-dealer makes and maintains certain business records to assist the firm in accounting for its activities. These rules also assist securities regulators in examining for compliance with the federal securities laws and as such are an integral part of the financial responsibility program for broker-dealers.
Considerations for Digital Asset Securities
The nature of distributed ledger technology, as well as the characteristics associated with digital asset securities, may make it difficult for a broker-dealer to evidence the existence of digital asset securities for the purposes of the broker-dealer’s regulatory books, records, and financial statements, including supporting schedules. The broker-dealer’s difficulties in evidencing the existence of these digital asset securities may in turn create challenges for the broker-dealer’s independent auditor seeking to obtain sufficient appropriate audit evidence when testing management’s assertions in the financial statements during the annual broker-dealer audit.23 We understand that some firms are considering the use of distributed ledger technology with features designed to enable firms to meet recordkeeping obligations and facilitate prompt verification of digital asset security positions (e.g., regulatory nodes or permissioned distributed ledger technologies). Broker-dealers should consider how the nature of the technology may impact their ability to comply with the broker-dealer recordkeeping and reporting rules.
Securities Investor Protection Act of 1970
Overview
Generally, a broker-dealer that fails and is unable to return the customer property that it holds would be liquidated in accordance with SIPA. Under SIPA, securities customers have a first priority claim to cash and securities held by the firm for securities customers. Customers also are eligible for up to $500,000 in protection (of which up to $250,000 can be used for cash claims) if the broker-dealer is missing customer assets. These SIPA protections apply to a “security” as defined in SIPA and cash deposited with the broker-dealer for the purpose of purchasing securities.24 They do not apply to other types of assets, including, importantly, assets that are securities under the federal securities laws but are excluded from the definition of “security” under SIPA.25
Considerations for Digital Asset Securities
In the case of a digital asset security that does not meet the definition of “security” under SIPA, and in the event of the failure of a carrying broker-dealer, SIPA protection likely would not apply and holders of those digital asset securities would have only unsecured general creditor claims against the broker-dealer’s estate.26 Further, uncertainty regarding when and whether a broker-dealer holds a digital asset security in its possession or control creates greater risk for customers that their securities will not be able to be returned in the event of a broker-dealer failure.27 The Staffs believe that such potential outcomes are likely to be inconsistent with the expectations of persons who would use a broker-dealer to custody their digital asset securities.
Control Location Applications
As a related matter, the Staffs have received inquiries from broker-dealers, including ATSs, wishing to utilize an issuer or transfer agent as a proposed “control location” for purposes of the possession or control requirements under the Customer Protection Rule. As described to the Staffs, this would involve uncertificated securities where the issuer or a transfer agent maintains a traditional single master security holder list, but also publishes as a courtesy the ownership record using distributed ledger technology. While the issuer or transfer agent may publish the distributed ledger, in these examples, the broker-dealers have asserted that the distributed ledger is not the authoritative record of share ownership. To the extent a broker-dealer contemplates an arrangement of this type, the Division will consider whether the issuer or the transfer agent can be considered a satisfactory control location pursuant to an application under paragraph (c)(7) of Rule 15c3-3.28
As noted, the Staffs encourage and support innovation in the securities markets and look forward to continuing to engage with investors and industry participants as the marketplace for digital asset securities develops. To contact Commission staff for assistance, please visit the Commission’s FinHub webpage or contact Thomas K. McGowan, Associate Director, at (202) 551-5521 or Raymond Lombardo, Assistant Director, at (202) 551-5755. To contact FINRA staff for assistance, please visit FINRA’s FinTech webpage or contact Kosha Dalal, Associate Vice President and Associate General Counsel, FINRA, (202) 728-6903.
