Monthly Archives: October 2019

internet banking network and cryptocurrency concept. Man hand using credit card for trade cryptocurrency.

Days after the Internal Revenue Service (IRS) released two new pieces of guidance for taxpayers who engage in transactions involving virtual currency, the IRS announced another compliance measure: a checkbox on form 1040. The checkbox, which appears on the early release draft of the form 1040, asks taxpayers about financial interests in virtual currency.

The checkbox appears on the second early release draft of the 2019 Form 1040, Schedule 1, Additional Income and Adjustments to Income (downloads as a PDF). The checkbox is at the top of Schedule 1, which is used for reporting income or adjustments to income that cant be entered directly on the front page of form 1040:

KPE

The question is:

At any time during 2019, did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency?

If youre wondering why that sounds familiar, the wording closely parallels the verbiage on Schedule B, Part III, concerning offshore accounts.

KPE

That question appears at the bottom of the Schedule. It asks:

At any time during 2018, did you have a financial interest in or signature authority over a financial account (such as a bank account, securities account, or brokerage account) located in a foreign country?

The similarities arent surprising. You may recall that Ive suggested (here and here) that the strategy the IRS is using to pursue cryptocurrency is reminiscent of how the agency chased down offshore accounts.

However, Im not overly keen on the location of the cryptocurrency question. As noted, taxpayers who file Schedule 1 to report income or adjustments to income that cant be entered directly on Form 1040 should check the appropriate box to answer the virtual currency question. But taxpayers who dont have to file Schedule 1 for any other purpose may not be aware that they need to file Schedule 1 to answer to this question if it applies to them. Yes, tax software interviews will likely catch it - but what if they dont? Or what if taxpayers are completing the form by hand? Or if tax preparers dont think to ask?

I think its something that IRS will need to address. The IRS will accept Schedule 1 comments via email at WI.1040.Comments@IRS.gov for a 30-day comment period beginning October 11, 2019. The IRS cannot respond individually to each comment received, but all feedback will be considered.

Why does the location of the checkbox matter? Compliance. The checkbox is ostensibly on the form to remind taxpayers to report their cryptocurrency transactions. But those tax professionals like me who have seen the response to the checkbox on Schedule B know that this is also an easy way to hold those who dont check the box - even by accident - accountable. The IRS can and has taken the position that willfully failing to check the box related to offshores interests can form the basis for criminal prosecution. Failing to check the box by accident can still result in headaches and penalties. I fully expect a similar result on the cryptocurrency side.

If youre looking for more information on cryptocurrency, you can read more about the recent guidance here. You can find out more about the taxation of cryptocurrencies like Bitcoinhere. And you can get up to date about how the IRS is targeting non-compliance through a variety of efforts, ranging from taxpayer education to audits to criminal investigations here.

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Theres A New Question On Your 1040 As IRS Gets Serious About Cryptocurrency - Forbes

Facebooksent the world into a frenzy when it announced its intention to enter thepayments space with the launch of its controversial cryptocurrency Libra earlier this year.

Initially, Facebook said it had garnered support from 28 companies, including some of the worlds top financial and technology giants.

But, as soon as regulators and central banks caught wind of Facebooks plans they began to issue warnings and air concerns about Libras potentialeffect on the worlds financial system; spooking several of the companys backers along the way.

Four months on, and after losing many of its original supporters,Facebook finally managed to get 21, out of the original 28, organizations to sign the Libra Association charter.

Hard Fork has put together a quick overview of every organization thats still involved and those who have (understandably!) ran a mile, because, lets face it, its hard to keep track.

Rumors about uneasiness among Facebooks Libra supporters have mounted for some time, but confirmation about a series of high-profile departures finally arrived over the past few weeks.

PayPals announcement as one of Libras initial backers failed to raise many eyebrows,given that that David Marcus, Libras managing director and COO, used to be president at the online payment system.

However, the multinational company became the first company to leave Libra when itannounced its withdrawalearlier this month.

PayPal didnt specify why it had decided to part ways, but said in a statement that it taken the decision to forgo further participation in the Libra association at this time and to continue to focus on advancing our existing mission and business priorities as we strive to democratize access to financial services for underserved populations.

Following increasing political pressure and just days before the projects supporters were due to meet in Geneva, to sign the charter,Mastercard, Visa, eBay, Stripe, and Mercado Pago pulled out.

We will continue to evaluate and our ultimate decision will be determined by a number of factors, including the Associations ability to fully satisfy all requisite regulatory expectations, a Visa company spokesperson said last Friday.

