Find the best CRYPTOtrends

Depending on the month, day, hour, or minute you check the news, you might think investing in cryptocurrency or being paid in cryptocurrency is the greatest idea since sliced bread or the worst possible use of your money, ever. Whether you agree with Warren Buffett that cryptocurrency has “no value” or think Bitcoin’s value will rise to $300,000 in 2022, there’s one thing about cryptocurrency that isn’t up for debate: getting it right on tax returns has never been more critical.

The IRS is aggressively working to identify and root out United States taxpayers who are required to report cryptocurrency transactions, but either incorrectly report or omit cryptocurrency entirely from their tax returns. Understanding the tax implications of buying, selling, exchanging, or earning cryptocurrency has never been more important. We’ve identified ten common mistakes made when reporting (or not reporting) cryptocurrency transactions to the Internal Revenue Service, and will detail how to avoid each mistake in its own article. Finally, we will end the Top 10 Crypto Tax Mistakes To Avoid series with suggestions for the IRS on how to better reach out to taxpayers who are making Crypto Tax Mistakes, and how to bring those taxpayers back into compliance. As a tax litigator, it is my job to Monday-Morning Quarterback how taxpayers and their tax professionals did the first time around. This series aims to help folks get it right from the beginning, or identify possible mistakes that may need to be addressed.

Number 10: Improperly Reporting Cryptocurrency Received From Air-drops, Forks, and Splits

“Air-drops, forks, and splits” may be foreign terms to rookie cryptocurrency investors, but it’s important for anyone even dabbling in this area to become quickly familiar with them as they have tax implications. Revenue Ruling 2019-24 specifically addresses these thorny issues, and we will help you work through the complexities of these events and how they impact your tax reporting requirements.

Number 9: Failing to Report Crypto-to-Crypto Transactions

It is common for crypto investors to exchange one cryptocurrency for another in a coin-to-coin transaction. It’s important to understand these are taxable events and how they should be reported.

Number 8: Using the Wrong Form to Report Cryptocurrency Transactions

Are you being paid in cryptocurrency? Did you exchange a car for crypto or vise versa? Are you simply investing in crypto? Are you mining crypto? Each one of these potential transactions may require a different IRS form to accurately report the transaction and calculate the tax consequences.

Number 7: Improperly Reporting Cryptocurrency Received as Earned Income

Cryptocurrency received in exchange for performing services is not taxed the same as the sale of cryptocurrency held for investment. We will explore and explain proper tax treatment of cryptocurrency as income.

Number 6: Failing to Report Cryptocurrency Exchanged for Goods and Services

Thinking of paying for your new outdoor furniture from overstock.com in Bitcoin? As more and more retailers accept cryptocurrency, taxpayers need to understand the tax implications and reporting requirements associated with paying in crypto.

Number 5: Failure to Prepare and Maintain Adequate (or any!) Records Reflecting Crypto Transactions

As with any taxable sale or exchange of property, taxpayers must be able to establish basis in an asset, including cryptocurrency, in order to calculate the gain or loss and resulting tax due. Taxpayers who don’t keep good records may find themselves paying tax on the sale of crypto as if they had no basis at all in the asset. Taxpayers should resist the urge to be lulled into laziness and assume all records will be available electronically come tax time.

Number 4: Failure to Properly Calculate Cryptocurrency Gains and Losses

Did you lose money on cryptocurrency? Losses can and should be reported to the IRS just like gains, and losses may completely offset any tax consequences of gains. But if they do, taxpayers still need to report the transactions. Cryptocurrency investors are not uniquely required to only report and pay taxes on gains, and should include losses and gains when calculating tax due.

Number 3: Using Like-kind Exchanges to Report Crypto

In all fairness, this isn’t really something that I have seen any of my clients do. But because crypto held as investment is required to be reported as property, it makes sense that crypto exchanges for property, like a Tesla or exchanging Bitcoin for Ethereum should qualify for a like-kind exchange under section 1031 of the Internal Revenue Code. Unfortunately, it doesn’t.

Number 2: Failure to Take Proper Steps to Pass on Your Cryptocurrency in the Event of Your Death or Disability

Do your loved ones know how to access your cryptocurrency accounts? If you die or become disabled, the value of your cryptocurrency may well be included in your taxable estate, even if your loved ones can’t actually access or unlock the value of that asset. We will explore best practices for how to ensure your loved ones are not left cleaning up your crypto mess without any access to the value of the asset.

Number 1: Failure to Report Cryptocurrency at All

By far the worst error - whether intentional or unintentional - taxpayers make when it comes to taxes and cryptocurrency is failure to report crypto transactions at all. Carolyn Schenk, the National Fraud Counsel & Assistance Division Counsel for IRS Office of Chief Counsel put it this way when addressing crypto investors who are not reporting income, “We see you.”

Putting it all Together

Since I’m not the Commissioner of the Internal Revenue Service, I don’t get to decide how the IRS is going to handle increasing and improving outreach to taxpayers who should be reporting cryptocurrency transactions on their tax returns, and I don’t get to decide how the IRS is going to bring those taxpayers into compliance. But as a tax litigator, I have a lot of ideas on how I think the IRS should be accomplishing these goals. We will finish our series with a close look at how the IRS has been handling outreach and enforcement so far, and what we’d like to see in the future.

Special thanks to Moore Tax Law Group's summer associate, Ali Hmoud, who is providing significant assistance in completing this series.

I try tax cases in tax court and federal courts, represent taxpayers who are examined by the IRS, and represent tax professionals who get into disciplinary trouble.  I'm

I try tax cases in tax court and federal courts, represent taxpayers who are examined by the IRS, and represent tax professionals who get into disciplinary trouble.  I'm also a professional partnership representative.  My practice is in Chicago but my clients are all over the country and the world.  Check out my website at www.mooretaxlawgroup.com.  Email me at guinevere.moore@mooretaxlawgroup.com and follow me at @Mommytax  

Baden-Wurttemberg, Stuttgart, May 29, 2021 (GLOBE NEWSWIRE) -- 29 May 2021 - Cryptocurrency exploded in popularity over the past few months and is the hottest new trend in the investing world. It’s possible to make a lot of money investing in cryptocurrencies, but it’s also possible to lose a lot of money. If you do choose to invest in cryptocurrency, choose your investment wisely. Right now, there are more than a thousand cryptocurrencies in the market to make choice. So, how can you make a smart decision?

A new cryptocurrency, X-TOKEN operating on Binance Smart Chain is the first token that will empower crypto traders, investors, and minorities who have no access to computers. Building decentralized BI applications and donating the usage fees will help crypto maniacs and minorities alike.

X-TOKEN is a frictionless, yield-generating contract where the tokens bought will soon be able to be spent on dApps. The protocol was launched on May 6th, 2021 through a DxSale presale. The token contract employs a static reward system—10% of every transaction is split into two parts—one part is distributed to holders, while the other 5% is used to fuel the liquidity pool on the PancakeSwap decentralized exchange. The tokens are permanently locked in the LP, effectively reducing the available supply. The token was launched with the idea of creating a community token with a self-generating income mechanism for its owner.

