Bitcoin prices traded slightly lower in U.S. trading Friday, extending a slide that has seen the largest digital currency shed roughly two-thirds of its value since December. Some bitcoin bulls believe the cryptocurrency is due to rally this month with an interesting catalyst sparking it higher.
That catalyst is Tax Day, which is fast-approaching on April 17th. Tom Lee, the co-founder of Fundstrat and one of the most ardent bitcoin bulls, estimates investors owe $25 billion in taxes on bitcoin and have been selling the digital currency in advance of Tax Day to, well, pay their taxes. Lee believes the selling pressure could slow after April 17th.
The US Internal Revenue Service (IRS) requires users of bitcoin to record all of their transactions in the cryptocurrency, regardless of the size.
“If the bitcoins were held for more than a year, long-term capital gains tax rates are applied. In the US, long-term capital gains tax rates are 0% for people in 10%-15% ordinary income tax rate bracket, 15% for people in the 25%-35% tax bracket, and 20% for those in the 39.6% tax bracket,” according to Investopedia.
Sourcing That $25 Billion
“The $25-billion tax liability accounts for 20 percent of the expected total tax payments for capital gains of around $168 billion in 2017. The projected tax liability is based on taxable gains for crypto of $92 billion,” Reuters reports, citing Lee’s Fundstrat.
Other countries have recently been unveiling their tax treatments of cryptoccurrencies.
“The South African Revenue Service (SARS) will continue to apply normal income tax rules to cryptocurrencies and will expect affected taxpayers to declare cryptocurrency gains or losses as part of their taxable income,” said SARS, that country’s equivalent of the IRS, in a recent statement. “The onus is on taxpayers to declare all cryptocurrency-related taxable income in the tax year in which it is received or accrued. Failure to do so could result in interest and penalties.”
As for the post-tax day potential of bitcoin, that remains to be seen, but Fundstrat did reiterate a $20,000 price target on bitcoin.
Coinbase Will Reward You For Holding Your Crypto
Coinbase is for the first time allowing general users to earn rewards by simply holding cryptocurrency, starting with the Tezos (XTZ) token.
Tezos uses an alternative consensus mechanism to proof-of-work mining – the system built into the largest cryptocurrency by market cap, bitcoin. Called proof-of-stake, the alternative mechanism rewards network users for holding onto its coins and thereby helping protect the network.
Coinbase’s 5 percent estimate is based on Tezos’ last 90 days of staking returns. The firm also notes that there’s an initial holding period of 35–40 days, after which stakers will start to see rewards appear in their accounts every three days.
The exchange has also added Tezos to Coinbase Earn, a program aimed at educating the public about crypto, and will give out XTZ to participants completing educational videos.
Coinbase soft-launched staking for both Tezos and decentralized finance token Maker (MKR) this March on Coinbase Custody.
As Coinbase wrote at the time, Coinbase Custody primarily serves institutional clients holding large amounts of crypto. This latest initiative brings staking to even the smallest of Tezos holdings, however.
Coinbase also recently rolled out 1.25 percent interest on users’ holdings of the dollar-pegged stablecoin USDC.
$19 million worth of Bitcoin (BTC) seized in dark web drug probe
The U.S. government has seized $19 million worth of BTC from a drug trafficker, who allegedly laundered funds through the cryptocurrency on the original dark web marketplace known as “Silk Road.”
The U.S. Attorney’s Office for the Southern District of New York announced the news on Thursday, saying that the trafficker, Hugh Brian Haney, 60, was arrested near Columbus, Ohio. In 2017 and 2018, Haney allegedly transferred bitcoins representing drug proceeds he had earned through Silk Road to an account held at a company involved in the exchange of bitcoin and other cryptocurrencies. He claimed falsely that the source of these bitcoins was from mining.
Haney is charged with one count of concealment money laundering and one count of engaging in a financial transaction in a criminally derived property. The former count carries a maximum jail term of 20 years, while the latter a maximum term of 10 years.
Homeland Security Investigations (HSI) special agent-in-charge Angel M. Melendez said:
“HSI special agents employed blockchain analytics to uncover and seize bitcoins valued at $19 million and usher Haney out of the dark web shadows to face justice in the Southern District of New York.”
“Cryptocurrency is a great idea” – Ron Paul
During a recent “Squawk Alley” interview, Former Republican congressman and presidential candidate, Ron Paul- discusses how he is in favor of cryptocurrencies as well as block change technology. Apparently, he enjoys competing currencies and believes they are a good idea.
He also believes that the governments only have the right to step in to prevent fraud from taking place. In the interview, Paul states that, “the government has a role. And if somebody has a case that there is fraud, I think it should be investigated.” Paul then goes on to state that what he wants to do “is legalize the freedom of choice, absent blatant fraud.” Agreeably so, this is exactly the type of perspective that the crypto world needs.
Throughout the interview, Paul compares crypto to gold in many ways. He points out how both assets are competing with traditional fiat money. He discusses how our government has never been “very tolerant of competition, and they’re not even tolerant with using the Constitution to compete with the fiat dollar. Because gold and silver, you can’t use it.”
This isn’t the first time that Ron Paul has discussed his views on crypto. Back in 2014, the Former Republican Congressman displayed his concerns about the foundation of crypto and Bitcoin. However, he acquired a bearish pro-crypto outlook on the future of fiat money. Paul believes that the dollar won’t last long as “they all self-destruct.” According to Paul, the only competition for the dollar is the euro and yen- which “isn’t any good.”
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