[{"innerBlocks":[],"postId":304,"name":"core\/freeform","blockType":{"name":"core\/freeform","keywords":[],"attributes":{"content":{"type":"string","source":"raw"},"lock":{"type":"object"},"metadata":{"type":"object"}},"providesContext":[],"usesContext":[],"selectors":[],"supports":{"className":false,"customClassName":false,"reusable":false},"styles":[],"variations":[],"blockHooks":[],"apiVersion":3,"title":"Classic","description":"Use the classic WordPress editor.","category":"text"},"originalContent":" $\"A$ \n\nIn this issue:\n

\u2022 Monetizing Positions in Cryptoassets Without Triggering Taxable Gain or Loss<\/a><\/p>\n<\/a>Multiple Studies Analyze Recent Cryptocurrency Market Trends<\/strong>\n\nBy:\u00a0<\/em>Robert A. Musiala Jr.<\/em><\/a>\n\nA recently issued report from the Blockchain Transparency Institute analyzed high-volume bitcoin \u201ctrading pairs\u201d on various cryptocurrency exchanges and found \u201cclear evidence of wash trading\u201d on 22 of 25 exchanges analyzed. A bitcoin \u201ctrading pair\u201d is an exchange of bitcoin for another type of cryptocurrency (or vice versa), and \u201cwash trading\u201d is a form of market manipulation where an investor simultaneously buys and sells the same financial instrument to create artificial market activity. The report claims to have identified four different \u201cbot strategies\u201d used to artificially inflate bitcoin trading pair volumes via wash trading on cryptocurrency exchanges. According to the report, over 80 percent of the top bitcoin trading pairs volume reported by CoinMarketCap is wash traded, with most of the trading pairs having actual volume under 1 percent of their reported volume.\n\nAnother recent report analyzed website traffic on the most frequently used cryptocurrency exchanges and found that many cryptocurrency exchanges with low website traffic report high transaction volumes. According to the report, this indicates that some cryptocurrency exchanges may be artificially inflating the dollar value of transactions processed on their platforms. Cryptocurrency market manipulation is also the topic of a recently published research paper co-authored by professors from four different universities that provides a detailed examination of \u201cpump and dump\u201d schemes in the cryptocurrency markets. The report\u2019s findings suggest that such schemes are \u201cwidespread and often quite profitable.\u201d\n\nAccording to a recent Bloomberg<\/em> article, a large U.S. hedge fund acknowledged emerging contingencies related to initial coin offerings (ICOs) by citing the risk that a significant percentage of ICOs it had invested in may be found in violation of U.S. securities laws. An analysis published Dec. 17 found rising outflows of Ethereum (ETH) from wallets reportedly controlled by ICO projects, with over 400,000 ETH moving out of ICO team wallets over a 30-day period. Another recently released analysis found that of the over 460 million \u201cpublic key\u201d addresses on the bitcoin blockchain, only about 172 million were \u201ceconomically relevant\u201d in that they are \u201ccontrolled by people or services who currently own bitcoin,\u201d with the remaining 63 percent of addresses used only temporarily to facilitate transactions.\n\nAnother apparent trend, reported by Diar<\/em>, found that institutional bitcoin trading appears to be shifting away from traditional exchanges in favor of over-the-counter markets. Finally, the University of Cambridge has released its 2nd Global Cryptoasset Benchmarking Study<\/em>, which \u201cgathers survey data from more than 180 cryptoasset companies and individuals, covering 47 countries across five world regions\u201d and provides analysis focused on mining, exchange, storage and payments. In one notable finding, the study reports that in the first three quarters of 2018, the number of ID-verified cryptocurrency users almost doubled, increasing from 18 million to 35 million.\n\nFor more information, please check out the following links:\n

\n \tBlockchain Transparency Institute: December 2018 Exchanges Volumes Report<\/a><\/li>\n \t
Analysis of cryptocurrency exchange traffic: Could results hint at faked volume?<\/a><\/li>\n \t
The Economics of Cryptocurrency Pump and Dump Schemes<\/a><\/li>\n \t
Crypto Hedge Fund Warns of Possible ICO Refunds After SEC Decision<\/a><\/li>\n \t
Over 400,000 ETH Left ICO Team Wallets in the Past Thirty Days, Data Shows<\/a><\/li>\n \t
Mapping the Universe of Bitcoin\u2019s 460 Million Addresses<\/a><\/li>\n \t
Institutional Traders Shift to Over-the-Counter Trading Desks?<\/a><\/li>\n \t