1 For the purposes of this statement, the term “digital asset” refers to an asset that is issued and transferred using distributed ledger or blockchain technology, including, but not limited to, so-called “virtual currencies,” “coins,” and “tokens.” A digital asset may or may not meet the definition of a “security” under the federal securities laws. For the purposes of this statement, a digital asset that is a security is referred to as a “digital asset security.”
2 This statement represents staff views of the Division of Trading and Markets and FINRA. This statement is not a rule, regulation, guidance, or statement of the U.S. Securities and Exchange Commission (“SEC” or “Commission”) or FINRA, and the Commission and FINRA’s Board have neither approved nor disapproved its content. This statement does not alter or amend applicable law and has no legal force or effect.
3 For purposes of this statement, the Staffs use the term “entities” to refer to both firms and individuals.
4 The financial responsibility rules include Rule 15c3-1 (the net capital rule), Rule 15c3-3 (the customer protection rule), Rule 17a-3 (the record making rule), Rule 17a-4 (the record retention rule), Rule 17a-5 (the financial reporting rule), and Rule 17a-13 (the quarterly securities count rule) under the Securities Exchange Act of 1934 (“Exchange Act”). This statement does not address all federal securities laws that may be implicated by a broker-dealer seeking to maintain custody of digital asset securities. Further, this statement does not address other securities laws or rules that may apply to digital asset securities.
5 Rule 15c3-3 was adopted by the Commission in 1972. See Broker-Dealers; Maintenance of Certain Basic Reserves, Exchange Act Release No. 9856 (Nov. 10, 1972), 37 Fed. Reg. 25224 (Nov. 29, 1972).
6 For example, one blockchain forensic analysis firm estimated that approximately $1.7 billion worth of bitcoin and other digital assets had been stolen in 2018, of which approximately $950 million resulted from cyberattacks on bitcoin trading platforms. The estimate of total losses in 2018 is 3.6 times higher than the estimate of such losses in 2017. See CipherTrace, Cryptocurrency Anti-Money Laundering Report, 2018 Q4, at 3 (Jan. 2019) (available at: https://ciphertrace.com/crypto-aml-report-2018q4/).
7 Firms can discuss with FINRA whether a contemplated change in business operations such as engaging in digital asset securities activities may require the filing of a CMA through the materiality consultation process.
8 These business models and transactions must comply with other provisions of the securities laws or regulations. The Staffs offer no views about whether such business models would be in compliance with other securities laws or regulations.
9 Entities that perform functions to facilitate the clearance and settlement of transactions in digital asset securities may be required to register as a clearing agency under Section 17A of the Exchange Act. See 15 U.S.C. 78q-1.
10 See, e.g., Statement on Digital Asset Securities Issuance and Trading, Division of Corporation Finance, Division of Investment Management, and Division of Trading and Markets, Commission (Nov. 16, 2018) (available at: https://www.sec.gov/news/public-statement/digital-asset-securites-issuuance-and-trading); see also e.g., Engaging on Non-DVP Custodial Practices and Digital Assets, letter issued by staff, Division of Investment Management, Commission, dated Mar. 12, 2019 (available at: https://www.sec.gov/investment/engaging-non-dvp-custodial-practices-and-digital-assets).
11 See Financial Responsibility Rules for Broker-Dealers, Exchange Act Release No. 70072 (July 30, 2013), 78 Fed. Reg. 51824, 51826 (Aug. 21, 2013). In addition, if the broker-dealer is liquidated in a formal proceeding under the Securities Investor Protection Act of 1970 (“SIPA”), the securities and cash held by the broker-dealer for its customers would be isolated and readily identifiable as “customer property” and, consequently, available to be distributed to customers ahead of other creditors. Id.
12 See 15 U.S.C. 78fff-1 (setting forth the powers and duties of a SIPA trustee).