Visas continued interest in Libra stems from our belief that well-regulated blockchain-based networks could extend the value of secure digital payments to a greater number of people and places, particularly in emerging and developing markets, they added.

An eBay spokesperson told the Financial Times (FT) that it had made the decision in order to [focus] on rolling out eBays managed payments experience for our customers.

FinTech giant Stripe said that in spite of its exit it still believed Libra had potential to make online commerce more accessible for people around the world and remained open to working with the project at a later stage.

Two people familiar with the decisions tod the FT Mastercard and Mercado Pago had also quit.

Online travel companyBooking Holdings Inc., which runs websites including Kayak.com and Priceline.com, has also left the cryptocurrency project spearheaded by Facebook.

The blockchain and cryptocurrency industry is being represented by Anchorage, a firm seeking to advance institutional participation in the digital asset class; Bison Trails, a blockchain infrastructure provider; cryptocurrency exchange Coinbase, and bitcoin wallet and storage provider Xapo.

Unsurprisingly,Facebooks subsidiary Calibra, which will oversee the giants cryptocurrency plans including the creation of a blockchain-based digital wallet is staying put despite recently being sued by another mobile banking app for using a very similar logo.

Although Facebooks Libra is not out of the woods yet,it can (at least for now!) count on the support of heavyweights from the venture capital world.

Andreessen Horowitz, an investor in Facebook; Ribbit Capital, which has backed Coinbase and Xapo; and Union Square Ventures, an investor in Coinbase and Stripe, are all supporting the project.

Thrive Capital, which backs media and technology companies; and Breakthrough Initiatives, are also remaining loyal.

Vodafone, which recently repledged its support for the project so long as it operated independently of Facebook, is still involved.

Iliad,a French provider oftelecommunicationservices, also remains a partner.

Creative Destruction Lab,one of the original backers,is a not-for-profit startup program that combines computer science and economic design. It supports startups building new infrastructure and applications using blockchain technologies viaa dedicated Blockchain stream and has also signed the charter.

Fellow founding member Kiva, which crowdfunds loans for the underserved and seeks to improve financial barriers across the world, is also sticking around. So is Mercy Corps, ahumanitarian organization helping people to recover from a crisis.

Womens World Banking, focused on low-income women and helping them gain access to financial markets, is also remaining involved.

Another founding member is Farfetch Limited, a well-known luxury fashion platform set up in the United Kingdom.

When it announced its support,the company said that it had long been interested in blockchain, noting how it had been researching potential applications of the technology.

Spotify, which also pledged its support when the project was first announced, is in.

Libra offers a massive opportunity for simple, convenient, and safe payment over the internet (particularly for the 1.7 billion adults worldwide without access to mobile money, a bank account, or a payment card, it said in its original statement.

Uber and Lyft, both founding members, will be sticking around to help with the launch of Libra.

PayU was joined by Mastercard, Paypal, Stripe, and Visa in this category, but is now flying solo.

The Dutch online payment service provider (also Naspers fintech arm!) is also a founding partner and will be staying put.

Compliance issues, which have hit payment firms particularly hard, still remain and even thoughFacebook may perceive the signing of the membership charter to be a roaring success, Libras true tests still lay ahead.

At least Facebook has finally formalized a group seemingly working towards the same objective, though.

Want more Hard Fork?Join usin Amsterdam on October 15-17 to discuss blockchain and cryptocurrency with leading experts.

Published October 15, 2019 16:46 UTC

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An overview of Facebooks cryptocurrency supporters whos in and whos out - The Next Web

The weekend session was slow and lethargic. Cryptocurrencies across the board pushed for consolidation at lower levels than the ones witnessed last week. However, the situation is slightly different on Monday atthe beginning of the European session. The market is mostly in the green apart from selected crypto among the top 20 which still struggle with declines.

The entire cryptocurrency market capitalization continues to be depressed. In less than 24 hours $2 billion has been wiped off the market. The current capitalization at $225 billion trails Sundays $227 billion. However, the trading volume managed to increase from $46 billion to $49 billion in the same period.

The three major cryptocurrencies are slightly in the green led by Ripple which is flying the bullish flag with intraday gains in the excess of 2%. Bitcoin is pivotal at $8,300 as discussed earlier today. The largest cryptocurrency is up by a subtle 0.2% on the day. Ethereum, on the other hand, is holding ground above $182. Correction towards $200 failed to materialize last week giving way for fresh losses testing $180 support.

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Cryptocurrency market update: Bulls swinging into action, Bitcoin, Ripple and Ethereum in the green - FXStreet

Facebook announced its ambitions to create a new digital currency last summer, with 28 companies pledging their support and cash. But in just a few months, more than a half dozen have changed their minds.

