10/17/19

The US Securities and Exchange Commission Never Sleeps — Crypto

The crypto industry had called for clarity from the US Securities and Exchange Commission for years.

Let’s be clear. What the crypto industry wants is for the US SEC to roll over and play dead and stop with its pesky rules, interpretations, and “hopelessly outdated Howey Test” nonsense.

It is reported that the men in Hell asked for ice water this morning. The Devil is considering it, but initial reactions are not encouraging.

What has happened is that the US SEC has begun to take firm stands and firm stands mean enforcement actions.

Two that come to mind are the Kik/Kin issue that has blown through its MUI (matter under investigation) notification, a notice of a formal investigation(an important first step because it authorizes the use of subpoenas), a Wells Notice, a Wells submission (formal reply by the company), and a formal complaint — an enforcement action.

Kik subsequently put itself to death and is solely focused on Kin intending to fight it out to the death.

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10/15/19

Crypto — We’re From The IRS And We’re Here To Help

Just when you thought the government of the United States of America had forgotten about you, the Internal Revenue Service sends you a love letter telling you how the cow shall consume the cabbage as it relates to taxes on the use of cryptocurrency.

They had previously opined on the subject last back in 2014 with IRS Notice 2014-21. Five long years and, finally, our pals from the IRS are back with an additional dose of wisdom.

I know what you’re saying, “Wow, this is really going to be great. Oh boy!”

[Pro tip: Hold onto that enthusiasm and, maybe, redeploy it at some future date.]

The guidance (on the specific issue of forks and airdrops) has come in the form of Revenue Ruling 2019-24 which you can find right here.

IRS Revenue Ruling 2019-24 (rr-19-2)

The real assistance is in the form of a series of Frequently Asked Questions on Virtual Currency Transactions.  You can find that gem of wisdom right here.

Frequently Asked Questions

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10/7/19

Cracks in the Libra Foundation

Some time ago, we spoke about Facebook’s Libra cryptocurrency.

We spoke of it here:

Facebook and Libra

Recently, we learned that PayPal has abandoned ship as one of the 28 founding Libra Association members. Sort of caught folks by surprise.

They didn’t give a reason, but mumbled along the lines of this:

Uhhh, ummm, we have decided “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.”

The Financial Times said that PayPal was concerned about the regulatory lightning Libra seems to be attracting.

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10/6/19

The Confusing State of Crypto in China

There is a huge amount of confusion as to the status of cryptocurrency regulation in China. The other day I read a commentary that suggested that all was rosy in China, when I was of the opinion that it was not.

Read this and you can judge for yourself. This is not intended as a nudge in any direction. It is just simple facts.

I did some research. Nothing ruins a good conversation like facts.

So, let’s review some facts, shall we?

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08/19/19

Walmart Cryptocurrency, The Walmart Coin

A couple of weeks ago, Walmart announced that it had applied for a cryptocurrency patent thereby spawning speculation that Walmart Coin was being plotted.

It wasn’t Facebook with a crowd of the crypto Illuminati floating the idea of its Libra coin to be overseen by gnomes in Geneva. It didn’t attract a lot of fanfare, and it didn’t trigger Congressional hearings.

No, it was plain vanilla, retail behemoth Walmart, who without much pomp or even a twinge of circumstance said, “Hey, we might be interested in an actual application of that blockchain and cryptocurrency stuff.”

Who would have ever thunk it, Walmart?

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07/12/19

The Trump Bump — Cryotocurrency

President Trump had some choice words to share in regard to cryptocurrency and the Libra (Facebook) cryptocurrency in particular.

They were not flattering.

The President is “…not a fan…” and suggests that cryptocurrency will “…facilitate unlawful behavior, including drug trade and other illegal activity.”

His full quote was:

“I am not a fan of bitcoin and other cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated crypto-assets can facilitate unlawful behavior, including drug trade and other illegal activity.”

He had a lot more to say, but that is the money line.

The comments were magnified by those of US Federal Reserve Chairman Jerome Powell who said that he felt that cryptocurrency “…raises serious concerns.” [Hey, if you were casting a movie on the Fed Reserve — sexy action thriller kind of movie with Charlize Theron as a central banker — is this guy not the perfect Fed Reserve Chairman?]

Powell’s comments, though less widely reported, contained substantial beef as he noted that the existing regulatory scheme does not “fit digital currencies” which he indicated would have to be addressed before Libra could go forward. He specifically called out Libra thusly,

“Libra raises many serious concerns regarding privacy, money laundering, consumer protection, and financial stability.”

The President pointedly noted that if Facebook wanted to go forward with Libra they should get a bank charter. Your Big Red Car said the same thing some time ago.

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06/8/19

Criminalizing Crypto in India

Big Red Car here getting ready for a trip to Sam’s.

So, I’m reading a few things and stumble on an interesting article about India and its attitude toward crypto. This is interesting for a number of reasons, not the least of which is that twenty percent of the world’s population lives in India.

Here is the famous Gateway to India which will likely not become the Gateway to Crypto if a proposed law is approved.

The “Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019” levies a ten-year prison sentence on any individual who might “mine, generate, hold, sell, transfer, dispose of, issue or deal in cryptocurrencies.”

This is what is called a broad stroke. Not much left to the imagination. Not subtle.

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