Tax Time is Here and Lots of Cryptocurrency Holders Don’t Care
Cryptocurrency Taxes: Not Many People Pay Them
If you’re a cryptocurrency enthusiast then over the past few weeks you’ve probably seen a lot of articles on paying cryptocurrency taxes, how to pay them, and the horror stories involved with those who have to pay taxes on every transaction because — every single one is a taxable event in the U.S. Even though lots of people believe the Internal Revenue Service’s (IRS) classification is unjust by defining cryptocurrencies as a property rather than a currency, people still are forced to pay for their cryptocurrency gains. Just recently there’s been a multitude of reports on cryptocurrency taxation, and some of them explain that a lot of cryptocurrency proponents don’t seem to care about paying their digital asset taxes.
Jagjit Chawla, the general manager of Credit Karma Tax explained this week that out of 250,000 individuals who claim to hold cryptocurrencies like bitcoin; less than 100 people (0.0004%) reported their gains to the IRS.
“There’s a good chance that the perceived complexities of reporting cryptocurrency gains are pushing filers to wait until the very last minute,” explained Chawla.
Further a recent Pollfish conducted Lendedu survey of 1,000 U.S. residents who own cryptocurrencies revealed that 35.87 percent of respondents answered, “No, I do not plan on reporting gains or losses on my tax return” The news also follows the recent IRS Coinbase investigation that reported on how there are millions of Coinbase customers, but less than 900 individuals per year reported their taxes over the past few years.
Salty Tax Paying Bitcoiners Get Mad at ‘Tax Cheats’
The articles reporting on people not paying their cryptocurrency tax obligations has got a bunch of bitcoin users ‘salty’ this past week. One individual on the Reddit forum /r/bitcoin says that “tax cheats” are smearing the good name of bitcoin owners.
“This is just another way to try and defeat Bitcoin. Nobody likes a tax cheat. Convince the country that BTC holders don’t pay their taxes, and before you know it, you have large numbers of people against them,” explains the post on April 16 the day before tax obligations are due in the U.S.
I personally pay my taxes on BTC. It’s not an anonymous currency, and one day, (the IRS can look back seven years) you may get caught. If regulation forces exchanges to hand over all of their customer data, everyone who didn’t pay will be in for a wild ride.
‘Without Projects That Express Principles, You Have Nothing of What You Want With a Revolution’
However, the individual who wrote that post didn’t get the support he was looking for as many of the comments declared that “taxation is theft.” One person who specifically disliked the phrase ‘tax cheats’ in the post writes:
Even the term ‘tax cheating’ is a fallacy itself, implying people voluntarily agreed being taxed and are backing out of their agreement or smt. If I live in a county where politicians can raise taxes without consulting the parliament or making a referendum who is cheating who? Because I FEEL it’s us the people who are being cheated into paying more taxes.
Another person details their issue with the post, “The financial system now is the problem — My government is a warmongering fascist state — F#&$ paying taxes in this shit hole!
It’s safe to say that cryptocurrencies and taxes are very topical conversations, and the subjects often gets people upset. A large majority of the comments on the ‘tax cheat’ post disagreed with the person who wrote his opinion that tax cheats smeared the reputation of tax-paying citizens. There are a lot of cryptocurrency proponents who are also adamantly against paying taxes, and many of them are vocal about spreading the message that ‘taxation is theft’ over the years.
“Without a big expression of intentionality to what is considered not the ‘polite things to do with bitcoin’ — specifically money laundering, specifically private access to your coin, holding your own keys — without projects that express these principles, you have nothing of what you want with a revolution — This leaves me to proclaim that most people involved with bitcoin were not serious about that in the first place,” Defense Distributed founder Cody Wilson explains in a 2015 interview.
Coinbase Just Bought One of Bitcoin’s Best-Funded Startups
Cryptocurrency startup Coinbase has announced the acquisition of Earn.com, one of the industry’s best-funded startups.
A statement released on Monday confirms a previous CoinDesk report in which sources said that Coinbase and other potential buyers were in talks to acquire Earn.com, formerly known as 21 Inc.
