Market Update for October 18th

Friday, October 18th 2019

Recent Headlines

The IRS Just Issued Its First Cryptocurrency Tax Guidance in 5 Years

The U.S. Internal Revenue Service (IRS) has published its first guidance in five years for calculating taxes owed on cryptocurrency holdings. Industry members have been eagerly awaiting the update since May 2019, when IRS Commissioner Charles Rettig said the agency was working on providing fresh guidance. The agency’s 2014 guidance left many questions unanswered, and the crypto market has grown more complex in the years since. The guidance addresses the tax liabilities created by cryptocurrency forks, the acceptable methods for valuing cryptocurrency received as income, and how to calculate taxable gains when selling cryptocurrencies. Read more...

The Central Bank of Canada is Exploring a Digital Currency

The Bank of Canada is exploring the possible opportunities and challenges related to launching its own digital currency. The central bank purportedly believes that a public central bank digital currency (CBDC) could be the answer to the direct threat that cryptocurrencies apparently present. The document, titled “Central Bank Money: The Next Generation,” was reportedly prepared for the current Governor of the Bank of Canada, Stephen Poloz, for a September 2018 board meeting and was presented as part of a two-year research project on whether or not the bank should launch its own CBDC. Switzerland’s central bank is also exploring a blockchain-based digital currency, while China's central bank digital currency is “ready” to launch later this year or early next year. Read more...

Visa, eBay, Stripe, Mastercard and PayPal Abandon Facebook’s Libra

Facebook’s effort to create a cryptocurrency was dealt a blow on Friday after several key partners, including Mastercard, Visa, eBay, Stripe and PayPal, abandoned the project. The defections followed fierce criticism from global regulators and lawmakers, and have prompted some industry-watchers to question whether Libra can survive. Since its announcement, it has been the subject of scrutiny from regulators and lawmakers, who are concerned about its possible effect on global trade, finance and monetary sovereignty. That all being said, Stefan Ingves, governor of the central bank of Sweden, recently said that Libra's introduction "has been an incredibly important catalytic event", that has forced central banks to "think hard about what we do." Read here and here...

Peter Thiel Backs $200 Million Valuation for Renewable Bitcoin Mining in the US

One company is driving its business plan straight into the “bitcoin wastes too much energy” argument and has raised $30 million to do so. That’s according to Layer1 co-founder and CEO Alexander Liegl, which plans to bring wind-powered bitcoin mining rigs to West Texas early next year. The company is raising a total of $50 million at a $200 million valuation. The CEO went on to say that he thinks “electricity directed to the bitcoin mining network is certainly a net positive for society.” Read more...

Cryptocurrency Can Serve a Positive Role in Hong Kong

Amidst significant protests in Hong Kong, LocalBitcoins, a popular platform for directly trading Bitcoin peer-to-peer, posted its highest trading volume ever in Hong Kong earlier this month. Given that the Chinese state monitors its citizens through their spending habits, cryptocurrencies have enabled citizens to move to an altogether different form of transferring value that’s not backed by the state. While a portfolio manager may consider Bitcoin a risk asset, for some people it is clearly treated as a safe haven. Read more...

QuadrigaCX Founder’s Widow to Compensate Exchange Hack Victims

The widow of QuadrigaCX founder Gerald Cotten has agreed to surrender the contents of his estate and the "vast majority" of her own assets to pay back the company's jilted clients. A total of 76,319 unsecured creditors, virtually all of them QuadrigaCX clients, came forward after the site's implosion, to claim they were owed $214.6 million. Read more...

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