Booking Holdings, the travel company behind Priceline and Kayak, dropped out of the Geneva-based Libra Association, following a similar move by Visa, Mastercard, eBay, Stripe, PayPal and others in the last couple of weeks.

The association is hosting a meeting in Geneva this week to plan next steps. Dante Disparte, head of policy and communications for the group, said in an emailed statement that although the makeup of the Association members may grow and change over time, the design principle of Libras governance and technology, along with the open nature of this project ensures the Libra payment network will remain resilient.

Companies involved with Libra are facing increased pressure from global regulators, including an investigation in the European Union, said Eleanor Fox, a professor of trade regulation at New York University School of Law.

Perhaps the companies realize that being part of this group would entail a huge amount more regulation. And it will, Fox said.

In the United States, members of Congress and the Treasury Department have warned Libra and its partners they would be subject to stringent regulation.

Its pretty clear, said Avivah Litan of the message being sent by regulators. Litan is a vice president and analyst at Gartner, a research and advisory firm. They said that if you go forward with this, were going to regulate your activities with Libra and all your other activities much more closely. So it wasnt even subtle.

But Litan said the tougher oversight, and even the headlines of companies dropping out, is more an optics problem than a real danger for the Libra Association. There are still big names like Uber, Lyft, Vodafone and Spotify on board.

Obviously, the U.S. is a big market, and that market may be cut off to Libra in the short run, Litan said. But its a big global market. And the fastest areas of growth are actually in Africa. Thats where all the growth is happening.

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Link:
Another partner abandons Facebooks cryptocurrency - Marketplace.org

This publication consists of two components: Rev. Rul.2019-24, and 43 frequently asked questions which pertain to cryptocurrency held as a capital asset. IR-2019-167 is designed to supplement Notice 2014-21. In addition to discussing how basic tax principles apply to cryptocurrency, Notice 2014-21 included answers to numerous frequently asked questions.

The FAQs included in IR-2019-167 provide a more thorough treatment on the taxation of cryptocurrency as investment property. In this post, we will discuss the basic contributions made by IR-2019-167 to the taxation of cryptocurrency. As we will see, the new Revenue Ruling clarifies issues related to two novel developments in the cryptocurrency world; and the FAQs answer multiple complex hypothetical scenarios involving the sale or acquisition of cryptocurrency as investment property.

In the cryptocurrency space, the term hard fork refers to the creation of a new digital token as a consequence of the splitting of an existing digital token into two separate currencies. The newly created digital token is then logged separately on an entirely new electronic ledger (or blockchain). A hard fork itself doesnt necessarily result in the delivery of new digital tokens to cryptocurrency holders, only the creation of a new token on a new ledger. Whats more, the term airdrop refers to the delivery of digital tokens to multiple cryptocurrency holders. An airdrop can follow a hard fork.

Revenue Ruling 2019-24 provide analyses and conclusions to two separate hypothetical scenarios, one scenario involves a hard fork, and the second involves a hard fork followed by an airdrop. In the first scenario, a hard fork occurs and a new digital token is created when an existing token is split.

However, the taxpayer doesnt receive any new tokens. The IRS conclusion is that the taxpayer doesnt have taxable income as a consequence of the hard fork because no additional tokens were received. In the second scenario, a hard fork is followed by the receipt of a certain quantity of the newly created digital currency.

The IRS conclusion is that the taxpayer has taxable income equal to the fair market value of the digital tokens received. Essentially, these two scenarios are a couple of relatively straightforward questions pertaining to the definition of gross income. But, even though they are conceptually simple, they involve new developments in the cryptocurrency space, and so the guidance is useful.

As mentioned, the frequently asked questions component of IR-2019-167 contains a total of 43 questions and answers. These questions range from the very simple to the complex. The IRS is trying to proactively tackle all conceivable scenarios involving the sale or acquisition of cryptocurrency.

This effort is meant to aid cryptocurrency investors as they plan ahead for the possible consequences of gains. The IRS references preexisting material when it makes sense to do so. For instance, the IRS provides a reference to its manual, Publication 544, on the disposition of assets.

The questions begin on the simpler side; the first question is the simplest what is virtual currency? and then the questions gradually increase in complexity. Those who intend to speculate in cryptocurrency will find answer to basically every conceivable hypothetical scenario. The IRS provides an answer on the question of the taxability of cryptocurrency transfers from one digital wallet to another, for example; the IRS also addresses the issue of the tax basis of cryptocurrency received as a bona fide gift.

