Category Archives: Bitcoin

What do these examples have in common? As Thomas Hobbes could have told you, human beings can only flourish, can only avoid a state of nature in which lives are nasty, brutish and short, if they participate in a commonwealth a society in which government takes on much of the responsibility for making life secure. Thus, we have law enforcement precisely so individuals dont have to go around armed to protect themselves against other peoples violence.

Public health policy, if you think about it, reflects the same principle. Individuals can and should take responsibility for their own health, when they can; but the nature of infectious disease means that there is an essential role for collective action, whether it is public investment in clean water supplies or, yes, mask and vaccine mandates during a pandemic.

And you dont have to be a socialist to recognize the need for regulation to maintain the reliability of essential aspects of the economy like electricity supply and the monetary system.

Which is why Im calling the modern American right antisocial because its members reject any policy that relies on social cooperation, and they want us to return instead to Hobbess dystopian state of nature. We wont try to keep guns out of the hands of potential mass murderers; instead, well rely on teacher-vigilantes to gun them down once the shooting has already started. We wont try to limit the spread of infectious diseases; instead, well tell people to take drugs that are expensive, ineffective or both after theyve already gotten sick.

What about Bitcoin? I dont think its even worth trying to make sense of Abbotts tortured logic, why he imagines that promoting an environmentally destructive, energy-hogging industry will somehow make his states electricity supply more reliable. (An energy grid overloaded by crypto mining helped set off the recent crisis in Kazakhstan.)

A better question is why Republicans have become fanatics about cryptocurrency, to the extent that one Senate candidate has defined his position as being pro-God, pro-family, pro-Bitcoin. The answer, Id argue, is that Bitcoin plays into a fantasy of self-sufficient individualism, of protecting your family with your personal AR-15, treating your Covid with an anti-parasite drug or urine and managing your financial affairs with privately created money, untainted by institutions like governments or banks.

In the end, none of this will work. Government exists for a reason. But the rights constant attacks on essential government functions will take a toll, making all of our lives nastier, more brutish and shorter.

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Opinion | Guns, Germs, Bitcoin and the Antisocial Right - The New York Times

What will President Biden say about Bitcoin and digital assets? It's hard to find his comments on ... [+] it. But next month, the market will know exactly what he thinks about it.

How real is the threat of regulatory overreach and higher taxation for Bitcoin? If powerful Western governments want to knock Bitcoin down a peg as it prepares to roll out digital versions of the dollar and euro, whats to stop them from trying to punish it through stricter rules and higher taxes?

This week might go down as one of the key markers in Bitcoin history. The International Monetary Fund warned El Salvador to do away with its Bitcoin-as-legal-tender policy. And President Biden saying new rules for Bitcoin and cryptocurrencies are coming soon.

Its one thing for the President of the United States to tell the public that new regulations are coming in its home market. But whats this with the IMF telling a sovereign nation what to do with its currency policy? Its not like El Salvador is borrowing money from the IMF in Bitcoin. The Powers-that-Be are anxious. They cannot roll out their central bank digital currencies fast enough. And decentralized crypto is gaining power.

The UKs former Health Minister, Matt Hancock, wrote in an op-ed in City A.M. on Friday that, the mainstream arrival of cryptocurrencies is set to shake the foundations of banking the centuries-old idea you need a bank to make a payment is coming to an end.

Why a Health Minister is writing on this, I have no idea. But the likelihood is strong that this is water cooler chatter in London. A new banking model is taking shape. The old model wants its own digital currency to control. Bitcoin, others, are out of its control. For them, this cant be good.

Therefore, if you are of the mind that Central Banks want to kill Bitcoin (and all the alt-coins along with it), then how would they do that?

I have been worried about central bank digital currencies eventually replacing demand and interest in Bitcoin. However, everyone I speak to about it is not as worried as I am.

Now I have something knew Im worrying about a new risk, perhaps, for us crypto investors. If the U.S. or any government wanted to punish Bitcoin in favor of its own digital dollar, one way to go about it would be to increase taxation on crypto investments.

Is such a thing even possible?

Yes, it is.

(Nod to Ancient Aliens fans.)

What the administration would do is crack down on Coinbase and others and use regulations to make it so onerous for the exchanges, especially if Biden is going to call it a matter of national security, speculates Vladimir Signorelli, founder of investment research firm Bretton Woods Research and a Bitcoin investor. If they increased taxes, treated it differently, it would be unfortunate. It would be terrible.

Regulatory Whispers & Taxation

The White House is developing a new digital securities strategy, expected to be issued as an Executive Order (EO). This means it lasts only as long as Biden is in power, or a new president agrees with its premise. A finalized copy of the new rules is expected at some point in February.

The EO will elaborate on a new regulatory framework and is expected to highlight how the White House views Bitcoin as a potential national security risk to the dollar.

The International Business Times reported on January 24 that the EO will direct federal agencies to weigh risks and opportunities of theseassetsand submit their reports by the second half of the year.

So, none of this happens overnight. Investors will have time to think this over.

I think Biden will use an executive order to bring heavier taxes on Bitcoin, says Dragostin Kozhuharov, owner of ComperBroker.io.

Biden, himself, has said very little about Bitcoin. Or digital assets, in general.

Meanwhile, the Fed issued itsreporton their digital dollar whereas the Fed becomes your bank if you opt-in to having a digital dollar wallet and has invited public comments by May 20.

