As millions of people across the US start to file their taxes, questions remain about how to account for crypto holdings. With the IRS paying closer attention than ever, it is important to follow proper guidance.
With the crypto markets surging over the past year, taxes have probably been far removed from the minds of most investors. However, with the filing date approaching it is important for everyone to know how to correctly fill out their forms and avoid inadvertent errors. In fact, the IRS is paying closer attention than ever to the space, as evidenced by its choice to prominently place a question about crypto holdings on the very top of the first page of a 1040.
This webinar will walk you through how the IRS approaches taxation when it comes to crypto, explain what constitutes a taxable event and provide tangible examples to guide you. It also touches on some emerging issues in the space including how to account for staking rewards, interest earned from lending activities, and even NFTs!
Roger Brown: Lukka, Head of Tax & Regulatory Affairs
Shehan Chandrasekera: Cointracker.io, Head of Strategy – Tax
Lisa Feliz: Kraken, Global Head of Tax
Michael Meisler: Ernst & Young, National Tax Partner, Leader – EY’s Cryptocurrency Tax Center of Excellence
Disclaimer: This webinar is for informational purposes only and should not be considered investment, financial, or tax advice.
Just a day after two decentralized finance powerhouses announced layer-two integrations via the Polygon sidechain, a major nonfungible token and gaming title has today followed suit.
In a blog post this morning, NFT-powered virtual world and video game Decentraland announced a token bridge enabling users to move native MANA tokens to Polygon and back. At the time of publication, MANA is the 80th ranked token by marketcap and has risen 3750% on the year to $1.01, per Coingecko.
This is just the first step in what will be a significantly larger migration, as the project intends to enable all Decentraland dApps, including their Builder and Marketplace contracts, to conduct transactions on Polygon.
In addition to brisk settlement times, the integration will also make all transactions completely free for users. While Polygon normally charges a transaction fee priced at fractions of a cent, Decentraland said that they will also be leveraging Biconomy.io meta-transactions. This will enable users to “claim, buy, sell, and trade wearables for their avatars entirely on Polygon, with no transaction fees.”
Finally, the integration will allow users to purchase MANA tokens directly with credit and debit cards via a Polygon integration with crypto on/offramp Transak.
The migration is yet another win for Polygon in a multi-horse race to provide scalability solutions to Ethereum’s chronic gas costs. Polygon — which rebranded from Matic, a former would-be competitor to Ethereum whose “sidechain” claim is somewhat strained — has been taking particular advantage of competition falling asleep at the wheel, such as when rollup platform Optimism pushed back their release by three months.
Yesterday, Aave and Zapper both announced Polygon implementations, giving the project two top-100 marketcap wins in under a week. There could be more competition coming in the scaling wars, however, as last week Starkware raised $75 million.
Investment fund manager 3iQ has partnered with Coinshares to launch a Bitcoin exchange-traded fund in Canada.
According to an announcement from 3iQ, the firm has filed a final prospectus for a Bitcoin (BTC) exchange-traded fund, or ETF, with the securities regulatory authorities in each of the 10 provinces and 3 territories of Canada. Pending regulatory approval, trading for the ETF is expected to begin in early April on the Toronto Stock Exchange.
CoinShares CEO Jean-Marie Mognetti said the joint effort was aimed at “making digital assets more accessible to investors of all types.” The fund’s units will likely trade in U.S. dollars under the ticker “BTCQ.U” and Canadian dollars under the ticker “BTCQ.”
Canadian investment firms have largely taken the lead on launching crypto ETFs in North America given the U.S. Securities and Exchange Commission’s, or SEC’s, seeming reticence in approving a fund. Toronto-based Purpose Investments launched a Bitcoin ETF in February, and Ninepoint Partners is reportedly planning to change its Bitcoin trust offering to an exchange-traded fund as well. Evolve Funds Group also announced in March that it had filed a prospectus with Canadian regulators for approval to begin trading an Ether ETF.
3iQ was behind the launch of Canada’s first Bitcoin fund in April 2020. The fund has since reached more than $1 billion, with Coinshares and 3iQ having a combined $7 billion of assets under management.
“We have followed 3iQ’s incredible growth closely since they received a landmark decision in Canada to allow listed Bitcoin vehicles,” said Mognetti.
The fully diluted valuation of Filecoin (FIL), a digital payment and cryptocurrency system built on top of the InterPlanetary File System (IPFS), has reached $450 billion.
Filecoin is a blockchain that enables users to rent unused hard drive space to store and retrieve data. Its model is similar to Snowflake, which completed the biggest software IPO in history in September 2020.