13 See paragraphs (b) and (c) of Rule 15c3-3. An entity’s designation as a good control location is based, in part, on its ability to maintain exclusive control over customer securities. See, e.g., paragraph (c)(5) of Rule 15c3-3 (deeming a “bank” as defined in Section 3(a)(6) of the Exchange Act to be a good control location so long as, among other things, the bank has acknowledged that customer securities “are not subject to any right, charge, security interest, lien or claim of any kind in favor of a bank or any person claiming through the bank” and the securities are in the custody or control of the bank).
14 See paragraphs (c)(1) and (c)(5) of Rule 15c3-3.
15 The Commission often receives applications under paragraph (c)(7) of Rule 15c3-3 to designate an issuer or the transfer agent of various types of uncertificated securities as a control location. The Division has delegated authority to “find and designate as control locations for purposes of Rule 15c3-3(c)(7) [under the Exchange Act] certain broker-dealer accounts which are adequate for the protection of customer securities.” See 17 CFR 200.30-3(a)(10)(i). The Commission has stated that mutual funds in particular may be held at the issuer or the issuer’s transfer agent. See, e.g., Broker-Dealer Reports, Exchange Act Release No. 70073 (July 30, 2013), 78 Fed. Reg. 51910, 51951 (Aug. 21, 2013) (stating that “[g]enerally, mutual funds issue securities only in book-entry form. This means that the ownership of securities is not reflected on a certificate that can be transferred but rather through a journal entry on the books of the issuer maintained by the issuer’s transfer agent. A broker-dealer that holds mutual funds for customers generally holds them in the broker-dealer’s name on the books of the mutual fund”). See also Form Custody for Broker-Dealers, 17 CFR 249.639 (providing broker-dealers with a field to indicate that they custody mutual fund securities with a transfer agent). The Division has also previously issued no-action letters regarding the maintenance of certain other uncertificated securities at the transfer agent. See, e.g., letter to Fantex Brokerage Services, LLC from Mark M. Attar, Senior Special Counsel, Division of Trading and Markets, Commission, dated Dec. 19, 2014 (providing that the staff would not recommend enforcement action if a broker-dealer treats a transfer agent for uncertificated securities as a good control location, under certain circumstances). These prior no-action letters do not address whether blockchain or distributed ledger technology, in connection with the maintenance of the single master security holder list, establishes control of uncertificated securities by the issuer (or transfer agent).
16 See, e.g., paragraph (d) of Rule 15c3-3 (requiring that, not later than the next business day, a broker-dealer, as of the close of the preceding business day, shall determine the quantity of fully paid securities and excess margin securities in its possession or control and the quantity of such securities not in its possession or control).
17 Cf. supra note 13.
18 See generally Rules 17a-3, 17a-4, and 17a-5.
19 See paragraph (a)(2) of Rule 17a-3.
20 See paragraph (a)(5) of Rule 17a-3.
21 See generally Rule 17a-5.
22 See paragraph (d)(2)(ii) of Rule 17a-5.
23 See generally PCAOB Auditing Standard 1105, Audit Evidence (describing sufficient appropriate audit evidence and stating that audit evidence consists of information that supports and corroborates management’s assertions regarding the financial statements and information that contradicts such assertions).
24 The SIPA definition of “security” is different than the federal securities laws definitions. See 15 U.S.C. 78lll(14) (excluding from the SIPA definition of “security” an investment contract or interest that is not the subject of a registration statement with the Commission pursuant to the provisions of the Securities Act of 1933). This means there may be digital assets that are: (1) securities under the federal securities laws and SIPA, and thus are protected by SIPA; (2) securities under the federal securities laws, but not under SIPA, and thus not protected by SIPA; or (3) not securities under the federal securities laws and therefore not protected by SIPA.
25 If a broker-dealer holds securities that are not protected by SIPA, the broker-dealer must nevertheless comply with the physical possession or control requirements under Rule 15c3-3 with respect to those securities.
26 Generally, in a SIPA liquidation, assets not included in customer property (other than customer name securities) are liquidated and paid out to general creditors on a pro rata basis. See 15 U.S.C. 78fff-2(c); 15 U.S.C. 78fff(b).
27 See supra note 16.
28 See paragraph (c)(7) of Rule 15c3-3.
submitted by godsslave to CryptoCurrency [link] [comments]