Ranks of Crypto Users Swelled in 2018 Even as Bitcoin Tumbled<\/a><\/li>\n \t
2nd Global Cryptoasset Benchmarking Study<\/a><\/li>\n<\/ul>\n<\/a>Stablecoins, \u201cTrading Pairs\u201d and Other Developments in Cryptocurrency Payments<\/strong>\n\nBy:<\/em> Robert A. Musiala Jr.<\/em><\/a>\n\nIn recent developments in cryptocurrency payments, according to reports, the PAX stablecoin, which is backed 1:1 by U.S. dollars, recently exceeded $5 billion in transaction volume in just over three months of its September launch. Another recently launched stablecoin, USD Coin, has been added by the cryptocurrency exchange Binance as a \u201ctrading pair\u201d option for six different cryptocurrencies.\n\nThis week, Coinbase began allowing its retail customers to trade bitcoin in \u201ctrading pairs,\u201d where bitcoin is exchanged for another type of cryptocurrency. Coinbase also recently announced that its U.S. customers now will be able to withdraw cash balances to their accounts at a major U.S. internet payment processor. And startup OpenNode recently announced that it has closed a seed-funding round from a major U.S. venture capital firm to develop a new bitcoin payment processing system for merchants that want to accept bitcoin as payment.\n\nFor more information, please check out the following links:\n
\n \t
PAX Stablecoin Exceeds $5 Billion in Transactions in First 3 Months<\/a><\/li>\n \t
Binance Will Add USDC Quote Pairs into the USD\u24c8 Trading Market\/Tab<\/a><\/li>\n \t
Coinbase Adds Crypto-to-Crypto Trading for Retail Customers<\/a><\/li>\n \t
Instant PayPal withdrawals now available for all U.S. customers<\/a><\/li>\n \t
OpenNode: Bitcoin, for everyday<\/a><\/li>\n<\/ul>\n<\/a>Threat Update: Ransomware, Crypto-mining Malware, BTMs and ICO Fraud Schemes<\/strong>\n\nBy:\u00a0<\/em>Shea M. Leitch<\/em><\/a>\n\nScammers recently delivered messages to various targets threatening to detonate explosive devices carried by an unidentified \u201cmercenary\u201d unless the targets paid a $20,000 ransom to a bitcoin wallet by the end of the business day. The sender(s) targeted individuals in geographically dispersed English-speaking countries, such as the U.S., Canada and New Zealand. Authorities in these jurisdictions have reported that no explosives were actually found.\n\nIn addition to so-called crypto-ransomware, another emerging threat are bitcoin ATMs (BTMs), which according to a recent report are spreading quickly and may pose high risks of money laundering. Perhaps the most pervasive current threat is crypto-mining malware, which, according to a new Threats Report from McAfee Labs, has increased 4,000 percent over the past year.\n\nFinancial regulators in France and Belgium have sought to minimize the impact of cryptocurrency fraud on investors, each blacklisting a number of crypto-related investment websites this week and warning against unauthorized or fraudulent ICOs. The Belgian Financial Services and Markets Authority announcement contained a blunt warning to investors.\n\n\u201cThe principle remains the same: they offer you an investment they claim is\u00a0secure, easy\u00a0and\u00a0very lucrative<\/strong>. They try to inspire confidence by assuring you that you don\u2019t need to be an expert in cryptocurrencies in order to invest in them. They claim to have specialists who will manage your investments for you. You are told that your funds can be withdrawn at any time or that they are guaranteed. In the end, the result is always the same: the victims find themselves unable to recover their money!\u201d (Emphasis in the original)\n\nGreece\u2019s high court issued a ruling this week affirming a lower court\u2019s decision to extradite to France Alexander Vinnik, who is accused of laundering up to $4 billion through the now-defunct cryptocurrency exchange BTC-e. Russia has also sought Vinnik\u2019s extradition. Vinnik\u2019s legal representatives have expressed the belief that his extradition to France will result in his eventual extradition to the United States to face charges of fraud, identity theft, money laundering and a number of other crimes related to his alleged operation of the BTC-e cryptocurrency exchange.\n\nFor more information, please check out the following links:\n
\n \t
Spammed Bomb Threat Hoax Demands Bitcoin<\/a><\/li>\n \t
Bitcoin scammers send bomb threats worldwide, causing evacuations<\/a><\/li>\n \t
Bitcoin ATMs: Even as Bitcoin crashes, these machines are spreading\u2014and they\u2019re perfect vehicles for cleaning dirty cash.<\/a><\/li>\n \t
McAfee: Crypto-Mining Malware Grew By Over 4,000 Percent in 2018<\/a><\/li>\n \t