If you’re excited about Snowflake, just wait until you learn about Filecoin
— Barry Silbert (@BarrySilbert) September 16, 2020
A combination of three factors likely led the price of FIL to surge in recent weeks: technical momentum, rising demand from China, and its uniqueness compared to Ethereum.
Analysts say big demand is coming from China
According to Wu Blockchain, a crypto-journalist based in China, the demand for FIL has been heating up in China.
The daily volume of FIL on Huobi, which ranks as China’s largest cryptocurrency exchange, reached $24.2 billion. The journalist said:
“China is crazy for Filecoin, with a 24h increase of more than 30%, reaching a maximum of $236. The 24h trading volume of FIL in Huobi, China’s largest exchange, reached $24.2b, nearly three times the volume of the second ETH $8.8b, Bitcoin was $7.8b. FILDOWN, a short-selling leveraged token in Binance FIL, plummeted by 53%, with a turnover of US$3.4 billion, indicating a large number of short FIL liquidation in Binance.”
A plausible scenario could have been that a fear of missing out (FOMO)-like trend across Asian markets, including China, created a strong uptrend led by the derivatives market.
As the demand started to spike in China, the open interest of Chinese futures exchanges rose, eventually flowing into global futures trading platforms.
Technical momentum is strengthening
When the price of FIL began to increase, the open interest across major futures exchanges began to increase rapidly.
According to the data from Bybt, within 24 hours, the open interest of Filecoin increased by 46.37%.
#Filecoin open interest have increased by 46.37% in 24 hours .
A pseudonymous trader known as Waro explained that when a cryptocurrency sees a strong uptrend like this, it is difficult to catch a top.
Many traders attempt to predict the top, which leads to short position liquidations and this causes a short squeeze that adds fuel to the rally. He said:
“I may not understand why $FIL keeps pumping but what I do know is trying to catch a top is suicide more often than not. For those that don’t understand that tweet: The likelihood of you getting murdered trying to catch a top short is higher than you shorting the top.”
FIL eventually saw an abrupt short-term top, falling 23% within merely 45 minutes across major exchanges.
Ethereum’s momentum could be a catalyst
James Spediacci, an Ethereum analyst, said that he continuously emphasized over the past four years that Filecoin brings uniqueness as a layer one blockchain that others struggle to as a competitor of Ethereum.
Spediacci explained that decentralizing cloud storage with IPFS is an innovative technology that actually adds value to the blockchain space. He said:
“I’ve been saying this since 2017: ‘Filecoin is the only other blockchain besides Ethereum that actually adds value to the world by decentralizing cloud storage with IPFS and it is complimentary to Ethereum.’ If you dumped your $FIL at $20, you’re not going to make it.”
Bitcoin miners claimed over $1.5 billion in Bitcoin block rewards and fees last month, according to arecent reportfrom blockchain analytics company Arcane Research.
Though mining revenue decreased toward the tail end of the month as trading volume settled down, the monthly tally still constitutes a record.
The final figure is roughly in line with projections from mid-March, when blockchain data firm Glassnode reported that miners were taking home $52.3 million per day. Revenue reached arecord $64.7 million on March 14, the day after Bitcoin’s price peaked at its new all-time high of $61,683.
Mining is how transactions get added to the Bitcoin blockchain. Miners, usually in coordination with larger mining firms, use specialized hardware to run the Bitcoin software. The process provides the network with security as miners lend their computing power to solve cryptographic puzzles. The first miner to do so gets to confirm a new batch, or block, of transactions and receive newly minted Bitcoin, plus any transaction fees people have paid to help push their transactions through on the network.
Currently, miners receive a block reward of 6.25 BTC, with a new block mined every 10 minutes or so. What might be startling is that the block reward used to be higher. From July 9, 2016 until May 11, 2020, miners earned 12.5 BTC for every block mined. For the four years before that, it was 25 BTC, and for nearly the first four years of Bitcoin’s existence, block rewards were 50 BTC.
Which is all to say that Bitcoin mining revenue is going up despite block rewards going down; the shrinking supply has driven the price up. Indeed, price is the primary reason for the revenue increase. Transaction fees play a much smaller role; average fees declined in March as the number of transactions decreased, according tostatistics from Blockchain.com.
Of course, revenue is not the same thing as profit. But mining profitability has consistently risen since October 2020, according tostats from BitInfoCharts. In March, it hit its highest level since July 2019.
Crypto influencer and trader Lark Davis says Bitcoin is set to rise, but altcoins will outpace the king coin’s growth in the coming months.
In a new video, Davis takes to the Bitcoin chart to explain why he’s short-term bullish on BTC.
