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Bitcoin Regulation

Telegram ICO Breaks Records 850 Million: Takes Steps to Welcome U.S. Investors

On February 13th, 2018, the creators of popular encrypted messaging app Telegram filed a Notice of Exempt Offering of Securities with the US Securities and Exchange Commission (SEC). Under SEC exemption Rule 506(c), they reported raising $850 million from 81 investors for “the development of the TON Blockchain, the development and maintenance of Telegram Messenger.”

Purchase Agreements for Cryptocurrency filed under the 506(c) exemption, limits US investment to only “accredited investors.” An accredited investor is a subset of investors who must have a net worth of more than $1 million or an annual income of $200,000 per year. Filing with the SEC signals that the creators of Telegram, Pavel and Nikolai Durov, are prepared for US citizens to legally invest in the TON initial coin offering (ICO).

Due to the popularity of the encrypted messaging app Telegram amongst the cryptocurrency community TON’s ICO is one of the most anticipated coin offerings ever. As we previously reported, the ICO is expected to make history raising a record $2 billion from investors around the globe.

In December of 2017, rumors of Telegram’s ICO started to circulate throughout the internet even resulting in a leaked copy of TON’s whitepaper. Due to Telegram’s tremendous popularity within the cryptocurrency community, It quickly became the most anticipated ICO to date. As we previously reported, the ICO is expected to make history raising a record $2 billion from investors around the globe.

TON’s Product Roadmap

  • Q1 2018 — secure ID launch
  • Q2 2018 — MVP of test of network of TON
  • Q3 2018 — testing and security audit for TON
  • Q4 2018 — stable version of TON deployed
  • Q4 2018 — Telegram wallet launched
  • Q1 2019 — TON-based economy goes live inside Telegram
  • Q2 2019 — TON services, storage and proxy launched

The company intends to rename TON to ON by 2021, citing Telegram will step away from the project and the network will be managed by its foundation.

In the whitepaper the company wrote:

“Telegram will serve as a launch pad for TON, ensuring its technological superiority and widespread adoption on the initial stages, but the future of TON is in the hands of the global open-source community,”

Some of the identities of the initial 81 investors have started to leak out via a Russian news outlet Vedomosti. They include a Russian billionaire Roman Abramovich, QIWI (a Russian payment service provider) CEO Sergei Solonin, and Wimm-Bill-Dann (a Russian dairy product company) co-founder David Yakobashvili.

Vedomosti reported that Abramovich may have invested as much as $300 million into the project. Solonin reportedly invested $17 million and Yakobashvili reportedly invested $10 million.

As always we here at Cryptobase will keep you up to date as this story unfolds.

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Bitcoin Regulation

IRS Coming For Your Crypto, Specific Crypto Question Added To 2019 Tax Forms

The IRS wants to know whether you traded cryptocurrency in 2019, a question it had never overtly asked taxpayers in the past.

In a new report on Monday covering fiscal 2019, the agency listed cryptocurrency and the gig economy as two key “emerging compliance areas that require attention” by the IRS. For crypto, that attention is taking the form of a new question on the 2019 Form 1040 (for additional income).

The question is at the very top of the form, and reads: “At any time during 2019, did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency?”

The IRS already had official guidance on cryptocurrency, first posted back in 2014: the agency classifies cryptocurrency as property, rather than as currency, and thus taxpayers would treat crypto selling as capital gains (or losses) and disclose it on Form 8949—if you choose.

In the past, the common attitude in crypto land toward disclosing crypto gains on your taxes was that there was little to gain from doing so—you’d risk an audit if you did, and would likely fly under the radar if you didn’t.

Now the IRS is getting more serious.

The phrasing of the question is also creating some confusion, since it mentions not just selling and receiving crypto, but also sending or exchanging it. That prompted some crypto folks on Twitter to wonder whether simply sending bitcoin from one digital wallet to another requires disclosure on your taxes. That answer is no. In an extensive FAQ about virtual currency transactions on its website, the IRS specifies, “If you transfer virtual currency from a wallet, address, or account belonging to you, to another wallet, address, or account that also belongs to you, then the transfer is a non-taxable event.”

The IRS, in its report this week, also disclosed that in 2019 it sent “educational letters” to more than 10,000 taxpayers “who may have failed to properly report virtual currency transactions.” And the IRS cautions: “Virtual currency, also called crypto currency, will remain an important focal point for the IRS in 2020.”

This article originally featured in Yahoo Finance.

 

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Bitcoin

Encouraging Signs For a Bitcoin ETF

It is several years in the making, but the Winklevoss Bitcoin Trust could be, emphasis on “could,” getting closer to becoming a reality.

Cameron and Tyler Winklevoss were ahead of the bitcoin exchange traded fund (ETF) curve, ranking as the first group to initiate plans for bitcoin-based ETF. As has been the case with all subsequent filings for related products, the Securities and Exchange Commission (SEC) has, to date, not approved any filings for ETFs related to bitcoin or any other digital currency for that matter. However, there is some good news for investors waiting on the Winklevoss Bitcoin Trust.

“Records show that Winklevoss IP applied for a patent on December 19, 2017, to facilitate a system for operating exchange-traded products holding digital currencies,” reports BTCManager.com. “The product explained in the patent application as ETP is similar to an ETF. An Exchange Traded Fund is a tradable security that tracks the price movement of a particular index or industry. ETFs are commonly used by investors to reduce risk and improve probable returns. The ETP as described by the patent will track the price movements of constituent cryptocurrencies.”

Regulatory Hurdles

Many ETF issuers expected the launch of bitcoin futures, which debuted on two U.S. exchanges in December, would help facilitate the debut of ETFs related to the cryptocurrency. Following the launch of bitcoin futures on Cboe and CME, a slew of ETF sponsors reapplied to launch bitcoin funds, but were still rebuffed by the SEC.

The Winklevoss Bitcoin Trust, which would trade under the ticker “COIN,” is designed to follow a basket of shares tied to bitcoin, the largest digital currency.

“Shares based on digital math-based assets may be redeemed using one or more computers by determining share price information based upon quantities of digital math-based assets held by a trust, electronically receiving a request from an authorized participant user device to redeem a quantity of shares, electronically transmitting a quantity of digital math-based assets from one or more origin digital asset accounts to one or more destination digital asset accounts associated with the authorized participant, and canceling the quantity of shares from the authorized participant,” according to the patent application.

In March 2017, the SEC rejected what was at the time the most recent application for the Winklevoss Bitcoin Trust. At the time, the SEC questioned the trust’s ability to adequately value bitcoin while also raising concerns about the lack of regulation surrounding the digital currency market.

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A Post-Tax Day Bounce For Bitcoin?

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.

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