Publication IR-2019-167 has been a very anticipated document. Investors in the cryptocurrency space have been waiting for additional guidance so that they can be adequately prepared when tax time rolls around. Practitioners have also been seeking counsel on the tax implications of novel cryptocurrency developments (such as a hard fork).

The two components Rev. Rul. 2019-24 and the 43 FAQs do quite a lot to provide clarification and help cryptocurrency investors get a grip on the possible tax consequences of their cryptocurrency investments. Of course, cryptocurrency investors should be sure to consult with an accountant prior to filing their return whenever they have cryptocurrency capital gains.

An accountant is necessary to ensure that the liability is calculated properly. And, in cases involving back cryptocurrency tax debt, a tax attorney may be necessary to resolve cryptocurrency tax debt in an optimal manner.

The IRS Offers Cryptocurrency Guidance

Why Bitcoin Owners Should Worry About the IRS

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The New Guidance on Cryptocurrency - Accountingweb.com

LAUNCHED AS REALCOIN in July 2014, Tether aimed to become a more reliable alternative to Bitcoin, the best-known cryptocurrency. With a $4.1bn market capitalisation, it is now the fifth-largest virtual currency. But its efforts to gain investors trust have fallen short. On October 6th a group filed a class-action lawsuit in New York, accusing Tether of being part-fraud, part-pump-and-dump, and part-money laundering. They call for truly startling damages: more than $1.4trn.

In response to The Economists queries, Tethers general counsel said that the lawsuit is meritless and the plaintiffs complaint is rife with errors. The firm has not used Tethers to manipulate any market, he added, and operates in full conformity with applicable laws.

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In 2014 Tether adopted its current moniker, which made its selling point explicit. With dollar reserves that it said matched Tethers one-to-one, it was one of the first stablecoinsdigital currencies that seek to avoid price swings by pegging their value to the greenback. That made it a useful unit of exchange. Many crypto-trading platforms struggle to secure banking services, and thus dollars, because lenders worry about shady transactions. Punters find it easier and quicker to trade Bitcoins in Tether, and it is the most popular crypto currency pair (see chart).

But Tether is also opaque. When and why it mints coins is unclear. Its general counsel says: We issue Tethers when customers want them, full stop. In China, where crypto-exchanges are illegal, buyers can swap wads of cash for Tethers, says Philip Gradwell of Chainalysis, a blockchain-analysis firm. Tethers reserves have not been independently audited. It hired Friedman, an accountancy firm, in 2017. In 2018 the firms parted ways. Later that year Tethers general counsel told Bloomberg that an audit cannot be obtained, citing risk aversion among potential auditors.

And yet its influence on crypto-markets is large. TokenAnalyst, a data-provider, says that Bitcoin prices track issuances of Tethers. On days when new Tethers are minted, the price of Bitcoin, which can be bought with them, rises 70% of the time.

The class action alleges that Tether and Bitfinex, a crypto-exchange that shares the same managers and owners, manipulated markets and raked in profits. In 2017 and 2018, it claims, Tether issued extraordinary amounts of unbacked coins to flood Bitfinex, propping up demand for Bitcoin and creating the largest bubble in human history. Bitcoin prices rose 19-fold between January 1st and December 17th 2017, to more than $19,000 a coin, before falling below $4,000 at the end of 2018. The boom-and-bust, the complaint alleges, destroyed some $265bn in Bitcoin wealth.

Tethers general counsel is adamant that the currency is fully backed. For years, when the firm said reserves it meant hard cash. Yet in March, under criminal probes by Americas Department of Justice, its futures-market watchdog and New Yorks attorney-general, it said that reserves from time to time may include other assets. A month later its lawyer said in court that Tether was then only 74% backed by cash and cash equivalents.

None of this seems to deter crypto-traders. That may be because Tether is the main provider of liquidity to crypto-markets, accounting for 96% of trading volume in stablecoins. It would be hard to replace. Since April Tethers market capitalisation has more than doubled. In September it launched a new stablecoinpegged to the offshore Chinese yuan.

Originally posted here:
The issuer of a star cryptocurrency is being sued for $1.4trn - The Economist

A new malware that can steal cryptocurrency has been uncovered. Its called Casbaneiro and is a threat for users in Latin America particularly in Brazil and Mexico.

The virus was discovered by ESET, a Slovak software developer specialising in antivirus.

Casbaneiro, also called Metamorfo, is a malware family member belonging to banking Trojans, quite typical to Latin America. The virus targets banks and can also track data from crypto wallets. Its focused on bank and payment services mainly in Mexico and Brazil.

That doesnt mean that the rest of the world is safe, though. The virus is likely to expand to other countries in Latin America and even outside the continent.