Bitcoin Surpasses 1 Million Daily Active Addresses

Bitcoin Surpasses 1 Million Daily Active Addresses

Bitcoin just passed an interesting milestone today, one we haven’t seen since November 27, 2017. According to CoinMetrics.io, there are now over a million daily active addresses, a number that is defined as the number of unique “from” or “to” addresses used per day.
https://preview.redd.it/mlox2h21iu431.png?width=2614&format=png&auto=webp&s=bc199cc07f888e9ee343490b352808e27a0818b4
Kevin Rooke noticed the move and Tweeted:
When Bitcoin first broke 1 million active addresses (Nov 27, 2017), 1 BTC was $9,352 and the median tx fee was $3.23. Yesterday 1 BTC was $8,230 and the median tx fee was $1.33.
While DAA doesn’t mean much in practice, it’s an important metric in that it shows actual, unique transfers separate from the various direct transfers to and from bigger exchanges. The fact that there are over a million unique addresses transacting on the blockchain is, as they say, good for bitcoin.
https://preview.redd.it/jh3d7l52iu431.png?width=773&format=png&auto=webp&s=1f3d674bdf969f9be6976522851b1bac9b7314ec

To put this number in perspective, however, we can point to Uber’s estimated 14 million rides per day or the estimated 798,877 iPhones a day Apple sold in 2017. While these are Apples to oranges comparisons, it is interesting to note that bitcoin is doing the transaction volume of some of the biggest brands in the world.
submitted by Rajladumor1 to omgfin [link] [comments]

Official SEC/Bats docs/feeds/lists

TL;DR: HODL HOLD
These are probably dotted around Bitcoin, but I just thought it might be handy to have them all in one place.
Bats BZX Rule Filings
News Feeds
SEC BatsBZX Rulemaking
SEC docs, FYI
SEC EDGAR Filings for WINKLEVOSS BITCOIN TRUST
Finally...
Don't forget to set a STOPtriggered at STOP, then executed at market price or LIMITtriggered and executed at LIMIT price if you are on an exchange. If you are on Coinbase, it is trivial to migrate to GDAX to accomplish this. Then sit back! Or be geeky if you have the time and create a bot using a combination of exchange API's and RSS feeds...
BTW, have you ever visited COIN's website? Not that it particularly matters, but it's pretty useless... I would have made it the centerpiece of the action... anyway...
submitted by epsilondelta17 to Bitcoin [link] [comments]

PSA: 1031 Like-Kind Exchange Does NOT Apply to Cryptocurrency!