X-TOKEN differs from the rest of the De-Fi crowd because it has a passionate team working full time to develop a fully-fledged ecosystem of applications surrounding the token. “We aim to not only have a financially appealing cryptocurrency asset for short-term traders but a suitable long-term asset for serious long-term investors active in crypto. X-TOKEN is a yield-generating contract that rewards its holders” Company stated.

Each trade has a 10% tax whereas 5% gets distributed to holders and another 5% gets locked in liquidity to create a solid price floor. Buying X-TOKEN is easy in a few steps: Download wallet, get BNB on Binance which you can swap to X-TOKENS, Swap on XSwap, which is also their first dApp, or on PancakeSwap.io.

The team behind X-TOKEN consists of 5 members who are experts in cryptocurrency from the early stages. They are primarily developers who deal with the implementation of BI applications, which will be paid in X-TOKEN. The Team is based mostly in Germany and Latvia.

For more info, or to get in contact, please visit:

Website: project-x.finance

Telegram: https://t.me/projectX_token

Discord: nce@prdistribution.org

“For the original news story, please visit power-crypto-traders.html"

Six large insurers acquired shares of cryptocurrency investment products offered by Grayscale Investments, according to an S&P Global Market Intelligence report.

The insurers didn’t directly purchase bitcoin or another cryptocurrency, but the investment products derive their value from shares of Grayscale Bitcoin Trust or Grayscale Ethereum Trust. Grayscale is a unit of Digital Currency Group, CoinDesk’s parent company.

Investors can buy shares in a private placement transaction and then sell them on the secondary market following a holding period. Retail and institutional investors can then buy shares on the over-the-counter market. The trusts use published CoinDesk indexes to track cryptocurrency prices.

Related: DeFi Risk Assessor Sherlock Raises $1.5M in Pre-Seed Funding

Grinnell Mutual Reinsurance and Donegal Mutual Insurance, a subsidiary of Atlantic States Insurance, made their first moves in February, purchasing 18,000 and 20,000 shares, respectively. Grinnell paid $968,000 for its shares.

Georgia-based State Mutual Insurance Co. was the only insurer to initially purchase shares of both the bitcoin and ethereum investment products. The mutual insurer acquired 13,000 shares of Bitcoin Trust and 9,000 shares of Ethereum Trust for about $491,000 and $141,500, respectively.

Insurance companies have recently ramped up their interest in cryptocurrency investments. In December, Massachusetts Mutual Life Insurance Co. purchased $100 million of bitcoin and made a $5 million equity investment in New York Digital Investment Group LLC.

Opium, UMA to Launch Decentralized Insurance for SpaceX Flights

‘Grayscale Discount’ Narrows to 10% and Could Shrink More as Lockups Expire

Record ‘Grayscale Discount’ Might Mean Bargain Bitcoin for Retail Traders

The recent volatility in bitcoin prices triggered by Tesla’s Elon Musk has raised new doubts among institutional fund managers over the future of cryptocurrencies as an asset class.

UBS Wealth Management, Pimco, T Rowe Price and Glenmede Investment Management were among the firms that have expressed reservations in recent days about the potential of cryptocurrency investments.

The upheaval came after Tesla said it would no longer accept payment in bitcoin for its electric vehicles owing to environmental concerns, and Musk jokingly referred to dogecoin, a rival cryptocurrency, as a “hustle” during an appearance on the Saturday Night Live television show.

“Our stance with clients is the 10-foot pole rule: stay away from it,” said Jason Pride, chief investment officer of private wealth at Glenmede. “I don’t think the Fed and other regulators are fans of the current market structure for cryptocurrencies.”

Rob Sharps, president and head of investments at T Rowe Price, told the Financial Times: “Crypto has an impact across capital markets, and we’re capital markets experts. Ultimately, the mandates we manage for clients are not well suited for investing in cryptocurrencies, and we recognise the high level of speculation in this space.”

Highlighting the extreme volatility, bitcoin traded at just above $44,000 on Monday, down about $20,000 from the record high it hit just a month ago. The latest tumult was sparked by Musk seeming to imply on Twitter that Tesla has or will sell the stake it has accumulated in bitcoin. He later clarified that the automaker “has not sold any bitcoin”.

To be sure, bitcoin has gained ground with investors in recent years and trading in futures contracts has become more liquid. US regulators are also considering whether to approve crypto exchange traded funds.

But asset managers say they are troubled by signs that cryptocurrencies are failing to live up to expectations that they would become less volatile over time or offer investors hedges against equity turbulence or inflation.

“The volatility of crypto is stratospherically high and we often see that, when equities sell off, so does bitcoin and that means it is not a good portfolio diversifier,” Pride said.

Nicholas Johnson, portfolio manager for commodities at Pimco, took issue with bitcoin advocates who praised it as an inflation haven after cryptocurrencies rallied while gold fell in price.

“This idea that crypto is an inflation asset is curious,” he said. “Inflation assets underperformed in recent years while cryptocurrencies did very well. People are looking for a reason to justify why crypto has gone up.”

Cryptocurrency anxieties were further exacerbated this week when a leading US regulator warned investors that buying mutual funds with exposure to bitcoin futures “is a highly speculative investment” — and warned mutual funds that it would be subjecting their involvement with the cryptocurrency to intense scrutiny.

The Division of Investment Management at the Securities and Exchange Commission said: “Investment in the bitcoin futures market should be pursued only by mutual funds with appropriate strategies that support this type of investment and full disclosure of material risks.”

“We expect more stringent policy and regulatory controls ahead for crypto as it becomes more mainstream,” UBS Wealth Management said, adding that the price volatility that followed the Tesla announcement “highlights risks companies face if they take on crypto balance sheet exposure”.

Tom Jessop, head of digital assets at Fidelity, which has been more receptive to cryptocurrencies, nevertheless cautioned that such investments were still in the early stage of development.

“We refer to bitcoin as an aspirational store of value and it’s an adolescent in terms of its development due to the extreme volatility,” he said. “Some investors are willing to accept the volatility as they see bitcoin as a long-term venture opportunity.”

Robert Armstrong dissects the most important market trends and discusses how Wall Street’s best minds respond to them. Sign up here to get the newsletter sent straight to your inbox every weekday.

Fidelity provides a brokerage service that enables more than 100 institutional investors such as hedge funds and family offices to buy cryptocurrencies and offers them custodian services. Fidelity has a small fund that invests in digital assets for clients and its has applied to the SEC to launch an ETF for bitcoin.

Even if asset managers shy away from crypto, swings in its valuations are a concern for the industry because of the growing power of retail traders to cause volatility in the equity market, known as the “substitution effect”.

“Watching what retail investors are doing is as important as bond flows to managers now,” said Viraj Patel, an analyst at Vanda Research. “They are asking, if millennial capital is buying bitcoin, does this mean they’re going to stop buying high-beta US stocks?”