French Financial Regulator Blacklists Four Crypto Websites for Unauthorized Offerings<\/a><\/li>\n \t
CRYPTOCURRENCY FRAUD: THE FSMA UPDATES ITS LIST OF SUSPICIOUS SITES<\/a><\/li>\n \t
Belgium\u2019s Financial Watchdog Updates Crypto Scam Blacklist to Total 113 Sites<\/a><\/li>\n \t
Greek Supreme Court Rules in Support of Extraditing Alleged Bitcoin Launderer Vinnik to France<\/a><\/li>\n<\/ul>\n<\/a>Blockchain Enterprise Developments in France, Spain and South Korea<\/strong>\n\nBy:\u00a0<\/em>Simone O. Otenaike<\/em><\/a>\n\nAccording to a recent report, French officials plan to invest about $569 million in state-level blockchain projects over the next three years. In the same report, officials expressed a desire to create a more bitcoin-mining-friendly environment in France. Despite these potential initiatives, the country\u2019s commitment to the blockchain and cryptocurrency industries seems tenuous \u2013 just last month, France\u2019s central bank failed to endorse a plan involving the sale of bitcoin at thousands of tobacco kiosks. Meanwhile, Spanish renewable energy company ACCIONA Energ\u00eda launched the GREENCHAIN project, which will use a blockchain platform to track the supply chain of renewable energy from five wind and hydro facilities in Spain to four corporate customers in Portugal in real time. According to reports, ACCIONA Energ\u00eda will be the first entity in Spain and Portugal to trace renewable energy through blockchain technology and allow clients to certify from any location in the world that 100 percent of the energy supplied is green.\n\nIn South Korea, the Ministry of Science, ICT and Future Planning and the Ministry of Oceans and Fisheries announced plans to launch its maritime blockchain pilot project, which will promote efficiency in the country\u2019s container shipping industry. The port-logistics pilot will run for one year out of the Port of Busan, the country\u2019s\u00a0largest\u00a0port, and the fifth-busiest container port worldwide. The pilot is part of the South Korean government\u2019s overall strategy to raise $204 million for blockchain technology by 2022.\n\nFor more information, please check out the following links:\n
\n \t
France: Gov\u2019t Report Recommends $570 Million Blockchain Investment<\/a><\/li>\n \t
ACCIONA will extend blockchain traceability to its renewable generation globally<\/a><\/li>\n \t
Spanish Renewable Energy Operator to Trace Electricity Generation With Blockchain<\/a><\/li>\n \t
South Korean Government Trials Blockchain for Shipping Efficiency Boost<\/a><\/li>\n \t
Korean Gov\u2019t Pilots Blockchain for Logistics Innovation in Country\u2019s Largest Port<\/a><\/li>\n \t
South Korea Pilots Blockchain in Busan<\/a><\/li>\n<\/ul>\n<\/a>UK Issues Cryptocurrency Guidance; US Issues Remain<\/strong>\n\nBy:\u00a0<\/em>Roger M. Brown<\/em><\/a> and <\/em>Nicholas C. Mowbray<\/em><\/a>\n\nThis week, the U.K. tax authorities (HMRC) published guidance on the taxation of cryptoassets<\/a>. The guidance states that HMRC does not view such cryptoassets as currency or money \u2013 which aligns the HMRC view with the general U.K. regulatory position. The guidance identifies three types of cryptoassets:\n
-- Exchange tokens (including bitcoin and other cryptocurrencies)<\/p>\n
-- Utility tokens<\/p>\n
-- Security tokens<\/p>\nThe guidance notes that labels do not control; rather, the functionality and substance do. The guidance focuses on the taxation of exchange tokens while noting that it also provides a beginning discussion point for rules that may ultimately be developed for the other types of tokens.\n\nThe guidance states that, in the vast majority of cases, individuals hold cryptoassets as a personal investment and hence will be liable to pay capital gains tax on any profits arising when they dispose of their cryptoassets. Only in exceptional circumstances would HMRC expect individuals to buy and sell cryptoassets with such frequency, organization and sophistication that the activity amounted to a financial trade \u2013 the profits of which would be subject to income tax rather than capital gains tax.\n\nHMRC specifically notes that it does not consider the buying and selling of cryptoassets to be the same as gambling \u2013 the proceeds of which would be tax-free. This is a clear change of position from their March 2014 guidance, which stated \u201cdepending on the facts, a transaction may be so highly speculative that it is not taxable or any losses relievable. For example gambling or betting wins are not taxable.\u201d\n\nUnder the U.K. guidance, cryptoassets received from mining or from airdrops may be subject to income tax on receipt, depending upon the nature of the activity giving rise to the receipt. Cryptoassets received as earnings from employment are treated as \u201cmoney\u2019s worth\u201d and are therefore subject to income tax and national insurance contributions.\n\nThe U.K. guidance raises questions that are similar to those that must be addressed from a U.S. tax perspective when transactions in cryptocurrency occur. Some of these questions focus on:\n