There is so much bias and bad information regarding this contentious issue, so I'm going to try to spell this out for your benefit and mine, with citations.
As a foreword, please realize Forbes is not an authoritative source (neither is Robert Wood, Esq.'s click-bait piece that uses ambiguous language such as "arguably", "may", "might", "one can always make arguments", ad nauseam.); when in doubt look to IRS code, the new tax bill, burden of proof during audits, etc.--language straight from the horse's mouth, and speak with your tax professionals (preferably more than one).
Q: Do crypto-to-crypto transactions qualify for 1031 like-kind exchange (and therefore tax is deferred until the final transaction back to fiat)?
A: Definitive NO after 2018, "most likely" NO even before 2018 (I put the caveat of most likely here because technically you can argue it, but I wouldn't--for the reasons provided below).
1. 1031 Like-Kind Exchange is an EXCEPTION to the GENERAL RULE
It's important to keep in mind the backdrop that 1031 is the exception, and not the general rule, to wit --
Whenever you sell business or investment property and you have a gain, you generally have to pay tax on the gain at the time of sale. IRC Section 1031 provides an exception and allows you to postpone paying tax on the gain if you reinvest the proceeds in similar property as part of a qualifying like-kind exchange. [https://www.irs.gov/newsroom/like-kind-exchanges-under-irc-code-section-1031]
Moreover, the IRS actually already provided guidance that "virtual currency" does not qualify for 1031, as far back as 2014.
2. Pre-2018 Guidance Clearly States that 1031 Does Not Apply to "Virtual Currency".
The 2014 IRS Notice [https://www.irs.gov/pub/irs-drop/n-14-21.pdf] provides, and I quote --
Q-6: Does a taxpayer have gain or loss upon an exchange of virtual currency for other property?
A-6: Yes. If the fair market value of property received in exchange for virtual currency exceeds the taxpayer’s adjusted basis of the virtual currency, the taxpayer has taxable gain. The taxpayer has a loss if the fair market value of the property received is less than the adjusted basis of the virtual currency. See Publication 544, Sales and Other Dispositions of Assets, for information about the tax treatment of sales and exchanges, such as whether a loss is deductible.
Q-1: How is virtual currency treated for federal tax purposes?
A-1: For federal tax purposes, virtual currency is treated as property.
While guidance is not law (now law in 2018), it does make the rule implicit and therefore hard to argue against.
Now some have suggested playing word games here with the IRS, that is, what is the container "other property", does it include cryptocurrency or does it mean other property not including cryptocurrency? My take? "Other property" is not in caps, it just plainly means other property. When you trade Bitcoin (one cryptocurrency property) for Ripple (another cryptocurrency property), that is a taxable event. Just like when you trade a car for a truck, that is not a like-kind exchange.
In personal property exchanges, the rules pertaining to what qualifies as like-kind are more restrictive than the rules pertaining to real property. As an example, cars are not like-kind to trucks. [https://www.irs.gov/newsroom/like-kind-exchanges-under-irc-code-section-1031]
But let's suppose you want to play word games with the IRS (which I don't recommend) and jump down the rabbit hole, you would be arguing up a hill and most likely fail -- why? keep reading.
3. Correctly Reporting 1031 Transactions via Form 8824
In order to qualify for like-kind exchange on a qualified property in a qualified exchange, you have to attach a form 8824 [https://www.irs.gov/pub/irs-pdf/f8824.pdf] and correctly report said qualifying transactions, not to mention retain the transaction records to back that up (the taxpayer's duty). Instructions here [https://www.irs.gov/pub/irs-pdf/i8824.pdf].
For argument's sake, let's assume you did this correctly.
4. Get Audited and Prepare to Argue (Up the Hill)
The IRS sends you a letter disputing that your crypto A <-> crypto B <-> crypto C, etc., do not qualify for 1031, get ready to rumble!
During the proceedings, the burden of proof is on you to establish that yes, your crypto exchanges do qualify for like-kind exchange and you try your best to avoid a penalty of an understatement in your taxes reported. If the underreporting is substantial (10% or > $5k, which is most likely), 26 CFR 1.6662-4 requires that you show that you have it on "substantial authority" of the 1031 tax treatment of your crypto pairs.
The substantial authority standard is an objective standard involving an analysis of the law and application of the law to relevant facts. The substantial authority standard is less stringent than the more likely than not standard (the standard that is met when there is a greater than 50-percent likelihood of the position being upheld), but more stringent than the reasonable basis standard as defined in § 1.6662-3(b)(3). [https://www.law.cornell.edu/cftext/26/1.6662-4]
Here is how the audit will likely go:
IRS Agent: do you have it on substantial authority that your reported crypto A <-> crypto B <-> crypto C qualifies under 1031, understanding the 1031 is an exception to the general rule that you must report each exchange as a gain or loss?
You: (thinking you're super smart, you pull out the 2014 guidance and ask the agent) but look -- here it says that I only have to report a gain/loss when exchanging virtual currency for "other property"! But what does other property mean? It might be exclusive of cryptocurrency! (grinning as you think you pulled a fast one.)
IRS Agent: so let me see if I understand, your position is that an exception (1031) to the rule (paying tax at time of transaction) applies to crypto because the IRS did not not call it an exception. I'm sorry but that position doesn't meet the requirements of CFR 1.6662-4(d)(2). IRS precedent on like-kind exchanges are very narrow, even deviation in purpose of similar type property is not treated as like-kind... cites string of precedent cases @ https://www.irs.gov/pub/irs-wd/0035005.pdf
You: ...
IRS Agent: let's see, after adding back interest, and adding a 20% penalty, your tax debt comes out to $XXXXX, would you like to pay that in lump sum or in installments?
For what it's worth I am an attorney (not tax) but have consulted numerous CPAs and colleague tax attorneys on this subject. But DISCLAIMER: this is not legal advice but mere information for your perusal, and you should always speak to your own CPA / tax attorney regarding your unique legal and tax circumstances (preferably more than one as most may not give you a definite answer on this subject).
Now feel free to down vote, deny deny deny, and get folks audited (but honestly if you can find a legally sound rebuttal I would LOVE to hear it as it would also save me a sizable chunk in taxes).
EDIT: Just one final important comment: for those waiting to defer paying taxes because it's too complicated... if it all comes crashing down tomorrow and your coins total a loss -- you STILL have to pay taxes for 2017 and can't deduct the loss until 2018 reporting, i.e. trading crypto with borrowed money is stupid.
submitted by xenxes to CryptoCurrency [link] [comments]