For the latest news and views on fintech from the FT’s network of correspondents around the world, sign up to our weekly newsletter #fintechFT

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Technology and globalization are rapidly changing the world we live in and its usual patterns. One of the biggest followers of this rapid development is undoubtedly "cryptocurrencies". Although cryptocurrencies find more place on the agenda day by day, both economically and legally, the question marks on this issue have not been resolved yet, and the systematics and principles of this issue have not been fully established both in our country and in the world. Therefore, cryptocurrencies bring some risks and uncertainties. This article examines legal character of cryptocurrencies under Turkish Law and the approaches of regulatory authorities to this matter.

Substantially, in order for cryptocurrencies to comprehend, the "blockchain" technology, which is the underlying technology of cryptocurrencies, must be explained. Blockchain technology, which is expected to shape our future technology, records the data in it by adding them to each other in the form of blocks, thus minimizing the risks such as deletion, imitation or elimination of these records1. As such, block chain technology ensures that every transaction in the digital environment is recorded with high security. Cryptocurrencies, on the other hand, can be defined as virtual currency that is built on this blockchain technology2, can be used in exchange, and strengthens in the digital environment. Cryptocurrency ensures that no financial institution is needed in the realization of online payments, while it makes it possible for all transactions made through these currencies to be carried out quickly, under favour of its direct transmission between the parties and their independence from central money institutions3. However, the fact that these currencies are not controlled by any control mechanism causes them to remain at an unstable level to a great extent.

The first cryptocurrency, Bitcoin, was introduced to the world in 2008 with the article titled "Bitcoin: A Peer-to-peer Electronic Cash System", which was sent to a working group by a person or group using the name "Satoshi Nakamato" and Bitcoin has become the pioneer of cryptocurrencies and the largest currency. Apart from this, there are more than a thousand types of cryptocurrencies such as Ethereum, Litecoin, Ripple and Avax.

Cryptocurrencies are legally accepted in some countries. For instance, Japan has accepted Bitcoin as a legal payment instrument as of 2018. Conversely, countries such as South Korea, Singapore, and the United Kingdom do not accept cryptocurrencies as legal payment instruments6.  As it is understood, it is seen that there is not a common denominator agreed on worldwide yet.

There is no clear regulation in our law that includes cryptocurrencies. The definition of "Electronic Money" is made in subparagraph (ç) of the first paragraph of Article 3 of the Law on Payment and Securities Settlement Systems, Payment Services and Electronic Money Institutions numbered 6493. Electronic Money means that monetary value that is issued on the receipt of funds by an electronic money issuer, stored electronically, used to make payment transactions defined in this Law and also accepted as a payment instrument by natural and legal persons other than the electronic money issue. Although electronic money is in digital form, the unit of account is legal currencies such as Turkish Lira and Dollar7. It is not possible to reach the interpretation that the cryptocurrency is detailed with this definition8.

As a result of the fact that the definition of electronic money does not clearly cover cryptocurrencies and that some legal problems which have arisen with the increase in the use of cryptocurrency in Turkey occupy the legal agenda; the first legal regulation took place in our law, although it is not directly discussed under the title of cryptocurrencies. Regarding crypto assets, the Regulation on the Disuse of Crypto Assets in Payments ("Regulation") was published by the Central Bank of the Republic of Turkey ("CBRT")  in the Official Gazette dated April 16, 2021 and numbered 31456, to be effective on April 30, 2021. The objective of this Regulation, which is the first regulation regarding cryptocurrencies, "is to regulate the procedures and principles regarding the disuse of crypto assets in payments, the disuse of crypto assets directly or indirectly in the provision of payment services and in the issuance of electronic money, and the non-intermediation by the payment and electronic money institutions for the fund transfers from and to the platforms providing services of trading, custody, transfer or issuance related to crypto assets." In fact, the Regulation, which consists of 6 articles in total, does not bring a comprehensive regulation, however gains importance as it defines crypto assets and is the first legal regulation on this subject.

Crypto assets defined as "intangible assets that are created virtually using distributed ledger technology or a similar technology and distributed via digital networks, but are not classed as fiat money, deposit money, electronic money, payment instrument, securities, or other capital market instruments." The usage area of the aforementioned definition is limited within the scope of the Regulation. Therefore, although a definition has been made, a broad definition that will expand the entire legal framework has not yet been included in our legal order.

In this regulation, it is stipulated that crypto assets cannot be used directly or indirectly in payments and the service for making these transactions cannot be provided. It is also prohibited for payment and electronic money institutions to act as intermediaries for platforms that offer trading, custody, transfer or issue services regarding crypto assets or for fund transfers from these platforms. The CBRT indicated the reasons such "cryptocurrencies are neither subject to any regulation and supervision mechanisms nor a central regulatory authority, their market values can be excessively volatile, they may be used in illegal actions due to their anonymous structures, wallets can be stolen or used unlawfully without the authorization of their holders, and transactions are irrevocable", in its press release dated April 16, 2021, as the reason for these restrictions made by the Regulation.9

Crypto asset service providers have become subject to the supervision of the Financial Crimes Investigation Board ("MASAK"), with the "Amendment to the Regulation on the Prevention of Laundering of Proceeds of Crime and the Financing of Terrorism" published in the Official Gazette dated 01 May 2021 and numbered 31471. MASAK has published the "Crypto Asset Service Providers Guide", with crypto asset service providers subject to control of the MASAK 10. This guide explains the obligations of service providers. Accordingly, the obligations of cryptocurrency service providers are listed as follows:

According to the guide, obliged parties, who are cryptocurrency service providers, "are obliged to determine the identities of those who make transactions and those who are transacted on their behalf, to take other necessary measures before taking any action in the transactions made by them or intermediating them, thus determining the principles of recognizing their customers."  If there is "any information, suspicion that it is illegally obtained or used for illegal purposes, used by terrorists or those who finance terrorism for terrorist acts, or related to or connected with them", suspicious transaction will also be in question and obliged parties shall notify this situation to MASAK regardless of monetary limit. This notification must be made within 10 working days from the date of suspicion. Furthermore, obliged parties are obliged to provide all kinds of information, documents or records that will be requested from them. Finally, the obliged parties are obliged to inform MASAK about the amount to be determined by the Ministry of Finance from the transactions to which they are parties or mediated.

These obligations are also detailed in the Law No. 5549 on the Prevention of Laundering Proceeds of Crime, and if these obligations are not complied with, an administrative fine may be imposed by MASAK.

In addition to the CBRT, the Capital Markets Board ("CMB") is one of the regulatory authorities in our country, which aims to determine the operating rules of capital markets and institutions and to ensure fair and effective functioning of the markets11. The CMB has made it clear that many of the practices for raising money, usually using blockchain technology, also known as the sale of cryptocurrencies, fall outside the CMB's regulation and oversight area, with regard to cryptocurrencies, as per its bulletin 2018/4212.

When the subject is considered in terms of property law, although the concept of property is not clearly defined in the Turkish Civil Code, when the provisions on real rights are examined, it is stated that goods with physical existence gain the quality of property13. There is no consensus in the doctrine on whether cryptocurrency should be counted as a property. There are opinions that cryptocurrencies cannot be considered as properties, since they do not carry the element of material assets in terms of Turkish law14, however, there are also opinions that cryptocurrencies can be considered as properties since they can be used in daily life and transferred, in other words, and they can be evaluated within the scope of property rights15.