- The proper category of property in which to place tokens<\/p>\n
- Which types of transactions give rise to taxable gains or deductible losses<\/p>\n
- The applicable rate at which to tax gains<\/p>\n
- Application of employment compensation rules to cryptoassets (or rights therein), including when there are conditions of continued employment associated with the retention of such rights<\/p>\n
- Treatment of cryptocurrency or tokens received in exchange for performing some activity (e.g., mining, social actions, validating)<\/p>\n
- Actions that give rise to a taxable gain (or loss) when cryptocurrency is disposed of, as well as planning opportunities that can defer taxable gains<\/p>\n
- Tax treatment of forks \u2013 both hard and soft<\/p>\n
- Record keeping and reporting<\/p>\nIn the absence of comprehensive guidance in the U.S. on cryptocurrency issues, taxpayers will borrow from other areas in doing their best to comply with their tax obligations \u2013 while identifying opportunities to optimize their tax situations when applicable doctrines permit.\n\n* * * * *<\/small>\n\nThe U.S. discussion above was provided by Roger Brown<\/em> and Nicholas Mowbray of Baker Hostetler LLP. The U.K. discussion above was provided by Darren Oswick of Simmons & Simmons, LLP.<\/em><\/small><\/small>\n\n<\/a>Monetizing Positions in Cryptoassets Without Triggering Taxable Gain or Loss<\/strong>\n\nBy:\u00a0<\/em>Roger M. Brown<\/em><\/a> and <\/em>Heather K. P. Fincher<\/em><\/a>\n\nStrategies still exist to monetize a position in crypto without triggering current taxable gain or loss, as a recent case shows: Estate of McKelvey v. Commissioner<\/em> (906 F.3d 26, 2nd Cir. 2018).\n\nMany people historically have sought to diversify their crypto holdings by exchanging one cryptoasset for another. Some people sought to avoid recognition of taxable income by taking the position that the exchange of cryptocurrencies was exempt from current taxation under the \u201clike kind exchange\u201d rules. However, that\u2019s no longer possible, due to 2017 tax law changes.\n\nNevertheless, a number of common law doctrines continue to exist that permit current monetization without current taxable income. One example is illustrated by the transaction undertaken by the founder of the Monster.com website, Andrew McKelvey (McKelvey). McKelvey had substantial appreciation in his shares, and he sought to monetize that value without triggering current taxable gain by entering into variable prepaid forward contracts (VPFCs).\n\nUnder VPFCs, a buyer of the shares agrees to make an upfront payment for the right to receive at a future date a maximum amount of the designated assets or their cash equivalent. The exact number to be delivered, however, would be determined by a minimum price and a maximum price that limit the amount of property to be delivered in the future.\n\nAs security for performance, the buyer gives the seller cash up front, effectively \u201cmonetizing\u201d the shares upfront. In turn, the seller receives the maximum amount of assets at a future date that the buyer may have to deliver. Custodians can be involved to minimize performance and execution risks.\n\nThe IRS did not take issue with the fact that the VPFCs of McKelvey were effective in allowing the taxpayer to monetize his position. Rather, the IRS said that McKelvey\u2019s modification of the VPFCs by extending their settlement dates shortly before delivery was effectively an event that triggered taxable gain. The appellate court agreed.\n\nAs trading activity in cryptoassets increases, taxpayers seek to monetize positions without triggering taxable gains or losses. Traders also seek to enter into different forms of \u201clong\u201d and \u201cshort\u201d positions to profit from market movements. VPFCs are among the established tools that can be used to achieve these goals in the crypto space \u2013 just like they have been for other asset classes.","saveContent":" $\"A$ \n\nIn this issue:\n
\u2022 Multiple Studies Analyze Recent Cryptocurrency Market Trends<\/a><\/p>\n