Davis highlights that Bitcoin is on the verge of crossing the MACD (moving average convergence divergence), a move which has historically preceded large BTC rallies.
“This has not been confirmed yet, just keep that in mind. It may not confirm, but it’s very very close to confirming. If we keep this momentum going we will get a confirmation, and if it does confirm then this would be a very bullish technical move for Bitcoin.
The last three times that we had a bullish MACD crossover the price went up by 120%, 66% and 20%. So this indicator tends to represent a period where bitcoin will see serious gains.”
The trader adds that the indicator will likely confirm tomorrow or the following day, though nothing is certain when it comes to the BTC charts.
Davis also highlights that Bitcoin bull and Real Vision founder Raul Pal believes that the overall crypto market has passed a significant milestone after hitting a $1.8 trillion market cap. Both crypto investors believe that the valuation of the crypto space is set to double in the coming months.
The market cap of the entire digital asset space feels like the break of $1.8trn is kind of a big deal. The chart pattern suggests acceleration lies ahead on that break. My guess is the whole space doubles in next 2 to 3 months. Let see! pic.twitter.com/125lTVAkNH
— Raoul Pal (@RaoulGMI) March 30, 2021
While investors can rely on Bitcoin for steady gains as crypto market growth accelerates, altcoin investments, while riskier, are going to manifest life-changing gains for traders in 2021.
“2021 is seriously one of the biggest opportunities of your financial life. The potential for life changing money to change your financial destiny in 2021 is incredible.
But here is the truth, if you just buy bitcoin you’re not going to see the exponentially huge gains. You’ll get pretty decent returns but if you want to make the big money you gotta invest in altcoins.”
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Former SEC chairman Jay Clayton says that Bitcoin isn’t a security—and hasn’t been classified as such for a long time.
His comments come as Ripple urges the SEC to examine Bitcoin and Ethereum in its defense of XRP.
Bitcoin is not a security—but that doesn’t mean that it won’t be regulated, former US Securities and Exchange Commission (SEC) chairman Jay Clayton said today.
Clayton, whonow advisesOne River Asset Management on cryptocurrency, toldCNBCthat Bitcoin was not a security long before he joined the SEC. But regulation of the asset will still inevitably come, he added.
“Where digital assets land at the end of the day–will be driven in part by regulation both domestic and international, and I expect that regulation will come in this area both directly and indirectly,” says Former SEC Chairman Jay Clayton on #bitcoin. pic.twitter.com/voWcgCFqOH
— Squawk Box (@SquawkCNBC) April 1, 2021
“[Bitcoin not being a security] does not mean that it should not be regulated,” he said.
“In fact, where digital assets land at the end of the day, which is very much a wide-ranging question, will be driven in part by regulation—both domestic and international—and I expect, and I’m speaking as a citizen now, that regulation will come in this area both directly and indirectly whether it’s through how these are held by banks, security accounts, taxation and the like.”
Clayton’s comments come as Ripple, the company behind XRP, previously the third-most capitalized cryptocurrency in the market,asks the SEC to reexamineBitcoin and Ethereum. Specifically, Ripple wants a court to compel the SEC to share its internal discussions about Bitcoin and Ethereum in the hopes that it will improve its own case for XRP.
Ripple is facing a billion-dollar lawsuit from the SEC, which filed its complaint just before Clayton stepped down as chairman. The Commission alleges that the companyillegally raised $1.3 billionthrough the unregistered sale of XRP, which the SEC says was a type of security known as an investment contract.
But Ripple says XRP is not a security—but rather a cryptocurrency. The company is in the process of fighting the SEC’s lawsuit on those grounds.
As part of its defense, Ripple asserts that the SEC should class XRP as a virtual currency, just like it classes Bitcoin and Ethereum virtual currencies and not securities.
The lawsuit has so far proven to be detrimental for the firm, and for XRP: top crypto exchanges like Coinbase, Binance, and Kraken have halted all XRP trading. The price of the currency also dipped, and it fell down the list of the top cryptocurrencies by market cap—dropping from third to seventh in a matter of months.
After a rough start, Filecoin has managed to break into the top 10 leading cryptocurrencies by market capitalization. After overtaking Chainlink (LINK) and Theta Network (THETA), with a rally of 138% in one week and 418% in one month, FIL took over the tenth position.
Founded by Juan Benet, creator of the InterPlanetary Files System (IPFS), and developed by Protocol Labs after receiving $257 million in its Initial Coin Offering, the platform has managed to attract a lot of attention in China, as journalist Colin Wu reports.