Cryptocurrencies, which has entered our lives as a new instrument, is mostly seen as an investment instrument, not as a payment instrument. This rapidly growing new international currency has not yet been fully regulated by countries. Legal regulations, with the contribution of technology, have remained in the background in the face of this rapidly developing sector. The rapid fluctuations in the market are one of the situations that cause states and regulatory authorities to approach this issue with prejudice.

Cryptocurrencies, which are not subject to a legal regulation, also bring some risks as they are not connected to any center. The recently enacted Regulation, on the other hand, covers only a narrow area and does not make a general definition of cryptocurrencies. The necessity of evaluating the disputes experienced within our classical legal system arises, however still the issue in question cannot be gathered under a clear denominator.  Nevertheless, as seen in the step taken by MASAK, the existence of cryptocurrencies will undoubtedly make itself felt more and more on our legal system, and it will bring important effects on our traditional legal rules.

Footnotes 

1 ÖZSOY, Ilker Mete, KRIPTO PARA VARLIKLARININ CEBRÎ ICRA YOLU ILE HACZI, Ankara 2019

2 MUTLUOGLU, Derya, KRI?PTO PARA BI?RI?MLERI? VE SUÇTAN KAYNAKLANAN MALVARLIGI DEGERLERI?NI? AKLAMA SUÇU, Ankara 2020,

3 ÇAKIN, Murat, KRIPTO PARALAR: BITCOIN, DÖVIZ KURLARI ve ALTERNATIF KRIPTO PARALAR ARASINDAKI ILISKININ INCELENMESI, Izmir, 2019

4 BILGILI, Fatih, CENGIL, Fatih, BITCOIN ÖZELINDE KRIPTO PARALARIN ESYA NITELIGI SORUNU

5 UYSAL, Ümit, KRIPTO PARA VE KRIPTO PARANIN TICARETTE KULLANIMI: GIRISIMCILERIN VE YATIRIMCILARIN KRIPTO PARAYA ILISKIN TUTUMLARININ INCELENMESI, Mugla, Temmuz,2019,

6 ALNIAÇIK, Baris, KRIPTO PARALARIN DÜNYA VE TÜRKIYE'DEKI GÜNCEL DURUMU ÜZERINE BIR INCELEME, https://dergipark.org.tr/tr/download/article-file/636852 , Date of Access: 01.06.2021

7 DURMUSH, Gülnara, KRIPTO PARA VE ICRA HUKUKU YÖNÜNDEN DÜSÜNDÜRDÜKLERI, Istanbul, 2019

8 ALNIAÇIK, Baris

9 CBRT press release dated April 16, 2021 ents/Press+Releases/2021/ANO2021-17 Date of Access: 02.06.2021

10 glayicilar-Rehberi.pdf Date of Access: 02.06.2021

11 SERMAYE PIYASASI KURULUNUN OLUSUMU, r.  Date of Access: 02.06.2021

12 https://www.spk.gov.tr/Bulten/Goster?year=2018&no=42 Date of Access: 02.06.2021

13 DURMUSH, Gülnara

14 BILGILI, Fatih, CENGIL, Fatih

15 DURMUSH, Gülnara

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Cryptocurrency investing has been one of the big news stories of 2021. Although the first Bitcoin was mined way back in 2009, it wasn’t until Bitcoin millionaires began being minted that crypto started grabbing the public’s attention. Now, new coins have flooded the market, and more millionaires have been created, as some coins have rallied 1,000%, 2,000% or even more. In the midst of all of these incredible gains, the natural question is whether or not it’s too late to invest in cryptocurrency. The truth is that no one can guarantee whether crypto will rise or fall from here, as it’s an entirely new market that is neither well-defined nor well-regulated. But there are clear arguments on both sides of the coin as to whether it’s time to buy or not.

Check Out: 10 Best Cryptocurrencies To Invest in for 2021 Consider: Dogecoin: Is It Still Worth an Investment?

One of the fears of entering the crypto market has always been that governments around the world will shut down acceptance and even production of the coins. That time may already be here. In late May 2021, China began cracking down hard on bitcoin mining and trading, which sent crypto prices cascading downwards. According to Boris Schlossberg, managing director at BK Asset Management, the primary reason for this crackdown was because “Chinese authorities are keen to see their own digital currency in the form of the yuan become the primary unit of account in the Chinese economy.” If other governments follow suit, demand and support for Bitcoin and other cryptocurrencies could falter.

The Economy and Your Money: All You Need To Know

If you’re a believer that the crypto market is another version of the stock market, there might be no better time to buy cryptos like Bitcoin because they are on sale. As of June 4, Bitcoin was more than 40% off its all-time high, and other cryptos had fallen by a similar amount or even more. As the history of Bitcoin has shown, massive drops like this are not at all unusual, and yet the cryptocurrency has managed to consistently climb to new highs. If you were curious about Bitcoin a few weeks ago, the current sell-off might be a chance to dip your toe into the market.

Explore: What Are Altcoins — and Are the Potential Rewards Worth the Risks?

Skeptics believe that cryptocurrency is an asset class with no store of value, no barrier to entry and no value as an exchange currency. As such, skeptics view crypto as simply a speculative asset class with no long-term viability as a true asset class. At a CNBC-hosted panel in Davos, Switzerland in 2019, Jeff Schumacher, founder of BCG Digital Ventures, had this to say about Bitcoin: “I do believe it will go to zero. I think it’s a great technology but I don’t believe it’s a currency. It’s not based on anything.” In 2020, famed investor Dennis Gartman offered the same assessment to Bloomberg, saying that if central banks “refuse to give up their monopoly on monetary policy, ” Bitcoin could one day plunge to zero.

Read: Where Does Cryptocurrency Come From?

Rather than seeing Bitcoin go to zero, believers like Ark Investment’s Cathie Wood suggest quite the opposite. The popular investment strategist and CEO believes that Bitcoin will actually hit $500,000. Part of the reason for Wood’s bullishness is her belief that asset managers will eventually allocate up to 5% of their portfolios to cryptocurrency. Greg Cipolaro and Dr. Ross Stevens, researchers at New York Digital Investment Group, support this belief, adding that “Increasing fundamental demand combined with a fixed supply and automatically declining supply growth make a compelling case for Bitcoin as an alternative investment for institutional investors.” The researchers are referring to the fact that the supply of Bitcoin is limited to 21 million coins.

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This article originally appeared on GOBankingRates.com: Is It Too Late To Invest In Cryptocurrency?

Coinbase, the US-based cryptocurrency exchange, announced on Monday support for Polkadot (DOT) within its Coinbase Pro offering. Although transferring DOT into Pro accounts is now possible, trading will be enabled after 4pm GMT on June 16 only if liquidity conditions are met, the company clarified.

According to the firm, once enough DOT supply is set on the exchange’s platform, trading on DOT-USD, DOT-BTC, DOT-EUR, DOT-GBP and DOT-USDT order books will be deployed in three phases known as post-only, limit-only and then full trading. “If at any point one of the new order books does not meet our assessment for a healthy and orderly market, we may keep the book in one state for a longer period of time or suspend trading as per our Trading Rules,” Coinbase noted.