Worth noting, the House of Lords in the U.K. shot down this idea of a digital pound two weeks ago. Itll be back, eventually.

Another issue that could pull the rug out from under Bitcoin in particular, and maybe even Ethereum in the short term, is the Biden team is concerned that mining for cryptocurrencies takes up too much electricity and is therefore bad for Mother Earth. Unlike printing dollars. That is not as bad for the planet.

There are just too many ways the government can treat cryptocurrencies differently than traditional securities and the best way to separate it from traditional assets is through taxation.

Imagine punishing crypto investors with higher taxes? For sure, professional Wall Street firms will ... [+] hate this and will move their crypto offshore. But will that stop Washington from trying to tax it to death anyway?

For now, selling crypto is the same as selling a stock in your E-Trade account. Coinbase will have your tax documents ready for filing if you sold crypto for dollars.

The Internal Revenue Service issued Notice 2014-21 in 2014 that defined cryptocurrency as being the same as stocks, bonds, and other assets that qualify for capital gains taxes. If your DeFi token is paying yield, apparently you get taxed on that, too, in theory. But I will save that for the tax specialists.

Like a stock, if you bought $1,000 of Ethereum in August 2021 and sold it in October 2021 for $2,000, you earned $1,000 in short term capital gains and will be taxed according to your tax bracket.

My evil genius thinking is that the government says look, Bitcoin is harmful for the environment and it is not U.S. issued tender, therefore we can tax it differently.

I dont know how this would work. But it would trigger a massive sell off in Bitcoin. If you want to kill Bitcoin, get the most powerful nations in the world to tax it to death.

I asked industry experts to calm me down.

Remember, Bitcoin is for hodlers. They dont care about tax anyway, says Kozhuharov. People who have a lot of Bitcoin are holding for a really long time. Bringing taxes on Bitcoin isnt going to influence the price, he says.

Bitcoin is down roughly 40% from its all time high.

Igneus Terrenus, head of communications at Bybit says investors who hold and do not realize their gains...there is no avenue to tax them.

Bitcoin has opened up the possibility of a new alternative financial system and economy.

Attempts to force this new reality into an outdated framework of top-down control is likely to fail, says Ben Caselin, head of research & strategy at AAX, a cryptocurrency exchange.

Nonetheless, following game theory, we can expect resistance to Bitcoin across the board, wherever it threatens the status quo, Caselin says. Draconian tax laws and other unreasonable measures to hamper its adoption would fit the picture and are both indicative of Bitcoins growth as well as the ignorance that surrounds it.

Ran Hammer, vice president of business development at Orbs, a public blockchain based in Singapore, says there are unknowns about the new regulations, and even some questions about existing ones, but higher taxes are unlikely.

Most of the regulatory issues on the table now wont impact the tax approach, says Hammer. The live issues now have to do with how digital assets and products like trading platforms will be regulated, not taxed.

Besides, hitting crypto with taxes beyond what standard securities pay would also increase the likelihood for offshore crypto havens to flourish ( !). It would also set up competition between countries.

And while most Americans probably wont unload their Coinbase account for the Russian version of one, Russia and others could make investing in crypto more attractive if the assets are held their instead. (Of course, the U.S. can, and would, just tax the hell out of it when you bring it home under Patriot Act laws, but if you are just transacting in BTC, you will never need fiat again.)

The U.S. knows the future is inevitably digital, says Nigel Green, CEO of the deVere Group. This would explain why Biden is rushing a directive that would place the White House in a central role overseeing plans to set policies and regulate digital assets.

Between Bidens new crypto edicts in the works, the Feds digital dollar, and the IMF scolding tiny El Salvador for its Bitcoin policy, crypto is reaching a tipping power in the power play with fiat currency.

The IMF asking a pioneering sovereign nation to drop a future-focused financial policy that attempts to bring it out of financial instability and a reliance on another countrys currency shows the institution to be on the wrong side of history, says Green.

El Salvador has used the dollar as its currency since 2001.

Bitcoin is the worlds largest digital currency - and digital is the inevitable future of money. For the IMF not to recognize this is baffling, says Green. Theres a sense among them that Bitcoin is headed towards a moment of critical mass.

Correct.

And if the Western banking powers, as demonstrated recently by the IMF, are against Bitcoin being the digital currency of choice, whats the best way to stop it and make it all look quite reasonable to the talking heads of CNBC?

My guess: tax the living daylights out of it, in favor of digital dollars and euros.

*The writer of this article owns Bitcoin and other cryptocurrencies.

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Biden's Bitcoin Regulations And The Threat Of Higher Taxes For Crypto - Forbes

Green Bay Packers quarterback Aaron Rodgers previously announced that he wanted to receive his ... [+] compensation in bitcoin, back in early November. At the time, the coin was more than $60,000it's now trading at around $37,000. (Photo by Patrick McDermott/Getty Images)

Inflation is out of control. There is a Great Resignation trend with millions of people quitting their jobs and businesses waging a war for talent to find, attract, recruit and retain workers. The value of the dollar has degraded, as inflation skyrocketed 7%. Bitcoin and other cryptocurrencies have become an attractive alternative for people to improve their financial situation.

Sports stars, politicians and other high-profile people have been requesting to take their compensation in digital assets. They point out that if you get paid in U.S. dollars, as inflation increases, the value of your paycheck decreases.