Data shared by Wu indicates that FIL has seen a 30% increase in its trading volume for the last 24 hours on Huobi’s platform. The cryptocurrency has managed to reach a new all-time high based on increased buying pressure and demand for the cryptocurrency.
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The daily trading volume stood at $24.2 billion. In contrast, the daily trading volume for Ethereum stood at $8.8 billion and $7.8 billion for Bitcoin. The rapid increase in price has had negative consequences for investors with short positions, as Wu notes:
FILDOWN, a short-selling leveraged token in Binance FIL, plummeted by 53%, with a turnover of US$3.4 billion, indicating a large number of short FIL liquidation in Binance.
Increase in institutional demand for Filecoin
Additionally, Wu recorded an increase in transactions for the FIL/USD pair on Coinbase’s Pro trading service. After FIL’s price surpassed the $180 barrier, “transactions with high credibility were recorded on Coinbase,” according to the journalist. Wu added:
Distributed storage has become popular. Filecoin continues to climb to 136U, HOT has risen by nearly 40% and 2500% year-to-date, its market value is close to that of HT, the token of China’s largest exchange.
FIL’s price appears to have increased following the launch of Grayscale’s Trust based on this and other cryptocurrencies to expand its product suite. In addition, the teams behind platforms Filecoin and Livepeer have announced a “co-mining” program. According to an official release:
Livepeer is launching a co-mining pilot with Filecoin to enable Filecoin miners to become Livepeer video miners while continuing to mine on the Filecoin network by storing transcoded video data.
Thus, miners of these cryptocurrencies will be able to obtain higher profits and “additional economic opportunities”. Filecoin’s mining mechanism requires miners to obtain token FIL to make a “bid/initial response”. The latter has contributed to the increase in buying pressure for the token.
Demand from companies and start-ups to use Filecoin’s platform also seems to be accelerating, as indicated by a recent report from its team.
📢 ANNOUNCEMENT: We are less than 1 month away from the Filecoin Frontier Accelerator #DemoDay with @LongHashVC! Watch 11 blockchain startups using Filecoin’s storage & distribution network pitch to you at 9am (GMT+8) on April 23rd.
RSVP here: https://t.co/uiNPYQLdxY
— Filecoin (@Filecoin) April 1, 2021
Trader Fiskantes believes the coin is “massively overvalued” and could see a 90% drop. This is mainly based on FIL’s increase supply that will double in the next 3.5 years. However, the high number of partnerships and interest from China could contribute to the prolongation of this token’s rally. At the time of writing, FIL is trading $190 with gains of 3.8% in the last 24 hours.
According to data from, Bitcoin’s (BTC) Q1 2021 performance was the best since 2013. With strong tailwinds, Bitcoin now enters Q2 which historically has been a good period for BTC price.
Data shows that BTC has only closed Q2 in the red twice and both times the decline was less than 10%. If history repeats itself, Bitcoin investors may witness sharp gains in the next six months.
Altcoins have also participated in the current bull run and this has propelled the total crypto market capitalization to $1.99 trillion which is just short of the $2 trillion milestone.
Let’s take a look at some of the top-performing tokens to see which may continue to rally higher in the short term.
The decentralized finance boom has attracted numerous new players. However, one of the problems facing investors is that the protocols are built on different blockchains.
This necessitates the need for a cross-chain protocol, enabling traders to swap tokens across the blockchains in a decentralized way and THORChain (RUNE) is attempting to do just that.
On March 26 the protocol teased that its multichain Chaosnet, which supports native cross-blockchain swapping across five chains is expected to go live soon.
This feature could attract several new investors who may lock their assets in THORChain for greater yields. If that happens, the total value of assets locked in THORChain could surge from the current $553 million TVL and add further benefit to RUNE investors.
Successful implementation of this feature could increase the demand for RUNE. On Feb. 23, Crypto investment firm Multicoin Capital also revealed a large position in RUNE.
RUNE rallied from an intraday low at $4.50 on March 25 to an intraday high at $8.93 today, a 98.44% rally in eight days. However, the long wick on today’s candlestick suggests profit-booking at higher levels.
The RUNE/USDT pair may retest the breakout level at $6.76. If the bulls can flip this level to support, it may act as a launchpad for the next leg of the uptrend that may reach $10.26.
The upsloping moving averages and the relative strength index (RSI) in the overbought zone suggest bulls are in command.
If the bears sink the price below $6.76, the pair may drop to the 20-day exponential moving average ($6.24). A bounce off this support will indicate the sentiment remains positive and it may keep the uptrend intact.
This positive view will invalidate if the bears sink the price below the 20-day EMA. Such a move could pull the price down to the 50-day SMA ($5.36) and then to $4.50.