According to ESET, Casbaneiro is similar to another malware virus called Amavaldo. It uses the same techniques to trick users and obtain data necessary to access wallets and steal cryptocurrency.

Casbaneiro follows the traditional course of action of all Trojan malware. It convinces the user to share personal data by using a trick. It uses pop-ups and fake communications to obtain sensitive information from end-users.

The strategy behind the attack seeks to urge you to take action, such as confirming your bank account information, verifying your credit, or launching a software update.

Once present on your device, the malware monitors your activity and steals your passwords. Then, it creates fake email addresses and sends the data to the attacker, who will use it to modify transactions.

The attackers then gain access to your activity inside your wallet and then replace your data with theirs. It only takes a few seconds to transfer your funds to their active wallets.

The virus takes a series of complex actions and uses backdoor commands to control your device. It can make screenshots and share them with its servers, remember keystrokes, simulate keyboard and mouse action, and even block your access to your banking site.

One of the most intriguing features of this malware family is its ability to hide the C&C server (the attackers computer from where the commands to your system arrive). As far as the ESET team could find out, the virus has multiple ways to cover its tracks. It either encrypts the domain and stores it in the data section or embeds the encryption in online documents and external websites.

Usually, Casbaneiro arrives on your device through email. However, the specialists from ESET identified other campaigns designed to spread the virus across devices.

One campaign includes a phishing message announcing a software update. End-users receive a link that supposedly allows them to download and install an update of their financial management software. Instead, the victims install Casbaneiro, which immediately starts extracting data from the devices archive while monitoring the users activity.

Another way to get the virus is by using a Re-Loader activator for Windows a cracking tool that allows users to activate Windows and Microsoft Office. In this case, the victim downloads not only the Re-Loader but also the virus. Casbaneiro is executed before the other tool and starts gathering data right away.

Malware families targeting cryptocurrency are dangerous. The blockchain is safe, but the virus can attack other areas where your digital assets dont benefit from the same level of protection.

Casbaneiro, for instance, is very similar to a legitimate application on your device. Youll only notice its presence when cryptocurrency starts to go missing from your wallet. And, as transactions on the blockchain are irreversible, you cant undo them and get your funds back.

Trojans are dangerous because, once in your computer, they get access to almost everything you do. The virus records every password, private key, or other information that you use to make transactions. Then, it sends them to its server, where attackers gain access to your wallet in seconds. Blockchains high-security features cant protect you from this, as they have no impact on how you protect your digital wallet.

Until now, Casbaneiro has been targeting bank applications in Brazil and Mexico, but theres no guarantee the attackers will stop there. In fact, its more likely the virus will spread across Latin America or even further.

Story continues

Prevention is still the most effective way to fight against Trojans. So, never download or install any software from unknown sources (or sources that you dont trust). Moreover, if someone uses email to send a programme, dont open the attachment without checking with the sender.

Another way to protect yourself from Trojans is by keeping all your apps and software up to date. It slows down the virus from taking complete control of your computer.

As you may already know by now, you also need an internet security solution (antivirus) to protect your device. Many have features specially created to block Trojan malware. These are necessary when using your device for financial operations of any kind.

Last but not least, dont let yourself be tricked by the idea that it wont happen to you. Casbaneiro and its cousin Amavaldo arent the only viruses targeting cryptocurrency. Cyberattackers are developing Trojans in all parts of the world, from India to Europe and the US, so it pays to develop good cyber hygiene habits.

The post Casbaneiro is a threat to cryptocurrency in Latin America appeared first on Coin Rivet.

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Casbaneiro is a threat to cryptocurrency in Latin America - Yahoo Finance

A recent report by Cipher Trade, a provider of cryptocurrency, intelligence, and blockchain security says that trading for over 700 coins and digital tokens is now traceable. This makes up 87% of the volume recorded among the top 100 digital assets. It includes cryptos such as Ethereum, Bitcoin Cash and Litecoin. According to Shannon Holland, the CTO of CipherTrace:

This giant leap in blockchain visibility was no easy feat. It has taken intense work and technological breakthroughs over the last four years, as well as collaboration with regulators and financial investigators. We can now discern and automatically verify previously unfathomable amounts of blockchain data and characterize it with a high level of confidence. We will continue to add more tokens, stablecoins, and blockchains in the coming months.

CipherTrace believes that aiding virtual asset providers in dealing with criminals and terrorist activities within their networks will help speed up adoption and acceptance. Exposing more of the true number of illegal transactions helps to close money laundering gaps

Excerpt from:
CipherTrace report: 87% of cryptocurrency trading is now traceable - FXStreet