If you didnt receive a hefty raise in 2021 and inflation remains the same or keeps raging higher, youll actually see a decrease in pay. This doesnt mean the company pays you less, it's that the purchasing power from your salary doesnt have the same value as it once did. It's like a race in which you are standing still and everyone is running past you. Each dollar you have is devalued and it takes more money to buy the same products compared to a year or so ago.

It's possible to convert your salary into cryptocurrencies. It only takes a few steps. First, find out through the human resources department if their payroll system offers a cryptocurrency payment option.Then, decide the amount ofmoney youd like to be changed into digital assets.You may want to conduct due diligence into the various tokens before you select one. Setup an account with a digital wallet at a crypto exchange for your employer to send the funds to the platform. There may be fees and costs involved, so check into that as well.

Green Bay Packers quarterback Aaron Rodgers previously announced that he wanted to receive his compensation in bitcoin, back in early November. At the time, the coin was more than $60,000it's now trading at around $37,000.

NFL star Odell Beckham Jr., wide receiver for the Los Angeles Rams, signed a one-year deal with a base salary of $750,000 and bonuses that could bump it up to $4.25 million. The NFL wide receiver said he was taking his entire salary in bitcoin. He reportedly converted a $750,000 paycheck into bitcoin, and may have lost the equivalent of almost $350,000, according to an analysis from MarketWatch. While the price of bitcoin has since somewhat rebounded, it hasn't fully recovered and remains extremely unpredictable. If the price doesnt recover, he would still have to pay taxes on his income at the value of $750,000.

This is something you need to keep in mind. If you are paid $100 and it drops to $50, the IRS doesnt care about the loss and youre taxed on the amount you were paid. Your accountant can help offer their guidance and advice on how to handle and report these wide fluctuations in value.

Saquon Barkley, an New York Giants running back,announced in July 2021 that he would place all of his endorsement earningstotaling around $10 millionin bitcoin. He received his payments at the end of the year when bitcoin had not crashed as much as it has now. Since then, the market took a hit and unless he sold his positions, the odds are high that Barkley took a big hit. The Washington Examiner reported, Barkley explained his goal is to attain wealth akin to Kevin Durant, Lebron James and Tom Brady, but said it's not attainable through just saving because of inflation. He added, You see inflation, you see how high it is right now and you learn that you cant save yourself to wealth. Thats why Im going to be taking my marketing money in Bitcoin.

Trevor Lawrence, the No. 1 draft pick in 2021 and the current quarterback for the Jacksonville Jaguars, partnered with cryptocurrency app Blockfolio to announce that hed place his approximate $24 million signing with the company.Hell convert the cash into bitcoin, ethereum, solana and other digital assets, according to USA Today.

Francis Suarez, the tech-savvy mayor of Miami, said in November that he would accepthis $97,000 all in bitcoin. Suarez foresees the possibility of building a tech hub in Miami. Leading by example, Suarez seeks to expand cryptocurrency use and acceptance in his city and entice tech talent and companies to South Florida. For any city to survive and thrive, we need a knowledge-based economy, he told Bloomberg.

Suarez added, "When governments are spending that kind of money that they are, when you have inflation at the point that it is, when you have rampant overspending in government and deficit spending, all of that pushes in favor of an increase in the price of Bitcoin. So, I feel very comfortable getting my entire salary in bitcoin."

Eric Adams, the newly installed mayor of New York City, announced that he would take his first three paychecks in cryptocurrency. He converted his first biweekly paycheck into both bitcoin and ethereum. When asked on CNBC about losing money on the decision, he said, "The purpose of the Bitcoin is to send a message that NYC is open to technology."

Christophe De Beukelaer, a Brussels member of Parliament, followed the path of Suarez and Adams. De Beukelaer will convert his entire salary to bitcoin. He said about the decision, Through this action, I want to demonstrate my confidence in a financial world in the making, a more transparent financial world, more accessible in the sense that it is decentralized. It is not run by a few people who decide to print more or less banknotes without any parliamentary control or debate. He also wants Belgium to be forward looking and thinks the country shouldnt miss the train.

Investment professionals recommend a practice of dollar cost averaging. This means instead of purchasing stock all at once, you buy shares on a regular set basis. Over time, you may buy at the high point, and other times when it's bottomed out. While it looks like the top athletes and politicians are sitting on losses, their fortunes could easily change if and when the crypto market turns around in their favor and the prices of bitcoin and other digital assets rise in value.

Read more:
Sports Stars And Politicians Are Taking Their Pay In Bitcoin And Other Cryptocurrencies Would You? - Forbes

Global investment bank Goldman Sachs has warned that bitcoin is increasingly vulnerable to the Federal Reserves rate hikes as the cryptocurrency grows more widely adopted. Over the last two years, as bitcoin has seen wider mainstream adoption, its correlation with macro assets has picked up, the Goldman analysts explained.

Global investment bank Goldman Sachs published a research note Thursday detailing bitcoins increased vulnerability to the Federal Reserve hiking interest rates.

Zach Pandl, banks co-head of foreign exchange strategy, and FX analyst Isabella Rosenberg explained that as mainstream adoption of bitcoin increases, so does the cryptocurrencys vulnerability to Fed policy. They described:

Over the last two years, as bitcoin has seen wider mainstream adoption, its correlation with macro assets has picked up.