The DeFi space is crowded and projects will have to think out of the box and introduce attractive products to stay ahead in the game. However, for the past few weeks, there have not been any major announcements from the Acropolis (AKRO) team.
High Ethereum gas fees continue to be a burden on users and that may have taken a toll. These could be some of the reasons why the protocol’s TVL is only at $37.31 million, according to a weekly update on March 31.
The team did mention that it is working on new vault strategies but it did not dish out too many specifics. In a bull market, almost everything rises, but projects that do not have a distinct advantage over their competitors struggle when the next downturn happens. Therefore, crypto investors should analyze the fundamentals of the projects and hold the ones that offer an edge over the others.
AKRO has risen from an intraday low at $0.042 on March 25 to $0.088 today, a rally of 109.50% in eight days. The token’s break above $0.072 completed a bullish ascending triangle pattern that has a target objective at $0.127.
However, the long wick on today’s candlestick suggests profit-booking at higher levels. The bears will now try to sink the price back below the breakout level at $0.072. If they succeed, the AKRO/USDT pair could drop to the 20-day EMA ($0.060).
If the price rebounds off this level, the bulls will once again try to push the price above $0.072 and resume the up-move.
Conversely, if the bears sink the price below the 20-day EMA, the pair may drop to the trendline of the triangle. A break below this support will invalidate the bullish setup and signal a possible change in trend.
Helium (HNT) was featured by Cointelegraph on Feb. 9 when it was trading at $3.96. From there, the token rallied to $12.09 on March 28, a 205% rally in just under two months.
The protocol aims to build a decentralized wireless network and connect IoT devices at a fraction of the cost of the current cellular service providers. Since early February, the number of active hotspots has increased from 18,000 to 24,572.
This number is likely to increase as one of its third-party HNT miner suppliers said that it had shipped 2,000 miners to customers in China on March 31. If HNT’s popularity increases in China, the number of hotspots could continue to rise.
Helium recently partnered with Streamr, a decentralized platform for real-time data, which can help users transport, broadcast, and monetize data. Helium has also forged partnerships with several firms that provide various types of IoT solutions.
VORTECS™ data from Cointelegraph Markets Pro turned positive just as HNT was starting the rally on March 25.
The VORTECS™ Score, exclusive to Cointelegraph, is an algorithmic comparison of historic and current market conditions derived from a combination of data points including market sentiment, trading volume, recent price movements and Twitter activity.
As seen in the chart above, the VORTECS™ Score for HNT was in the green on March 25, just as the token started its rally from $7.09 to $11.38 on March 28.
The VORTECS™ Score again turned green on March 31 just before the start of the rally and it has remained in the green since then. HNT pric rallied from $9.67 to $11.98 during the period.
Currently, HNT is in an uptrend but the bears are trying to stall the up-move at $12. The bears had pulled the price down from this level on March 28 but the bulls purchased the drop to the 20-day EMA ($8.66) on March 31, indicating accumulation on dips.
The rising moving averages and the RSI in the overbought territory suggest the path of least resistance is to the upside. If the bulls can sustain the price above $12, the next leg of the uptrend could start. The next target objective on the upside is $14.56 and then $17.64.
Contrary to this assumption, if the price again turns down from $12, the bulls will try to sink the HNT/USDT pair below the 20-day EMA. If they succeed, the pair could drop to the 50-day SMA ($6.04).
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk, you should conduct your own research when making a decision.
U.S.-based crypto exchange Coinbase says it anticipates going public with a direct stock listing in two weeks.
According to a Coinbase blog today, the U.S. Securities and Exchange Commission, or SEC, has declared the crypto exchange’s S-1 registration for a public offering effective. Coinbase’s Class A common stock is expected to trade on the Nasdaq Global Select Market under the ticker symbol “COIN” on April 14.
The crypto exchange had previously been expected to go public in March, but reportedly delayed its plans after paying a $6.5 million fee as part of a settlement with the Community Futures Trading Commission, or CFTC.
Coinbase sent its draft registration for a public offering to the SEC in December, though the crypto exchange disclosed plans to pursue a direct listing through Nasdaq in early 2021. The firm may have a $100 billion valuation at the time of its initial public offering, as suggested by the exchange’s shares reportedly selling for up to $375 each in a private auction last month.
First launched in 2012, Coinbase is one of the largest cryptocurrency exchanges in the United States, with Coinbase Pro handling more than $3 billion in daily transactions according to CoinMarketCap. Crypto exchange Kraken, also based in California, has not yet confirmed that it will follow in Coinbase’s footsteps by going public, but said it would do so through a direct listing rather than a special-purpose acquisition company.