\u2022 Stablecoins, \u201cTrading Pairs\u201d and Other Developments in Cryptocurrency Payments<\/a><\/p>\n
\u2022 Threat Update: Ransomware, Crypto-mining Malware, BTMs and ICO Fraud Schemes<\/a><\/p>\n
\u2022 Blockchain Enterprise Developments in France, Spain and South Korea<\/a><\/p>\n
\u2022 UK Issues Cryptocurrency Guidance; US Issues Remain<\/a><\/p>\n
\u2022 Monetizing Positions in Cryptoassets Without Triggering Taxable Gain or Loss<\/a><\/p>\n<\/a>Multiple Studies Analyze Recent Cryptocurrency Market Trends<\/strong>\n\nBy:\u00a0<\/em>Robert A. Musiala Jr.<\/em><\/a>\n\nA recently issued report from the Blockchain Transparency Institute analyzed high-volume bitcoin \u201ctrading pairs\u201d on various cryptocurrency exchanges and found \u201cclear evidence of wash trading\u201d on 22 of 25 exchanges analyzed. A bitcoin \u201ctrading pair\u201d is an exchange of bitcoin for another type of cryptocurrency (or vice versa), and \u201cwash trading\u201d is a form of market manipulation where an investor simultaneously buys and sells the same financial instrument to create artificial market activity. The report claims to have identified four different \u201cbot strategies\u201d used to artificially inflate bitcoin trading pair volumes via wash trading on cryptocurrency exchanges. According to the report, over 80 percent of the top bitcoin trading pairs volume reported by CoinMarketCap is wash traded, with most of the trading pairs having actual volume under 1 percent of their reported volume.\n\nAnother recent report analyzed website traffic on the most frequently used cryptocurrency exchanges and found that many cryptocurrency exchanges with low website traffic report high transaction volumes. According to the report, this indicates that some cryptocurrency exchanges may be artificially inflating the dollar value of transactions processed on their platforms. Cryptocurrency market manipulation is also the topic of a recently published research paper co-authored by professors from four different universities that provides a detailed examination of \u201cpump and dump\u201d schemes in the cryptocurrency markets. The report\u2019s findings suggest that such schemes are \u201cwidespread and often quite profitable.\u201d\n\nAccording to a recent Bloomberg<\/em> article, a large U.S. hedge fund acknowledged emerging contingencies related to initial coin offerings (ICOs) by citing the risk that a significant percentage of ICOs it had invested in may be found in violation of U.S. securities laws. An analysis published Dec. 17 found rising outflows of Ethereum (ETH) from wallets reportedly controlled by ICO projects, with over 400,000 ETH moving out of ICO team wallets over a 30-day period. Another recently released analysis found that of the over 460 million \u201cpublic key\u201d addresses on the bitcoin blockchain, only about 172 million were \u201ceconomically relevant\u201d in that they are \u201ccontrolled by people or services who currently own bitcoin,\u201d with the remaining 63 percent of addresses used only temporarily to facilitate transactions.\n\nAnother apparent trend, reported by Diar<\/em>, found that institutional bitcoin trading appears to be shifting away from traditional exchanges in favor of over-the-counter markets. Finally, the University of Cambridge has released its 2nd Global Cryptoasset Benchmarking Study<\/em>, which \u201cgathers survey data from more than 180 cryptoasset companies and individuals, covering 47 countries across five world regions\u201d and provides analysis focused on mining, exchange, storage and payments. In one notable finding, the study reports that in the first three quarters of 2018, the number of ID-verified cryptocurrency users almost doubled, increasing from 18 million to 35 million.\n\nFor more information, please check out the following links:\n
\n \tBlockchain Transparency Institute: December 2018 Exchanges Volumes Report<\/a><\/li>\n \t
Analysis of cryptocurrency exchange traffic: Could results hint at faked volume?<\/a><\/li>\n \t
The Economics of Cryptocurrency Pump and Dump Schemes<\/a><\/li>\n \t
Crypto Hedge Fund Warns of Possible ICO Refunds After SEC Decision<\/a><\/li>\n \t
Over 400,000 ETH Left ICO Team Wallets in the Past Thirty Days, Data Shows<\/a><\/li>\n \t
Mapping the Universe of Bitcoin\u2019s 460 Million Addresses<\/a><\/li>\n \t
Institutional Traders Shift to Over-the-Counter Trading Desks?<\/a><\/li>\n \t
Ranks of Crypto Users Swelled in 2018 Even as Bitcoin Tumbled<\/a><\/li>\n \t