Noting that higher bond yields have affected technology stocks in recent weeks, with the Nasdaq 100 index falling more than 13% for the year, the analysts noted: Bitcoin and other digital assets have likely suffered from the same forces These assets will not be immune to macroeconomic forces, including central bank monetary tightening.

The markets now expect the Fed to hike interest rates five times this year. Goldman Sachs believes that the Fed could raise interest rates at every meeting this year. The post-meeting statement from the Federal Open Market Committee (FOMC) last week did not provide a specific time for when the increase will come, though indications are that it could happen as soon as the March meeting.

Goldmans analysts further commented:

Over time, further development of blockchain technology, including applications in the metaverse, may provide a secular tailwind to valuations for certain digital assets.

Recently, Goldman Sachs said that the metaverse could be an $8 trillion opportunity. Rival investment bank Morgan Stanley similarly estimated a comparable size for the metaverse.

Earlier this month, Goldman Sachs predicted that bitcoin could reach $100,000 as the cryptocurrency continues to take golds market share. Meanwhile, Switzerlands largest bank, UBS, has warned of a crypto winter amid expectations of Fed rate hikes and regulation. At the time of writing, bitcoin is trading at $37,502 based on data from Bitcoin.com Markets. The crypto is up 6.6% in the last seven days but down 20.5% in the past 30 days. However, it is still up 9.8% for the year.

A recent report by Crypto.com shows that the number of global crypto owners is expected to surpass 1 billion this year.

Do you agree with Goldman Sachs? Let us know in the comments section below.

A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Goldman Sachs Warns Bitcoin Increasingly Vulnerable to Fed Rate Hikes as Mainstream Adoption Grows Bitcoin News - Bitcoin News

For many years and likely many years to come, bitcoin has been the number 1 digital asset for investors, especially those looking to invest in the long-term. When big money started entering into the crypto space, bitcoin was the first stop before it diversified into other assets. However, as time as gone by and more altcoins are beginning to gain popularity, bitcoin is losing its hold as the number 1 choice for investors.

A recent survey that featured respondents from the ultra-wealthy class showed that they did not favor bitcoin as their first choice. Rather, they picked an altcoin whose growth has rivaled and even surpassed that of bitcoin since its inception.

Crypto.com revealed that the wealthy are gradually moving away from bitcoin. Their obvious choice besides the leading cryptocurrency is ethereum, which is currently the second-largest cryptocurrency by market cap.

The numbers provided by the crypto exchange showed that ethereum has made its mark on the wealthy. With its broad range of use cases and applications, like decentralized finance (DeFi) and NFTs, the value of the cryptocurrency has shot up exponentially. And with that has come more confidence from investors.

Related Reading |Ethereum Bullish Signal: Number Of Holders With 1 ETH Touches New ATH

Crypto.com reached that that ethereum beat out bitcoin by 1% when it comes to the number of high-value investors going into crypto. Bitcoin came out at 33%, while ethereum made the top of the list at 34%, proving to be the preferred digital asset for investment purposes. Crypto funds came in third at 23%, other altcoins dominated at 15%, while Dogecoin, surprisingly, made the list with 2% of investors wanting to invest in the meme coin.

The crypto exchange also noted that about 1 billion people are expected to be invested in the crypto market by 2022. By the look of things, ethereum may see a larger share of investors compared to bitcoin.

Well, for those investing in the crypto space, there could be a number of factors. One is the low-interest rates offered by banks and returns from traditional investment avenues like stock and bonds being too low to combat the inflation rate. So in order to keep inflation from eating away at their wealth, these investors have chosen the crypto market for their needs.

Bitcoin had been the inflation hedge of choice for years before now. But all of that is changing as the ethereum network has taken major steps towards becoming deflationary. President and Founder of TIGER 21, Michael Sonnenfeldt, notes that the high inflation rates are what is pushing the uber-wealthy investors towards crypto, and by extension, ethereum.

Like all investors, the super-rich are concerned about inflation and are looking to preserve their wealth in 2022, said Sonnenfeldt.

Related Reading |Ethereum Whales Quietly Filled Up On ETH While Broader Market Panicked

Likewise, another member of TIGER 21 explained that investors are starting to favor ethereum over bitcoin. Additionally, similar projects like Solana and Avalanche are also enjoying this support.

I am very bullish on both Bitcoin and ETH. My personal assessment is that the tide is turning in favor of ETH. I also like Ethereum alternatives like Solana and Avalanche. Andy Sack, member of TIGER 21.

Read more:
The Uber Rich Investors Are Picking This Altcoin Over Bitcoin - NewsBTC

Major coins traded higher over 24 hours as the global cryptocurrency market cap rose 1.9% to $1.8 trillion.

Metaverse play Decentraland (MANA) was the top 24-hour gainer, according to CoinGecko data,up 14.3% to $2.79 in the period. For the week, it has shot up 33.5%.

Other coins that saw notable gains were Nexo (NEXO) and Terra (LUNA). NEXO and LUNA rose 14% and 12.4% respectively to $51.27 and $4.64 over a 24-hour time frame.

See Also: How To Buy Bitcoin (BTC)

Why It Matters: Bitcoin managed to outdo the S&P 500 over the last week in terms of gains, according to GlobalBlock analyst Marcus Sotiriou. This is despite headwinds in the form of a hawkish Federal Reserve.