Polkadot (DOT) is not available on Coinbase’s website or mobile apps, although the exchange stated such plans would be announced when the support is enabled outside Coinbase Pro. Support for DOT will be available for most supported countries in the publicly-listed crypto exchange, but the firm highlighted it would not be allowed for Singapore.

What Are the Benefits of a Technology Driven Liquidity Provider?Go to article >>

Also, the exchange said on the official announcement that it would keep customers informed through Coinbase Pro’s Twitter official account when each phase mentioned has been passed in terms of order books for DOT.

The company has been adding cryptos to its platform actively, such as Gitcoin (GTC), Enzyme Token (MLN), Amp (AMP), Dogecoin (DOGE), Internet Computer (ICP), Cartesi (CTSI), iExec (RLC), Mirror Protocol (MIR) and Tellor (TRB), among others. In fact, Finance Magnates reported in April that Coinbase announced support for stablecoin Tether (USDT), whose trading in Coinbase Pro started on April 26.

When the US-based crypto exchange announced support for DOGE in Coinbase Pro early in June, the meme coin skyrocketed around 15%. Order books for Dogecoin available are DOGE-USD, DOGE-BTC, DOGE-EUR, DOGE-GBP and DOGE-USDT.

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India's predicted move could have a very positive effect on the price of bitcoin as the nation is the world's sixth-largest economy. This could open up a $10trillion economy to bitcoin investment and daily transactions. About the possibility of India following El Salvador's lead, editor at Invezz, Jayson Derrick said: “Encouraging developments in the move towards greater adoption of bitcoin aren’t limited to poorer countries.

"India, a G20 member with a $10trillion economy, is reportedly close to classifying bitcoin as an asset class”.

Referring to the trajectory of mainstream adoption of the world's preeminent cryptocurrency, bitcoin pioneer Max Keiser told Express.co.uk: "India, like all nations, will follow El Salvador and make bitcoin their official currency.

"I can say this with 100 percent certainty because Game Theory is hardcoded into the bitcoin protocol, reckless money printing by central banks is unstoppable, and the best safe-haven asset in the world is bitcoin."

Many Latin American nations such as Mexico, Colombia, Argentina and Brazil, with economies that struggle with inflationary issues, may follow the example set by El Salvadoran lawmakers who made bitcoin legal tender on June 8, 2021.

The text of the law ratified by the El Salvadoran congress stated that “every economic agent must accept bitcoin as payment when offered to him by whoever acquires a good or service".

Already financial institutions and experts are looking at El Salvador's move as a "historic" precedent.

Avik Roy, president of the Foundation for Research on Equal Opportunity, said the move would “transform El Salvador into one of the world’s most important financial centres, and affect the way people around the globe use digital currencies".

The price of bitcoin jumped by 12 percent today partially in reaction to the announcement that billionaire US investor Paul Tudor Jones would transfer 5 percent of his balance sheet into the cryptocurrency.

READ MORE: Universal Basic Income: Adults aged 18-64 in UK trial could get £213

Speaking to CNBC today Mr Jones said: "Bitcoin is math and math has been around for thousands of years, and two plus two is going to equal four, and it always will for the next two thousand years.

"So, I like that idea of investing in something reliable, honest, secure, and 100 percent certain.

"Bitcoin has an appeal to me in being able to invest in certainty."

More news that has helped bolster a renewed positive sentiment in bitcoin is Tesla's announcement it will Tesla accept bitcoin payments once Miners Use 50 percent “clean energy”.

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Tesla CEO Elon Musk was lambasted by Sygnia CEO Magda Wierzycka who said, “what we have seen with bitcoin is price manipulation by one very powerful and influential individual."

Yesterday the Tesla CEO responded with a revealing tweet: "This is inaccurate.

"Tesla only sold 10 percent of holdings to confirm bitcoin could be liquidated easily without moving market.

"When there’s confirmation of reasonable, 50 percent plus, clean energy usage by miners with positive future trend, Tesla will resume allowing Bitcoin transactions."

Bitcoin, the original cryptocurrency, was launched in 2009. Today, there are thousands of cryptocurrencies with a total value of about $2 trillion. The surge in their prices earlier this year minted tens of thousands of cryptocurrency millionaires—at least on paper. Cryptocurrencies might turn out to be a massive speculative bubble that ends up hurting many naive investors. Indeed, many cryptocurrency fortunes have already evaporated with the recent plunge in prices. But whatever their ultimate fate, the ingenious technological innovations underpinning them will transform the nature of money and finance. Eswar Prasad Senior Fellow - Global Economy and Development Twitter EswarSPrasad

Cryptocurrencies such as bitcoin and Ethereum were designed as a way to make payments without relying on traditional modes such as currency notes, debit cards, credit cards or checks. The bitcoin white paper, which set off the cryptocurrency revolution, envisions an electronic payment system that allows “any two willing parties to transact directly with each other without the need for a trusted third party,” cutting governments and banks out of the financial loop. The website Pymnts claims, “Blockchain IS the future of the payments industry,” a reference to the computational technology that undergirds cryptocurrencies.

In fact, it has become very expensive and slow to conduct transactions using cryptocurrencies. It takes about 10 minutes for a bitcoin transaction to be validated, and the average fee for just one transaction was recently about $20. Ethereum, the second-largest cryptocurrency, processes transactions slightly faster but also has high fees.

Moreover, wild swings in the values of most cryptocurrencies make them unreliable as a means of payment. In late April, the price of a Dogecoin was 20 cents. It tripled in the next two weeks and then fell to half that peak value ten days later. It is as though a $10 bill could buy you just a cup of coffee one day and a lavish meal at a fancy restaurant just a few weeks later. Even on a calmer, more typical day, the value of a major cryptocurrency such as Ethereum might fluctuate by 10 percent or more, making it too unstable to be practical. Recently, Elon Musk announced that Tesla would no longer accept bitcoin as a form of payment, reversing a policy it had implemented earlier in the year. The value of a single coin almost immediately plummeted. A Chinese crackdown on cryptocurrencies then briefly took another one-third off the price in just one day.

Investment funds in bitcoin and other cryptocurrencies have proliferated. Even major banks such as Goldman Sachs and Morgan Stanley are getting into the game. And you would certainly have made a fantastic return if you had bought any of the major cryptocurrencies last year. A typical article in the Motley Fool debates not whether cryptocurrencies are a good investment but “which one is right for you.” The website Business Mole claims: “Even with adjustments made, Bitcoin and Ethereum are very profitable. It’s simple.”

But beware. Part of the allure seems to be that, like gold, the supply of most cryptocurrencies is tightly controlled (by the computer programs that manage them). For instance, about 18.5 million bitcoin have been created so far, and there will eventually be a maximum of 21 million bitcoin. This is a cap set by the computer program that manages the supply of the currency.

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Scarcity by itself is not, however, enough to create value—there has to be demand. Since cryptocurrencies cannot easily be used to make most payments and have no other intrinsic uses, the only reason they have value is because many people seem to think they are good investments. If that changed, their value could quickly drop to nothing.