2nd Global Cryptoasset Benchmarking Study<\/a><\/li>\n<\/ul>\n<\/a>Stablecoins, \u201cTrading Pairs\u201d and Other Developments in Cryptocurrency Payments<\/strong>\n\nBy:<\/em> Robert A. Musiala Jr.<\/em><\/a>\n\nIn recent developments in cryptocurrency payments, according to reports, the PAX stablecoin, which is backed 1:1 by U.S. dollars, recently exceeded $5 billion in transaction volume in just over three months of its September launch. Another recently launched stablecoin, USD Coin, has been added by the cryptocurrency exchange Binance as a \u201ctrading pair\u201d option for six different cryptocurrencies.\n\nThis week, Coinbase began allowing its retail customers to trade bitcoin in \u201ctrading pairs,\u201d where bitcoin is exchanged for another type of cryptocurrency. Coinbase also recently announced that its U.S. customers now will be able to withdraw cash balances to their accounts at a major U.S. internet payment processor. And startup OpenNode recently announced that it has closed a seed-funding round from a major U.S. venture capital firm to develop a new bitcoin payment processing system for merchants that want to accept bitcoin as payment.\n\nFor more information, please check out the following links:\n
\n \t
PAX Stablecoin Exceeds $5 Billion in Transactions in First 3 Months<\/a><\/li>\n \t
Binance Will Add USDC Quote Pairs into the USD\u24c8 Trading Market\/Tab<\/a><\/li>\n \t
Coinbase Adds Crypto-to-Crypto Trading for Retail Customers<\/a><\/li>\n \t
Instant PayPal withdrawals now available for all U.S. customers<\/a><\/li>\n \t
OpenNode: Bitcoin, for everyday<\/a><\/li>\n<\/ul>\n<\/a>Threat Update: Ransomware, Crypto-mining Malware, BTMs and ICO Fraud Schemes<\/strong>\n\nBy:\u00a0<\/em>Shea M. Leitch<\/em><\/a>\n\nScammers recently delivered messages to various targets threatening to detonate explosive devices carried by an unidentified \u201cmercenary\u201d unless the targets paid a $20,000 ransom to a bitcoin wallet by the end of the business day. The sender(s) targeted individuals in geographically dispersed English-speaking countries, such as the U.S., Canada and New Zealand. Authorities in these jurisdictions have reported that no explosives were actually found.\n\nIn addition to so-called crypto-ransomware, another emerging threat are bitcoin ATMs (BTMs), which according to a recent report are spreading quickly and may pose high risks of money laundering. Perhaps the most pervasive current threat is crypto-mining malware, which, according to a new Threats Report from McAfee Labs, has increased 4,000 percent over the past year.\n\nFinancial regulators in France and Belgium have sought to minimize the impact of cryptocurrency fraud on investors, each blacklisting a number of crypto-related investment websites this week and warning against unauthorized or fraudulent ICOs. The Belgian Financial Services and Markets Authority announcement contained a blunt warning to investors.\n\n\u201cThe principle remains the same: they offer you an investment they claim is\u00a0secure, easy\u00a0and\u00a0very lucrative<\/strong>. They try to inspire confidence by assuring you that you don\u2019t need to be an expert in cryptocurrencies in order to invest in them. They claim to have specialists who will manage your investments for you. You are told that your funds can be withdrawn at any time or that they are guaranteed. In the end, the result is always the same: the victims find themselves unable to recover their money!\u201d (Emphasis in the original)\n\nGreece\u2019s high court issued a ruling this week affirming a lower court\u2019s decision to extradite to France Alexander Vinnik, who is accused of laundering up to $4 billion through the now-defunct cryptocurrency exchange BTC-e. Russia has also sought Vinnik\u2019s extradition. Vinnik\u2019s legal representatives have expressed the belief that his extradition to France will result in his eventual extradition to the United States to face charges of fraud, identity theft, money laundering and a number of other crimes related to his alleged operation of the BTC-e cryptocurrency exchange.\n\nFor more information, please check out the following links:\n
\n \t
Spammed Bomb Threat Hoax Demands Bitcoin<\/a><\/li>\n \t
Bitcoin scammers send bomb threats worldwide, causing evacuations<\/a><\/li>\n \t
Bitcoin ATMs: Even as Bitcoin crashes, these machines are spreading\u2014and they\u2019re perfect vehicles for cleaning dirty cash.<\/a><\/li>\n \t
McAfee: Crypto-Mining Malware Grew By Over 4,000 Percent in 2018<\/a><\/li>\n \t
French Financial Regulator Blacklists Four Crypto Websites for Unauthorized Offerings<\/a><\/li>\n \t