Even though the Federal Reserve Chairman, Jerome Powell, was hawkish at the FOMC meeting last Wednesday, $670 million of Bitcoin was removed from exchanges the next day, as whales continue to buy in this price range, said Sotiriou, in an emailed note.

Financial market data and content platform Santiment noted in a tweet Monday that 40,785 BTC, worth approx $1.56 billion, were moved from exchanges in the past week.

Mondays upwards movement by Bitcoin comes ahead of February, a traditionally favorable month for the apex coins price action.

The apex coin rose as the dollar took a fall with the dollar index, a measure of the greenback's strength against a basket of six currencies, declined 0.7% on Monday, according to a Reuters report.

Bitcoins newly-found momentum has enthused some analysts even though they remain cautious.

Pseudonymous analyst Kaleo pointed to BTC resistance at $39,000 levels and said if it broke through, it might might end up with a solid month or two of bullish price action across the market carrying us back into the low 50s.

Amsterdam-based cryptocurrency analyst Michal van de Poppe tweeted that Bitcoins reversal is not confirmed at all. He said it is still fighting resistance beneath previous support at $41,500.

Meanwhile, the adverse macroeconomic environment has not yet dissipated.

Powell made it clear that supply chain issues are indeed prominent, meaning that global markets may remain fearful going into the first rate hike planned for March 16th, said GlobalBlocks Sotiriou.

Read Next: Biden Moves To Regulate Bitcoin

Photo: Jose Rodrigo Safdiye/Benzinga

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Bitcoin, Ethereum, Dogecoin On The Rise Sorry To Play Debbie Downer But Here's Why These Analysts Refus - Benzinga

One of the longest-running problems in the Bitcoin ecosystem for businesses has been banking relationships. Prior to NYDIG and their recent efforts to start plugging American banks and credit unions into Bitcoin rails, the only banking options for businesses in the space were Signature Bank in New York and Silvergate out of California. Major banks have been very combative and at odds with businesses in the space for years. Hell, they've been combative and at odds with their own customers simply trying to patronize Bitcoin businesses, closing accounts or shutting down cards for years now at this point. No businesses have exemplified the hostile and antagonistic nature of these interactions more than Bitfinex and Tether. Not just in the case of banks either, but legacy regulators.

One of the first big instances of Bitfinex running afoul of this antagonism was in 2016. The Commodity Futures Trading Commission ordered them to pay a fine of $75 thousand dollars for failing to register as a futures commission merchant (FCM) under the Commodity Exchange Act (CEA). This was ultimately the result of Americans trading leveraged financial products on the platform without Bitfinex complying with the appropriate regulations. The key point of the regulation revolved around what constituted actual delivery of the underlying commodity and in what time frame it occurred. In order to escape registration requirements you are required to be able to prove actual physical delivery of the commodity (bitcoin) within 28 days. Because all of the Bitcoin backing the leveraged products were custodied by Bitfinex and only credited to users accounts, this was viewed as not meeting the definition of physical delivery, and therefore Bitfinex was required to register as a FCM.

To sidestep this registration requirement Bitfinex ended up contracting with Bitgo to restructure how their bitcoin storage system worked in order to comply with the regulation's requirement to physically deliver within 28 days. They provided each user a segregated multisig wallet which Bitgo co-signed for and began storing each individual user's funds in separate wallets. This would be the first in a long line of events that can be ultimately described as antagonism from regulators and financial institutions forcing a business in this space to either comply with burdensome regulation or engage in riskier behavior in order to circumvent the need to comply. Ultimately this architecture change is what allowed a still unknown entity to compromise their system and get away with 119,756 BTC. Had this system not been implemented, I remind you specifically to comply with U.S. regulations, then only a tiny fraction of those funds would have been available in a hot wallet that could be remotely compromised. Even though you could put some of the blame on Bitfinex for not registering as an FCM, the regulations even putting them in the position where they had to comply or be compatible with a loophole is ultimately what created this situation in the first place.

This is a pattern that repeats itself through the entire history of Tether and Bitfinex in this ecosystem. Whether it is direct pressure from the regulators themselves, or indirect pressure in the form of regulated entities cutting business ties with Tether or Bitfinex, the story of both companies is the story of being pushed further and further into a corner as they were methodically and progressively ostracized by jurisdictional regulators and financial institutions from the United States.

Tether was originally created in 2014. For a short period it was known as "Realcoin," but after a month everything was renamed to Tether. The company and product were founded by Brock Pierce, Reeve Collins, and Craig Sellars. The initial launch of the company involved three different stablecoin tokens being issued: one for the U.S. dollar, one for the euro, and lastly one for the Japanese yen. All of these tokens were issued and circulated directly on the Bitcoin blockchain using the protocol Mastercoin (later rebranded to Omni).Omni is a second-layer protocol on top of Bitcoin using OP_RETURN to record the issuance and transfer of new tokens inside of bitcoin transactions without requiring the Bitcoin network to enable new rules (everyone who cared about the tokens could validate new rules around them and refuse to accept invalid token transactions, while everyone else could just ignore new rules and see "gibberish" encoded on the blockchain).