Bitcoin is now seen as the granddaddy of cryptocurrencies, and investors (or speculators, more precisely) are piling into other cryptocurrencies such as Dogecoin. In 2019, Investopedia claimed that bitcoin was “losing its power as the driving force of the cryptocurrency world.” “Bitcoin And Ethereum Are Being Left In The Dust By Dogecoin,” reads a recent Forbes headline.

Dogecoin and other such cryptocurrencies, which are simply built around memes (Dogecoin, with its Shiba Inu dog mascot, references the “doge” meme), don’t even make a pretense of being usable in financial transactions. And there is no clear constraint on the supply of these coins, so their prices surge or crash on random events such as tweets from Musk. The valuations of meme currencies seem to be based entirely on the “greater fool” theory—all you need to do to profit from your investment is to find an even greater fool willing to pay a higher price than you paid for the digital coins.

Bitcoin’s technology does seem outdated compared with some of the newer cryptocurrencies that enable greater anonymity for users, faster transaction processing and more sophisticated technical features that facilitate automatic processing of complex financial transactions. For all its flaws, however, bitcoin remains dominant: It accounts for nearly half of the total value of all cryptocurrencies.

Morgan Stanley’s chief global strategist, Ruchir Sharma, has argued that bitcoin could end the dollar’s reign—or at least that the “digital currency poses a significant threat to [the] greenback’s supremacy.” A Financial Times headline proposes, even more ominously, that “Bitcoin’s rise reflects America’s decline.”

Cryptocurrencies are not backed by anything other than the faith of the people who own them. The dollar, by contrast, is backed by the U.S. government. Investors still trust the dollar, even in hard times. As one illustration, domestic and foreign investors continue to eagerly snap up trillions of dollars in U.S. Treasury securities even at low interest rates.

New cryptocurrencies called stablecoins aim to have stable values and therefore make it easier to conduct digital payments. Facebook plans to issue its own cryptocurrency, called Diem, that will be backed one for one with U.S. dollars, giving it a stable value. But the value of stablecoins comes precisely from their backing by government-issued currencies. So while dollars might become less important in making payments, the primacy of the U.S. dollar as a store of value will not be challenged.

Warren Buffett has compared cryptocurrencies to the 17th-century Dutch tulip craze, while Bank of England Governor Andrew Bailey cautioned, “Buy them only if you’re prepared to lose all your money.” Economist Nouriel Roubini called bitcoin “the mother or father of all scams” and even criticized its underlying technology.

Cryptocurrencies may or may not persevere as speculative investment vehicles, but they are triggering transformative changes to money and finance. As the technology matures, stablecoins will hasten the ascendance of digital payments, ushering out paper currency. The prospect of competition from such private currencies has prodded central banks around the world to design digital versions of their currencies. The Bahamas has already rolled out a central bank digital currency, while countries like China, Japan and Sweden are conducting experiments with their own official digital money. The dollar bills in your wallet—if you still have any—could soon become relics.

Even transactions such as buying a car or a house could soon be managed through computer programs run on cryptocurrency platforms. Digital tokens representing money and other assets could ease electronic transactions that involve transfers of assets and payments, often without trusted third parties such as real estate settlement attorneys. Governments will still be needed to enforce contractual obligations and property rights, but software could someday take the place of other intermediaries, including bankers, accountants and lawyers.

It’s been brewing for some time, but 2021 is finally seeing established payment companies take the opportunities of cryptocurrency seriously, and among those leading the pack is Visa V . 

An industry that was previously plagued by volatility and speculation is beginning to see its enterprise-friendly side blossoming, and according to the card network, the opportunities are abundant. 

“The world of digital currencies and crypto has moved and evolved quite significantly since the 2009 launch of Bitcoin,” explains Nikola Plecas, head of new payment flows, Visa Consulting and Analytics, Europe at Visa. 

“Visa's strategy is to be a network of networks and really be able to originate and terminate new payment flows outside of card rails. We have made tremendous push into these new flows over the last couple of years with products such as B2B Connect, Visa Direct, Push to Pay – and digital currencies naturally fall into that category.”

However, this doesn’t mean that the world’s most famous cryptocurrency – Bitcoin – features heavily in the card network’s plans. Instead, Visa characterises the industry as made up of two distinct groups: conventional, untethered cryptocurrencies and fiat currency-backed digital currencies, often known as stablecoins, which are attracting greater interest from institutional and government organizations despite currently a smaller part of the overall market.

The former is seen by the company as a tradeable asset with limited industry potential – CEO Alfred Kelly described it as “digital gold” in the company’s Q2 2021 earnings call. However, the latter is where Visa sees significant potential for payments.

“We see these as having the potential to be used by consumers and merchants in the same way as existing fiat currencies are,” says Plecas. “And when it comes to areas of opportunity, there are many for organizations such as ours.”

While many use the terms cryptocurrency and digital currency interchangeably, Visa has chosen to characterize the area it is focusing on – the stablecoin side of the industry – as digital currencies. 

Visa’s digital currency efforts currently fall into five areas. Some of these are well-established and already contributing to the company’s revenue growth, while others are in the early stages and are unlikely to make a meaningful impact on Visa’s top line in the near future. However, they together represent a long-term view of the market.

The first is perhaps the most obvious: making it easy for consumers to buy cryptocurrencies, which has involved working with wallets and exchanges “drive acceptance”. This area earned a mention in Visa’s most recent earnings call as being the second biggest contributor of growth in its card-not-present excluding travel segment – the biggest growth was the surge in ecommerce.

Second is a natural progression from the first: enabling cryptocurrency to be cashed out to fiat. 

“We want to make sure that you as a consumer, once you exit your cryptocurrency positions in exchanges and wallets can cash onto a Visa credential and then start spending at any of our 70 million-plus merchant endpoints,” says Plecas.

While those two are in full swing, a newer development is the third pillar, which is the use of digital currency APIs to enable banks and neobanks to add cryptocurrency options for their clients. This is in the early stages, with US neobank First Boulevard becoming the pilot customer earlier this year, however Plecas highlights that Visa is “looking to extend to other markets and regions” with the product.

“We quickly realized that there's potential to be the next gen of neobanks,” he explains. “They're also doing a lot of their treasury operations, paying vendors and employees already in stablecoins.”

In order to do this, the company needed to enable customers to “stay within their ecosystem when they also settled their obligations” with Visa, which is where pillar four, settlement in stablecoins comes in. This has seen Visa settle its first transaction in a stablecoin, US dollar-tethered USDC, this year. 

“Settling in USDC is very similar to settling in USD,” he explains.

“What we've done is an upgrade of existing treasury infrastructure operations to be able to receive these assets, because actually receiving them is now done through public blockchain rails. And as time evolves, we want to support other stablecoins.”

The final pillar, however, is the most long-term: central bank digital currencies (CBDCs). According to the Bank for International Settlements, 86% of the world’s central banks are now considering the launch of CBDCs of one form or another, with more than one in ten currently engaged in pilots. 