CRYPTOCURRENCY FRAUD: THE FSMA UPDATES ITS LIST OF SUSPICIOUS SITES<\/a><\/li>\n \t
Belgium\u2019s Financial Watchdog Updates Crypto Scam Blacklist to Total 113 Sites<\/a><\/li>\n \t
Greek Supreme Court Rules in Support of Extraditing Alleged Bitcoin Launderer Vinnik to France<\/a><\/li>\n<\/ul>\n<\/a>Blockchain Enterprise Developments in France, Spain and South Korea<\/strong>\n\nBy:\u00a0<\/em>Simone O. Otenaike<\/em><\/a>\n\nAccording to a recent report, French officials plan to invest about $569 million in state-level blockchain projects over the next three years. In the same report, officials expressed a desire to create a more bitcoin-mining-friendly environment in France. Despite these potential initiatives, the country\u2019s commitment to the blockchain and cryptocurrency industries seems tenuous \u2013 just last month, France\u2019s central bank failed to endorse a plan involving the sale of bitcoin at thousands of tobacco kiosks. Meanwhile, Spanish renewable energy company ACCIONA Energ\u00eda launched the GREENCHAIN project, which will use a blockchain platform to track the supply chain of renewable energy from five wind and hydro facilities in Spain to four corporate customers in Portugal in real time. According to reports, ACCIONA Energ\u00eda will be the first entity in Spain and Portugal to trace renewable energy through blockchain technology and allow clients to certify from any location in the world that 100 percent of the energy supplied is green.\n\nIn South Korea, the Ministry of Science, ICT and Future Planning and the Ministry of Oceans and Fisheries announced plans to launch its maritime blockchain pilot project, which will promote efficiency in the country\u2019s container shipping industry. The port-logistics pilot will run for one year out of the Port of Busan, the country\u2019s\u00a0largest\u00a0port, and the fifth-busiest container port worldwide. The pilot is part of the South Korean government\u2019s overall strategy to raise $204 million for blockchain technology by 2022.\n\nFor more information, please check out the following links:\n
\n \t
France: Gov\u2019t Report Recommends $570 Million Blockchain Investment<\/a><\/li>\n \t
ACCIONA will extend blockchain traceability to its renewable generation globally<\/a><\/li>\n \t
Spanish Renewable Energy Operator to Trace Electricity Generation With Blockchain<\/a><\/li>\n \t
South Korean Government Trials Blockchain for Shipping Efficiency Boost<\/a><\/li>\n \t
Korean Gov\u2019t Pilots Blockchain for Logistics Innovation in Country\u2019s Largest Port<\/a><\/li>\n \t
South Korea Pilots Blockchain in Busan<\/a><\/li>\n<\/ul>\n<\/a>UK Issues Cryptocurrency Guidance; US Issues Remain<\/strong>\n\nBy:\u00a0<\/em>Roger M. Brown<\/em><\/a> and <\/em>Nicholas C. Mowbray<\/em><\/a>\n\nThis week, the U.K. tax authorities (HMRC) published guidance on the taxation of cryptoassets<\/a>. The guidance states that HMRC does not view such cryptoassets as currency or money \u2013 which aligns the HMRC view with the general U.K. regulatory position. The guidance identifies three types of cryptoassets:\n
-- Exchange tokens (including bitcoin and other cryptocurrencies)<\/p>\n
-- Utility tokens<\/p>\n
-- Security tokens<\/p>\nThe guidance notes that labels do not control; rather, the functionality and substance do. The guidance focuses on the taxation of exchange tokens while noting that it also provides a beginning discussion point for rules that may ultimately be developed for the other types of tokens.\n\nThe guidance states that, in the vast majority of cases, individuals hold cryptoassets as a personal investment and hence will be liable to pay capital gains tax on any profits arising when they dispose of their cryptoassets. Only in exceptional circumstances would HMRC expect individuals to buy and sell cryptoassets with such frequency, organization and sophistication that the activity amounted to a financial trade \u2013 the profits of which would be subject to income tax rather than capital gains tax.\n\nHMRC specifically notes that it does not consider the buying and selling of cryptoassets to be the same as gambling \u2013 the proceeds of which would be tax-free. This is a clear change of position from their March 2014 guidance, which stated \u201cdepending on the facts, a transaction may be so highly speculative that it is not taxable or any losses relievable. For example gambling or betting wins are not taxable.\u201d\n\nUnder the U.K. guidance, cryptoassets received from mining or from airdrops may be subject to income tax on receipt, depending upon the nature of the activity giving rise to the receipt. Cryptoassets received as earnings from employment are treated as \u201cmoney\u2019s worth\u201d and are therefore subject to income tax and national insurance contributions.\n\nThe U.K. guidance raises questions that are similar to those that must be addressed from a U.S. tax perspective when transactions in cryptocurrency occur. Some of these questions focus on:\n