21 Inc previously ran a bitcoin mining operation, powered by technology from Intel, and later launched its eponymous, developer-focused 21 Bitcoin Computer in 2015. The company was backed by major Silicon Valley investors to the tune of $116 million raised over multiple funding rounds.
The firm rebranded to Earn.com last October in a pivot that saw it launch a social network aimed at incentivizing users to complete tasks in exchange for cryptocurrency rewards.
While Coinbase did not publicly disclose the terms of the deal, a source directly involved in the discussions told CoinDesk previously that the total amount in cash, crypto-assets, stocks and earn-out being pursued at the time could exceed $120 million.
According to a new report from Recode, the Coinbase deal “was slightly more than $100 million. The publication also reported that some of Earn’s existing investors initially balked at the offer.
As part of the acquisition, Balaji Srinivasan, co-founder and CEO of Earn.com, will become Coinbase’s first chief technology officer. The Earn.com team will be integrated with Coinbase’s operations and its existing business will continue, Coinbase said.
The startup said:
“Earn has built a paid email product that is arguably one of the earliest practical blockchain applications to achieve meaningful traction. We will keep Earn’s business running because it’s showing a lot of promise and potential.”
In his new capacity, Srinivasan will help lead the development of the Coinbase platform, and also recruit new cryptocurrency talent.
The news comes just days after another acquisition deal, announced last Friday, which saw Coinbase snap up mobile ethereum wallet Cipher Browser.
Dollars image via Shutterstock
This article has been updated with additional information.
Chilean Cryptocurrency Exchanges Take Banking Blockade to Appeals Court
Chile’s largest cryptocurrency exchanges, Buda, CryptoMarket (Crypto MKT), and Orionx recently applied to an appeals court to confront a banking blockade they’re currently facing.
As covered by CCN, the cryptocurrency exchanges recently saw Itau Corpbanca, Bank of Nova Scotia, and the state-owned bank Banco del Estado de Chile shutdown their accounts with no proper explanation. At the time, Banco Estado revealed it decided “not operate with companies that are dedicated to the issuance or creation, brokerage, intermediation or serve as a platform for the so-called cryptocurrencies.”
The appeals court agreed to hear the cryptocurrency exchanges, although their bank accounts remain closed. Per Bloomberg, Chile’s financial institutions are seemingly implementing a blanket ban on the cryptocurrency industry, a move that’s worrying crypto enthusiasts.
Guillermo Torrealba, Buda’s chief executive officer, was quoted as saying:
“They’re killing an entire industry. It won’t be possible to buy and sell crypto in a safe business in Chile. We’ll have to go back five years and trade in person. It seems very arbitrary.”
While cryptocurrencies weren’t yet huge in Chile, the market was growing. Buda, Torrealba’s company, traded about $1 million per day before the banks decided to shut down its accounts. According to its CEO, the exchange is self-regulated and uses the same standards the financial industry uses to know its customers. This, he revealed, includes running checks with local and international authorities.
Chilean news outlets are now speculating the blanket ban comes from the government, as Chile’s Financial Stability Council, an organization with representatives from the Finance Ministry, the country’s central bank, and the securities, banks and pension funds regulator, issued a warning on cryptocurrencies on April 5.
While most financial institutions didn’t reply when reached out to, Itau Corpbanca’s chief executive Milton Maluhv stated on March 27 that the bank supports startups and new technologies, but argued the cryptocurrency industry needs more regulation, adding that the “bank is following internal norms to decide on closing individual accounts.”
Torrealba noted that the appeals court may help the cryptocurrency exchanges. As covered, Crypto MKT’s co-founder, Martin Jofré, has stated that with Banco Estado turning its back on the company, it was left with no banking.
Orionx, on the other hand, revealed that users’ funds are “fully backed” and that there is “no risk of insolvency.” It added that it believes the bank’s moves are “incorrect and anti-competitive.”
Featured image from Shutterstock.
Written by CCN.com
Lightning + NFC? The New Plan to Bring Bitcoin to Retail
Imagine a way to expand bitcoin payments to millions per second. Now, imagine a clunky, command-line interface.