CBDCs have a variety of benefits, including the potential to better reach the underbanked, and Visa argues that their implementation will require public-private partnerships.

“That way, they will be integrated in the right way into the existing payments' ecosystem,” says Plecas.

“At Visa, we want to make sure that our products and services are acting as a bridge between our existing clients and the new clients and blockchain rails involved with digital currencies.”

While much of this is focused on the consumer side of cryptocurrency and digital currencies, Visa also sees significant potential in B2B payments.

“B2B is an area of high growth, high importance and high interest to all of Visa. And we see that digital currencies can supplement and compliment some of the existing solutions that we have in the space,” says Plecas.

However, while digital currencies can impact the B2B space, and in some cases are already doing so, broader institutional adoption is likely to take time. 

Nevertheless, in areas with poor infrastructure, the potential of CBDCs in particular is strong for B2B.

“In some countries the infrastructure is just not there yet, and for these types of countries and regions, digital currencies can complement what we already have.”

One of the areas that is often raised in digital currency discussions is cross-border payments, with many citing potential speed and cost benefits. However, Plecas stresses that while there is potential, it is not a simple clean fix.

“The cross-border space is highly complex, and it has a large number of actors who are trying to solve for consumer experience in terms of end user price and time efficiency,” he says.

“It's not easy to solve for this, even if you're trying new technologies that would give you some advantages theoretically with this aspect.”

However, he says Visa sees particular opportunities in global marketplaces that bring together buyers and sellers from different currencies.

“In those instances, potentially digital currencies can help them reach some of these markets in a more time and cost efficient way.”

Daniel is Founder and CEO of FXC Intelligence, a financial data company specializing in the cross-border payments, cards and ecommerce industries. Daniel is a leading

Daniel is Founder and CEO of FXC Intelligence, a financial data company specializing in the cross-border payments, cards and ecommerce industries. Daniel is a leading influencer in the cross-border payments space globally. He is frequently invited to speak at industry conferences and provide insights and data on the sector. His weekly industry newsletter is the most widely read in the international payments market.

The Biden administration recently met with other government officials, including staff members at the Treasury Department, to discuss the risks presented by the extreme volatility in cryptocurrency markets, the Washington Post reported on Tuesday, and how to prevent illicit activities that use crypto.

The White House has also discussed the matter with the Treasury department’s Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau, although these talks did not include most senior-level officials like Treasury Secretary Janet Yellen, two unnamed individuals told the Post.

Biden officials are reportedly looking at possible “gaps” in oversight of the crypto market, and whether such gaps might be exploited to fund illicit or terrorist activities, the Post reported.

They also discussed possible ways to protect retail investors who want to purchase cryptocurrency.

Although federal regulators don’t currently believe the massive swings in crypto prices pose a threat to overall financial market stability, they contend such risks are worth monitoring, the Post noted.

Forbes has reached out to the White House, Treasury Department and the CFPB for comment.

“[Federal officials are] aware of the fact that there are all kinds of risks [related to crypto] in the abstract and things to look out for, but they are still largely in a wait-and-see posture,” an unnamed person briefed on the discussions told the Post. 

Last week, the Treasury Department revealed a plan to raise $700 billion over the next 10 years to help fund Biden’s $1.8 trillion American Families Plan which included new tax enforcement provisions that seeks to put pressure on cryptocurrencies, crypto asset exchanges and crypto payment services to report transactions to the Internal Revenue Service in order to uncover unreported income or to detect incidences of tax evasion, money laundering and other illicit activities. The plan would also compel businesses to file a current transaction report if they receive cryptocurrency valued at more than $10,000 (as they are currently required to report cash payments above $10,000). Meanwhile, Bitcoin, the largest and most popular cryptocurrency, traded at around $38,000 on Tuesday at 1:20 p.m., a 36% plunge from May 9, partly due to worries about Chinese regulatory crackdowns on cryptocurrency transactions as well as comments made by Tesla chief Elon Musk about the climate impact of mining Bitcoins. Bitcoin hit an all-time high of almost $65,000 in mid-April.

Luke Lloyd, wealth advisor and investment strategist at Strategic Wealth Partners in Independence, Ohio, told Forbes that government regulation of crypto markets isn’t “necessarily a bad thing” as long as it doesn’t completely ban cryptocurrency. But he cautions that regulation can kill innovation, and could restrict the free markets from working properly. “In the end, the issue of volatility in the cryptomarkets will fix itself if cryptocurrency becomes what it’s supposed to, at least for the larger coins like Bitcoin and Ethereum,” he said. “As more players and money get involved with Bitcoin and Ethereum, the market cap will rise. As the market cap rises, volatility will shrink.”

$1.63 trillion. That’s the current total market cap of the entire crypto market, according to CoinMarketCap, however that figure has dropped about 36% from a peak of about $2.53 trillion in early May.

On Monday, Federal Reserve board governor Lael Brainard promoted the idea of a cryptocurrency backed by the central bank, saying it would, among other things, help to provide financial services to the 20% of Americans who are “underbanked.” In a speech at a conference presented by Coindesk, a crypto news site, she said: “We must explore, and try to anticipate the extent to which households’ and businesses’ needs and preferences may migrate further to digital payments over time.” She added that a digital dollar would be a “new type of central bank money issued in digital form for use by the general public.” Last week Fed Chairman Jerome Powell said the central bank plans to release a working paper this summer on the various facets of central bank digital currencies, suggesting the Fed is getting serious about the matter.

Allianz chief economic adviser Mohamed El-Erian warned on Monday that volatility is likely to be a permanent feature of cryptocurrencies.  “I think the volatility will continue,” he told CNBC. “The roller coaster, the up and down. We’ve traded in the $30,000 to $44,000 price range [for Bitcoin] in a week, that’s enormous.”

Elon Musk And Michael Saylor Lead Effort By Bitcoin Miners To Address Environmental Concerns (Forbes)

Billionaire Ray Dalio Reveals Bitcoin Investment But Warns Of Regulation Rocking Crypto Markets (Forbes)

What Is Bitcoin And How Does It Work? (Forbes)

I have more than 20 yrs experience in writing about financial markets. I am especially interested in history and literature.

The world of cryptocurrency is weird and complicated.

In this four-part series, Information Age looks at the history of crypto, how you can get your hands on some, what you can do with it, and the Australian innovators looking to capitalise on this emerging technology.

Throughout this series (Part I and Part II), we've learned about the blockchain technology that underpins cryptocurrencies, discovered how to buy and store coins, and gained a better understanding of the history behind Bitcoin and what problems it looks to solve.

If you've taken the plunge and bought cryptocurrency, you might be wondering: what now?

Unless you live in, or are planning to move to, El Salvador, you’ll be hard-pressed finding many places that accept bitcoin or other cryptocurrencies as payment.

That won’t necessarily always be the case because with each passing month it seems more payments companies are dipping their toes into cryptocurrency.

Square – a favourite cashless service used by small vendors – has signalled its entrance into the space by investing in a large bitcoin holding and is looking to develop its own range of non-custodial hardware wallets.

PayPal entered the market last year when it began rolling out native cryptocurrency features letting users buy, sell, and hold Bitcoin, Ethereum, Bitcoin Cash, and Litecoin.