The reason for wanting to do this in the first place is sort of in a way the reason for Bitcoin existing in the first place, i.e., you want all the benefits Bitcoin provides minus the volatility. You want Bitcoin plus stability, i.e., a stablecoin. Bitcoin is a mechanism that allows things to settle with finality in ten minutes (and nowadays with the Lightning Network instantly), but the bitcoin asset is very volatile. So putting a token on the blockchain backed by fiat in the bank brings that same settlement efficiency (as long as you trust the people holding the fiat in the bank) to more stable fiat currencies. Now given the antagonistic way banks have dealt with companies in this space, the utility of this should be pretty intuitive. Instead of having to deal with all the problems of banks refusing transactions and wires, or specific relationships between transacting parties, you just have to get the money into a bank and can transact with the token on the blockchain. All of those annoying fiat bank problems can be pushed to the time of final redemption of the token for real bank money instead of having to be dealt with every time you make a single transaction.

Given Bitfinex's situation in hindsight it shouldn't surprise anyone they enabled trading of Tether at the start of 2015 a few months after the company and tokens launch. The ability to delay actual bank settlement in transferring fiat balances is a natural alleviation if your problem is friction dealing with the banking system. For a few years this arrangement worked very well, even to the point that other exchanges who also had troubles with the banking system used Tether for access to fiat liquidity in operating their own businesses, but eventually the legacy system began to ostracize Tether. In early 2017 Wells Fargo began blocking payments to and from Tether that flowed through them. They were the correspondent banking partner with the Taiwanese banks that Tether (and Bitfinex) were using to custody fiat funds. Both companies filed a lawsuit against Wells Fargo, but within a week both suits were dropped.

This led to a year or slightly more of banks playing whack-a-mole with Tether and Bitfinex. Right after the Wells Fargo wire blockage, Bitfinex also had all banking relationships severed by their Taiwanese banks. During this time period both companies bounced around through multiple banking relationships. Things got to the point where new accounts, sometimes even under newly incorporated entities, were being opened up in a shell game of trying to move money in and out and keep it shuffling around before any bank realized the deposits were for cryptocurrency activity.

August in 2017 marked the start of a new phase for the avalanche of attention from banks and regulators in the United States. Twitter user Bitfinexed (@Bitfinexed) made his first accusation against Bitfinex and Tether for systemic market manipulation of the entire ecosystem. His post went into defining a supposed trader on Bitfinex he called "Spoofy," and his accusations that Spoofy was engaged in widespread market manipulation on the platform. For those not familiar with trading, spoofing is a practice of putting orders in on an exchange to buy or sell something and then removing the orders when the market price reaches the point things would actually be bought or sold. Lots of the time other traders will front run and start buying or selling before those orders would be hit, so a trader with enough funds can actually push the market price around by effectively tricking other people into buying or selling, and then removing their own orders without having to fulfill them. Bitfinexed's accusations were that this behavior could very well be Bitfinex themselves, and that the behavior was a systematic manipulation of the entire crypto market. He later went on to outright accuse Tether of printing money out of thin air with no backing, but in this initial post he left it insinuated instead of accusing them outright.

For the next year or so Tether was constantly berated by accusations of fraud, market manipulation, and not being fully backed by dollar reserves. They contracted with Friedman LLP to conduct an audit of Tether reserves, but all that was ever published by the firm before Tether severed the relationship was attestations. The difference between an audit and attestation is an audit would comprehensively look through an entity's balance sheets including assets, obligations, revenue, etc., to build a comprehensive picture of how those all balance out, where as the attestations simply attested to witnessing proof of holding certain assets or currency in reserve at the time of the attestation. Eventually the relationship ended due to, paraphrasing Tether's statement on the matter, "the large amount of time and resources being spent on the very simple Tether balance sheet meaning the audit will not be produced in a short enough time frame." I would like to point out here though, unless this has recently changed in the last year or two, no other stablecoin I am aware of has published an actual full audit of their operations. So the framing back then in the context at the time I feel was a completely disingenuous singling out of Tether and demanding a higher standard of transparency than what was demanded of other stablecoin issuers.

Throughout this whole saga in late 2017/early 2018 both Bitfinex and Tether completely cut ties with U.S. customers. Two other important factors in this story occurred around the same time period, although they were to differing degrees not publicly known until later. One was Tether and Bitfinex beginning a banking relationship with Noble Bank in Puerto Rico, a 100% reserve bank founded by Brock Pierce (an original founder of Tether), and the other was Bitfinex beginning to utilize Crypto Capital for fiat payment processing. This was the entity constantly shuffling money between new bank accounts set up under new corporate entities.

Before getting into the unraveling of one of these stories (regarding the Noble Bank relationship) it's worth mentioning a short period of time in early 2018 when Bitfinex had a banking relationship with Dutch bank ING. I mean very short. Within a few weeks of Bitfinex publicly acknowledging the relationship, ING closed their banking accounts. Later in 2018 Tether and Bitfinex severed ties with Noble Bank, and the bank was put up for sale. The publicly-given reason was the banks lack of profitability as a full reserve bank, but my own speculation is that their own custodial bank New York Mellon was likely pressured by New York regulators to in turn pressure Noble Bank for their relationship with Tether and Bitfinex. See the continuing theme? Banks and regulators constantly ostracizing both companies from banking services is the pattern here. After jumping ship from Noble, Tether began holding reserves with Deltec Bank in the Bahamas.