TMX’s (Toronto Stock Exchange) Shorcan Announces Cryptocurrency Initiatives

March 22, 2018 (TORONTO) – TMX Group today announced that its wholly-owned subsidiary, Shorcan Digital Currency Network (Shorcan DCN) has entered into an agreement with Paycase Financial (Paycase), a Toronto-based, value network and trustware provider for decentralized financial services, most widely known for their mobile-first remittance platform, to launch a new cryptocurrency brokerage service focused on Bitcoin and Ether. BMO Financial Group will provide Shorcan DCN with banking services as part of the payment and settlement infrastructure.
Shorcan DCN is designed to leverage the combination of Shorcan Brokers' (Shorcan) expertise in providing clients in the Canadian financial industry with liquid, efficient and reliable brokerage services with Paycase's premier cryptocurrency data aggregation platform and established worldwide network of industry leaders and participants. Concurrently with the establishment of brokerage services, Shorcan DCN, together with Paycase, will create proprietary-based cryptocurrency benchmarks based on consolidated data from the world's leading crypto exchanges as well as over the counter, or OTC, brokered volume.
"We are excited to enter in to this agreement with Paycase, an industry leader with an innovative and entrepreneurial spirit," said Peter Conroy, President, Shorcan. "We look forward to putting in the necessary collaborative work in the days ahead as we strive to make Shorcan DCN a lasting success."
John Lee, Managing Director, Enterprise Innovation & Product Development, TMX Group added: "Shorcan DCN represents a significant step forward in the execution of TMX Group's digital strategy. As new technologies continue to reshape the global financial industry, we continue to explore new ways to evolve our business to address client needs in both traditional and non-traditional markets."
Shorcan DCN is planned for launch in the second quarter of 2018. For more information, please visit shorcandcn.com.
For more information on Paycase, please visit paycasefinancial.com
About TMX Group (TSX: X) TMX Group's key subsidiaries operate cash and derivative markets and clearinghouses for multiple asset classes including equities and fixed income. Toronto Stock Exchange, TSX Venture Exchange, TSX Alpha Exchange, The Canadian Depository for Securities, Montréal Exchange, Canadian Derivatives Clearing Corporation, Trayport and other TMX Group companies provide listing markets, trading markets, clearing facilities, depository services, technology solutions, data products and other services to the global financial community. TMX Group is headquartered in Toronto and operates offices across North America (Montréal, Calgary, Vancouver and New York), as well as in key international markets including London, Beijing and Singapore. For more information about TMX Group, visit our website at www.tmx.com. Follow TMX Group on Twitter: @TMXGroup.
https://www.tmx.com/newsroom?id=650&lang=en
submitted by PoliticalDissidents to BitcoinMarkets [link] [comments]

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How to make money from Bitcoin? - YouTube

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