In March, the company took the next step allowing its US customers to Checkout with Crypto which means customers can choose to automatically convert their cryptocurrency holdings into fiat currency when finalising transactions.

US cryptocurrency exchange Coinbase has gone down a similar route with its own Visa debit card that automatically converts cryptocurrency to fiat currency at the point of purchase.

It’s currently only available to a small number of users in the US but provides an example of how cryptocurrency use can expand into the real world.

There is a major downside to this method of converting crypto to fiat: tax.

Even though it seems the same as using a debit card or Apple Pay to make a normal transaction, because the transaction involves that conversion, it may be treated as a capital gains event in many jurisdictions, including Australia.

We’ll come back to tax shortly.

Spending your coins

There are hundreds if not thousands of different cryptocurrencies available for you to buy and sell, many of which claim to have some use beyond wild price speculation.

One of the cryptocurrency uses that has exploded in the last couple of years is decentralised finance (DeFi).

These are platforms, typically built on smart contract blockchains like Ethereum, that give users access to financial services you might normally find in a traditional bank such as margin lending and earning interest on cryptocurrency deposits.

Decentralised exchanges (DEX) are one type of DeFi service that serve as both ways to continue keeping cryptocurrency away from central power structures as well as ways to get your crypto working for you.

Platforms like Uniswap and Pancakeswap let people easily exchange different cryptocurrencies or tokens, including some you might not find on large centralised cryptocurrency exchanges like Binance.

Some DEXs are automated market makers which rely on user-generated liquidity to function.

Cryptocurrency users essentially loan their coins to a DEX’s liquidity pool, allowing other users to trade a wide variety of cryptoasset pairings.

Take the Safemoon token, for example, that was part of a massive spike in speculative activity earlier this year.

Like many smaller cryptocurrency projects, it has not been hosted on large exchanges and relies instead on people trading coins on DEXs like Pancakeswap.

Crucially, DEXs need high levels of liquidity to account for large trading volumes so people are incentivised to deposit their coins on these exchanges by earning interest in the form of cryptocurrency.

Interest rates can be high – especially compared to record low savings rates offered by banks – but staking, as with many aspects of the cryptocurrency world, does come with its risks in the form of impermanent loss, which can leave the liquidity provider with less of a certain cryptocurrency due to the market maker responding to changes in real-world pricing.

NFTs

Non-fungible tokens (NFTs) have become a major trend in the art world this year, offering digital artists the opportunity to sell their wares in a way that provides buyers with a sense of scarcity and authenticity that makes art a store of value.

Unlike regular cryptocurrencies, NFTs are a form of cryptographic asset designed such that each one is unique and not interchangeable.

Because NFT ownership records are kept on a blockchain, it makes it easier for art dealers to check against a work’s authenticity.

And artists can see greater benefits to the smart contracts of blockchain by imprinting royalty features on NFTs, meaning they can receive cryptocurrency every time an artwork is re-sold.

In order to buy NFTs, you will likely need access to a hot wallet such as Metamask or Bitski which are designed to connect directly with decentralised applications (Dapps) running on blockchains.

With funds transferred into your hot wallet you can bid on and store the NFTs you find on different exchanges like Opensea, NiftyGateway, or those found on the WAX blockchain.

A recent explosion in NFT activity has seen hundreds of different NFT marketplaces and stores opening up giving buyers and artists alike a chance to cash in on the latest craze.

Once you have gone onto an NFT market and bought, say, an animated gif for nearly $1 million, then what?

Users can show off their NFT art purchases in virtual spaces like those on Cryptovoxels and Decentraland which attempt to create 3D metaverse-like social experiences.

These platforms expand the idea of NFTs by selling space and other assets in their virtual worlds as NFTs, further underpinning the ownership of digital assets on blockchain technology.

Fun and games

Where developers are making applications, it never takes long for video games to soon follow and Dapps are no exception.

The Worldwide Asset Exchange (WAX) blockchain is a great place to find different Dapps, early video games, and NFT market places.

It’s a hub for pop culture products in the form of NFT trading cards which can be bought directly from a supplier and then sold on secondary markets.

Alien Worlds is an early cryptocurrency video game – played in the browser – in which you play an interplanetary miner looking for resources in the form of the cryptocurrency Trilium (TLM), and mining or combat equipment.

Players choose a mining location on a planet – locations are NFTs owned by other players who get commission from your TLM mining – and then try to dig up as much TLM as their equipment will allow.

Better equipment means greater rewards.

Because every game asset in Alien Worlds is an NFT, they can be bought and sold in secondary marketplaces like the AtomicHub for the WAX cryptocurrency.

Because TLM and WAX can be bought and sold on cryptocurrency exchanges, players are incentivised through the prospect of earning real money, making Alien Worlds and many other blockchain video games an example of ‘play to earn’ gaming.

The tax of it all

Now that we know about some of the options for spending and playing with cryptocurrencies, it’s important to understand a little bit about how cryptocurrency ownership fits into Australia’s tax landscape.

In short: it’s complicated.

The Australian Taxation Office (ATO) has a set of information sheets dedicated to how it treats cryptocurrencies for tax purposes but unfortunately it turns out nearly everything you do with crypto is classed as a capital gains event and may need to be factored in when you file your tax return.

Let’s say you bought an amount of Dogecoin five years ago just for a laugh and then this year found the Doge in your wallet suddenly worth more than a thousand times what you paid for it.

It is intuitive that you would have to declare, for tax purposes, any gains you might make from cashing out your Dogecoin in the same way you would for capital gains from traditional investments like the sale of shares or property.

Unfortunately, cryptocurrency is slightly more complicated.

According to the ATO, most uses of cryptocurrency count as capital gains events, not just when you cash your coin back into fiat currency.

“Because you receive property instead of money in return for your cryptocurrency, the market value of the cryptocurrency you receive needs to be accounted for in Australian dollars,” the ATO says.

For example, say you wanted to convert some of your Dogecoin winnings into Ethereum to buy on an NFT of a meme you really like that has recently gone to auction.

Swapping Doge for Ethereum would have been a capital gains event and the value of your new Ethereum purchase, in Australian dollars, needs to be reflected on your tax return.

It gets more complicated.

You might have heard about another coin, like Safemoon when its value was ramping up, and wanted to get involved.

Unfortunately, you couldn’t directly swap your Doge for Safemoon and instead needed Binance Coin (BNB) so you could use a different DeFi service like PancakeSwap.

In that case, you traded some Dogecoin for BNB then swapped the BNB for Safemoon.

Each step in that chain is a capital gains event and needs to be converted to Australian dollars to account for the capital gain or loss incurred – and the same thing happens when selling back out of your position in a cryptocurrency, even if you haven’t sold it back into Australian dollars.

Similarly, if you earn staking rewards for joining a liquidity pool – or as part of a proof of stake network – cryptocurrency rewards and interest you earn may be classed as income, decided by the cryptocurrency’s market value at the time you received it.

Keep in mind that there are third party services like Koinly that connect with your wallet and exchange APIs to simplify the process.