Now here is where the story gets absurd. In 2019, $850 million dollars of Bitfinex funds held by Crypto Capital were seized by multiple governments, one of which was the United States. The company had been opening bank accounts under shell corporations and claiming to the banks that they were engaged in real estate transactions in order to process deposits and withdrawals on behalf of Bitfinex, Tether, and other cryptocurrency companies using their services. For months the company led Bitfinex on, would not fully explain the issue, and eventually Bitfinex addressed the problem by taking a loan from Tether out of their backing reserves. This is when the New York Attorney General sued Bitfinex and Tether for being short $850 million in Tether reserves. The United States government seized almost a billion dollars, and then sued the companies the money was stolen from for not having that money.

This case dragged on for almost two years until February 2021, when Tether settled with the NYAG for an $18.5 million dollar fine. They were required under the terms of the settlement to issue quarterly reports of exactly what was backing Tether.

Only about 6% is real cash reserves or treasuries under Tether's direct control (for clarification to readers not familiar with such details, "fiduciary deposits" are effectively bank deposits not directly held by Tether). The balance sheet of reserves is essentially the inverse of what it started as. In the beginning Tether actually did have hard cash on hand for reserves, now the majority of their reserves are simply commercial paper (short-term loans issued by corporations). The risk profile of this versus simply holding physical cash is massive, as the value of all that commercial paper is effectively only as stable as the company that issued it.

That said, why are they in this position in the first place? Because of the years of regulators and banks constantly cutting them off from fiat financial rails and pushing them further and further into a corner. Think about that for a minute. The entire chain of events that led to a much riskier balance sheet profile, which puts anyone holding Tether at a greater risk of losing their value, was caused directly by constant antagonism from banks and regulators. It doesn't change the risk, but I think it is an important context to provide.

So what lies ahead for Tether?

Given the recently announced El Salvadorian Bitcoin bond, and the fact that Bitfinex will act as the broker and Tether will be accepted as payment, I think the road ahead for Tether is going to be very dangerous in a sense. Simply existing as an alternative fiat settlement system has led to non-stop harassment and scrutiny from governments and banks that have at times pushed both businesses to the point of potential failure and liquidity crises. That was just for passing dollars around between exchanges. They are now, after having already been backed into a corner, literally facilitating the sale of the first sovereign Bitcoin bond in human history. If just moving money between crypto exchanges has elicited the level of regulator and bank ire that Tether and Bitfinex have been subjected to, what will this bond issuance elicit?

I fully believe in response to this, the United States government will be coming for both Bitfinex and Tether in full force. The setting of the stage for that is written all over their recent obsession with stablecoin regulations, USDC's recent move in response to this wind change of shifting all reserves to short-term treasuries, and in general the entire historical response and antagonism of both companies. The United States has subtly reacted to this ecosystem existing the way an immune system reacts to a virus, and with things evolving to the point of a nation-state issuing a bond backed by bitcoin, that immune response will likely increase.

I have always considered the attacks, and frankly deranged conspiracy theories, surrounding Tether are absurd. But that doesn't change the fact that attacks against them have continued increasing in intensity while they have been backed further and further into the corner. The more that Tether, and by proxy Bitfinex, facilitate the evolution of this ecosystem financially beyond the control of the existing U.S.-dominated financial system, the more the hammer will be swung at them. Just because prior whacks have missed doesn't mean all attempts in the future will. To think so is to subject yourself to the gambler's fallacy. Not to mention the basket of issues commercial paper backing introduces in terms of stability risk tied to general global financial markets, i.e., if the companies who issued that paper do poorly, become insolvent, or can't make good on the paper then there are no dollars backing that Tether when any of those things happen. That becomes the rock to the government antagonism's hard place. On one side the traditional banking system and regulators squeezing them into a corner, and on the other the risk of economic misfortune of issuers of the commercial paper effectively deleting that Tether backing if defaulted on.

And to top all of this off, very recently the rebel government of Myanmar in their fight against the military government adopted Tether as a currency.

What do you think the domino effects of that will be? I think they will result in Tether being backed further into a corner, and more frantic swings of the hammer will come. Maybe this is me being a pessimist, but I have always thought if Tether came to an end it would be due to the U.S. government having enough of it. I think they're about at that point.

This is a guest post by Shinobi. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

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Bitcoin, Tether And Poking The Financial Beast - Bitcoin Magazine

Sumit Gupta, co-founder and CEO of CoinDCX, on Monday shared a post about investing in gold or Bitcoin, the largest cryptocurrency by market value. Bitcoin is the clear winner," the CoinDCX CEO has said.

He asked investors, What do you prefer? Investing in Bitcoins? Or investing in Gold?"

Gupta who is also the Co-Chair of Blockchain and Crypto Assets Council (BACC) said, Bitcoin is, undeniable, the landmark of digital money and one of the most exciting financial technologies. It is the present and will definitely rule the future."

Reasons listed by Gupta on why you should invest in Bitcoin:

- Real-time tracking of how much gold is available is almost impossible.

- Whereas, you can easily verify every Bitcoin that has ever been mined.

- Its difficult to verify the authenticity of gold that you buy. There are tests, sure. But it takes days to get the results.

- Bitcoin, being public and open, can be verified in minutes with the click of a button.

- Gold is a centuries-old asset hence higher market cap ($10T+, lower volatility) class.

- Bitcoin is relatively new (~$1T), but network effects rapidly picking up.

- Transactions via Bitcoin can be done easily over the internet. Sending Bitcoin is as easy as sending an email.

- Sending gold from one place to another is an extremely cumbersome and tedious process.

- The purity of each piece of gold varies depending on the percentage of gold.