- The proper category of property in which to place tokens<\/p>\n
- Which types of transactions give rise to taxable gains or deductible losses<\/p>\n
- The applicable rate at which to tax gains<\/p>\n
- Application of employment compensation rules to cryptoassets (or rights therein), including when there are conditions of continued employment associated with the retention of such rights<\/p>\n
- Treatment of cryptocurrency or tokens received in exchange for performing some activity (e.g., mining, social actions, validating)<\/p>\n
- Actions that give rise to a taxable gain (or loss) when cryptocurrency is disposed of, as well as planning opportunities that can defer taxable gains<\/p>\n
- Tax treatment of forks \u2013 both hard and soft<\/p>\n
- Record keeping and reporting<\/p>\nIn the absence of comprehensive guidance in the U.S. on cryptocurrency issues, taxpayers will borrow from other areas in doing their best to comply with their tax obligations \u2013 while identifying opportunities to optimize their tax situations when applicable doctrines permit.\n\n* * * * *<\/small>\n\nThe U.S. discussion above was provided by Roger Brown<\/em> and Nicholas Mowbray of Baker Hostetler LLP. The U.K. discussion above was provided by Darren Oswick of Simmons & Simmons, LLP.<\/em><\/small><\/small>\n\n<\/a>Monetizing Positions in Cryptoassets Without Triggering Taxable Gain or Loss<\/strong>\n\nBy:\u00a0<\/em>Roger M. Brown<\/em><\/a> and <\/em>Heather K. P. Fincher<\/em><\/a>\n\nStrategies still exist to monetize a position in crypto without triggering current taxable gain or loss, as a recent case shows: Estate of McKelvey v. Commissioner<\/em> (906 F.3d 26, 2nd Cir. 2018).\n\nMany people historically have sought to diversify their crypto holdings by exchanging one cryptoasset for another. Some people sought to avoid recognition of taxable income by taking the position that the exchange of cryptocurrencies was exempt from current taxation under the \u201clike kind exchange\u201d rules. However, that\u2019s no longer possible, due to 2017 tax law changes.\n\nNevertheless, a number of common law doctrines continue to exist that permit current monetization without current taxable income. One example is illustrated by the transaction undertaken by the founder of the Monster.com website, Andrew McKelvey (McKelvey). McKelvey had substantial appreciation in his shares, and he sought to monetize that value without triggering current taxable gain by entering into variable prepaid forward contracts (VPFCs).\n\nUnder VPFCs, a buyer of the shares agrees to make an upfront payment for the right to receive at a future date a maximum amount of the designated assets or their cash equivalent. The exact number to be delivered, however, would be determined by a minimum price and a maximum price that limit the amount of property to be delivered in the future.\n\nAs security for performance, the buyer gives the seller cash up front, effectively \u201cmonetizing\u201d the shares upfront. In turn, the seller receives the maximum amount of assets at a future date that the buyer may have to deliver. Custodians can be involved to minimize performance and execution risks.\n\nThe IRS did not take issue with the fact that the VPFCs of McKelvey were effective in allowing the taxpayer to monetize his position. Rather, the IRS said that McKelvey\u2019s modification of the VPFCs by extending their settlement dates shortly before delivery was effectively an event that triggered taxable gain. The appellate court agreed.\n\nAs trading activity in cryptoassets increases, taxpayers seek to monetize positions without triggering taxable gains or losses. Traders also seek to enter into different forms of \u201clong\u201d and \u201cshort\u201d positions to profit from market movements. VPFCs are among the established tools that can be used to achieve these goals in the crypto space \u2013 just like they have been for other asset classes.","order":0,"get_parent":{},"attributes":[],"attributesType":{"content":{"type":"string","source":"raw"},"lock":{"type":"object"},"metadata":{"type":"object"}},"dynamicContent":null}]

Studies Analyze Cryptocurrency Market, New Announcements in Payments, Enterprise and Threats