That’s the extent of the divide between the vision enabled by bitcoin’s best-yet scaling solution, the lightning network, and the current state of its design. But while that’s daunting, developers are moving ahead on designs to make the payment system easier to use, with one recently submitting a proposal for connecting lightning with a payment technology that could make it feel as futuristic as it’s touted.
That payment technology, near-field communication, or NFC, would allow a user to pay for an item just by holding their smartphone an inch away from the device it’s paying.
Not a new idea in bitcoin or the payments world at large, NFC-based payments have caught on throughout Asia and Europe – not only on smartphones, but also through chips embedded in payment cards. And while the U.S. might be lagging behind in NFC adoption, bitcoin’s early adopters might just be the right target audience.
As such, the proposal, submitted by developer Igor Cota, looks to standardize a way to connect lightning with NFC.
Invoking the name of his lightning wallet that uses NFC, Presto, Cota told CoinDesk:
“I want the payments to be instant just like with the contactless cards we have here in Europe. A user would simply tap on the payment terminal and presto!”
Further, Cota imagines turning any computer into a lightning point-of-sale terminal through the use of a $29 USB attachment, a route that has proven successful in his early tests.
Replacing QR codes
Given the success, Cota’s proposal is about standardizing what he’s created, adding it to the many other standard rules that describe how each lightning software implementation should operate.
Many bitcoin payments implementations tend to use QR codes – those pixelated-looking black-and-white squares that encode data that can then be scanned and consumed by smartphones. And while Presto supports QR codes alongside NFC, he believes the latter provides a much better experience.
QR codes not only can be a bit finicky, but they also can become “unwieldy,” Cota said, especially when more information is added to them. In this way, merchants won’t be able to add much information such as itemized receipts and coupons to QR codes, he said.
NFC, though, doesn’t have this hurdle.
“I’d like to see a system where the payment terminal sends a nice HTML receipt for the customer – that receipt has, say, a table list of your grocery shopping with subtotal, taxes, grand-total, perhaps a shop logo, some loyalty code or a coupon for future use,” he said.
In Cota’s mind, this would give consumers a more detailed record of their spending habits, empowering them to take even more control of their finances.
“Imagine a wallet that can tell you how much you’ve spent on broccoli last month?” Cota said, adding:
“With crypto you’re always in control, but with these digital receipts you are even more so.”
A bolt of lightning
But first, Cota is trying to get his NFC implementation added to the standards that lightning network developers have established in an effort to make sure all implementations are compatible with each other.
These standards are called “BOLTS,” and Cota believes NFC should be added to BOLT 11, which explains how “invoices” – describing how much a person owes – should be encoded and presented to a user. It’s a similar process to that of the credit card reader at Starbucks showing you that you owe $4.50 for a mocha latte.
For now, BOLT 11 only describes a standard for QR codes.
Already, Cota has come up with a rough standard, putting together a Multipurpose Internet Mail Extensions (MIME) type, which is a format for sending data; an NFC application ID, which indicates the payment method is lightning; and a “very simple protocol to forward socket data.”
Though these pieces weren’t so hard to come up with, Cota said he thinks it’s important to write up a standard, whereby all NFC-enabled point-of-sale devices can accept any NFC-based lightning payment, now to be ahead of the game should NFC-based lightning payments take off.
“For the sake of interoperability, it would be great if we agreed on some standards,” he explained.
And already, most of the public technical feedback has been positive, with Lightning developers ZmnSCPxj and Corné Plooy responding favorably to the proposal on the mailing list.
However, Bitrefill lightning developer Justin Camarena was a bit wishy-washy, telling CoinDesk:
“It’s an obvious way to pay in the future but it seems we’re a bit too early as there are no hardware point-of-sales offering lightning support.”
Still, Cota is plugging away on the next steps to move the project forward.
“As you can see the [Presto user-interface] is not really there yet but I’m working on it,” he said, adding, “What I’m working on at the moment is a protocol that makes sure the NFC payment goes through even in case the paying device is offline.”
Cota plans to submit another pull request for developers to review once this mechanism is finished.