- Each Bitcoin represents the exact same value as another Bitcoin on the network.

- Gold is easy to counterfeit.

- Owing to the complicated, decentralized blockchain ledger system, Bitcoin is incredibly difficult to counterfeit

Meanwhile, gold price in Delhi on Monday declined marginally by 5 to 47,507 per 10 grams in line with weak international precious metal prices and rupee appreciation, according to HDFC Securities.

In the previous trade, the precious metal settled at 47,512 per 10 grams.

Silver also dipped by 27 to 60,914 per kg from 60,941 per kg in the previous trade.

The Indian rupee appreciated 45 paise to close at 74.62 against the US dollar on Monday.

In the international market, gold was trading lower at $1,788 per ounce and silver was flat at $22.42 per ounce.

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Among Bitcoin and gold, who is the clear winner? CoinDCX CEO answers - Mint

Decentralized platform Harmony saw renewed traction this month. Its native cryptocurrency ONE reaped the benefits of this interest. After hitting a low of $0.13 on 4 December, the price of ONE rose by 163%. Further, the token marked a new all-time high of $0.38 on 14 January.

Interestingly, the token has lost over 53% of its valuation since then. Well, possibly due to larger market corrections. Even so, the platforms developers have revealed ambitious plans to take Harmony to new heights in the coming year.

According to a recently released roadmap, the main focus of development will be on adoption, interoperability, decentralization, and zero-knowledge proofs. This would be achieved by building bridges with other important blockchain protocols, notably including Bitcoin and Ethereum.

Harmony is a Layer 1 smart contract platform that makes use of sharding for its consensus mechanism. This allows the protocol to scale significantly with increased block sizes and throughput. Thus, making it fully Ethereum interoperable similar to layer 2 protocols.

The blog post noted that both the Bitcoin and the Trustless Ethereum Bridge were released on Harmonys Testnet in November last year. This, in order to further its use cases.

An example of utility is a cross-chain exchange without custodial risks Ethereum developers can easily scale their applications with Harmony to enjoy our 2-second finality and cheap fees.

Moreover, apart from the top two blockchains, the development of bridges with other decentralized protocols is also underway, the announcement noted. These include Polygon, Terra, Cosmos and Polkadot, among others. The roadmap also highlighted that a host of other ecosystem-centric developments are in different stages of release Including derivatives staking, decentralized nodes, and secure resharding.

It was further highlighted that Harmonys path towards interoperability will also include the release of Cross-Shard Composability and Cross-Chain Communications. While the former will focus on atomic swaps of assets and inter-shard contracts, the latter will be aimed at building chain relays as smart contracts and data availability layers.

It should be noted here that Harmonys plans to develop its ecosystem further do not seem too far-fetched, especially considering the steep rise in its adoption. The total value locked in the protocol hit an ATH of $1.25 billion earlier this month, up from just $135 million towards the beginning of October.

While it might be giving a hard time to layer 2 protocols, Harmony still faces stiff competition from blockchains similar to itself, namely Fantom, NEAR protocol, and Cosmos. Recently, this group of alternate layer-1 blockchains has been outperforming more established ones such as Binance Smart Chain and Terra, according to CoinMarketCap.

It also noted a dramatic uptick in their on-chain activity, wallet counts, DApp ecosystems, and total value locked TVL in recent months.

Read more from the original source:
Harmony bets on Bitcoin, Ethereum bridges to improve cross-chain ecosystem - AMBCrypto News

Thailand has reportedly scrapped plans to impose a 15% withholding tax on crypto transactions following a surge incryptocurrency trading.

Earned income on crypto trading or mining can be reported as capital gains on income taxes, tax authorities said Monday, according to the Financial Times.

The new rules, outlined in a manual published by Thailands revenue department, will also allow traders to offset their annual losses against gains made in the same year.

The revenue department did a lot of homework and reached out to crypto operators as well to get feedback, said Pete Peeradej Tanruangporn, chief executive of Upbit, a crypto exchange, and co-chair of the Thailand Digital Asset Operators Trade Association. It is much more friendly to both investors and the industry.

The Bank of Thailand, the countrys Securities and Exchange Commission, and its finance ministry last week announcedplans to issue regulatory guidelines to restrict digital currency payments.

Digital assets have fast gained momentum in Thailand over the past couple of years, with average daily trading surging to 4.8 billion baht ($143.8 million) from just 240 million baht,Ekniti Nitithanprapas, director-general of the ministrys revenue department, according to Reuters.

Last week, Indonesia's Financial Services Authority warned that financial firms are not allowed to offer and facilitate sales of crypto assets amid a boom in crypto trading in Southeast Asia's largest economy.

The authority saidthat the value of crypto assets often fluctuates and that people buying into the digital assets should fully understand the risks.

Bitcoin prices turned higher Monday, rising 2.3% to $38,444 following heavy losses that hit the cryptocurrency sector. Bitcoinset an all-time high of $69,044.77 on Nov. 10.

"While the sell-off in Bitcoin has been relatively muted going into this week, the outlook for the cryptocurrency market as a whole remains negative with heavy losses seen across a range of once-popular altcoins," saidNicholas Cawley, Strategist at DailyFX. "If the market as a whole is looking to Bitcoin to lead the way higher, it is most likely to be disappointed as BTC struggles with nearby resistance."

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Thailand Scraps Plans to Tax Bitcoin, Crypto Transactions - TheStreet