Australian Taxation Office Clarifies CGT on DeFi and Crypto Wrapping

The Australian Taxation Office (ATO) has provided pivotal guidance on the capital gains tax (CGT) treatment concerning decentralized finance (DeFi) and the process of wrapping crypto tokens. This move is part of the ATO’s ongoing efforts to clarify tax obligations in the evolving domain of digital assets and blockchain-based finance.

DeFi, a form of finance leveraging blockchain technology to operate without traditional financial intermediaries, predominantly runs on the Ethereum blockchain. In DeFi, capital gains can occur, and the ATO has highlighted several CGT events (A1, E2, C2, H2) that might be relevant, depending on the specific arrangement’s nature.

A critical factor in determining CGT events is whether a trust relationship is established within the DeFi arrangement. This becomes significant in scenarios where the legal person holds the same type of asset for other beneficiaries, impacting the sole beneficiary status.

The ATO’s guidance clarifies that many DeFi lending and borrowing arrangements could trigger a CGT event, primarily when beneficial ownership of a crypto asset changes. This can occur through either asset exchange or a future rights exchange.

In DeFi, liquidity pools are mechanisms for pooling crypto assets to facilitate lending and add liquidity to trading. Providers who contribute to these pools receive new assets or rights, representing their pool share. The ATO clarifies that depositing into and withdrawing from these pools can constitute CGT events, determined by the market value of the assets involved.

Rewards or returns from DeFi platforms are treated similarly to interest income for tax purposes. The market value of any crypto asset reward at the time of receipt must be reported as assessable income.

Wrapped tokens, representing another crypto asset, are subject to CGT upon wrapping or unwrapping. This is based on the market value of the wrapped token at the exchange time.

Following the ATO’s clarification, there’s been notable industry response. Chloe White from Genesis Block and Blockchain Australia criticized the ATO’s stance for violating the principle of technological neutrality, potentially impacting the financial future of young Australians.

Adding to the complexities, CoinSpot, a local cryptocurrency exchange, reportedly experienced a security issue leading to a significant financial loss. This incident adds another layer of concern for Australian crypto users in the current regulatory landscape.

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Binance to Remove Liquidity Pools: ADA, APE, AVAX, DOT and More

Binance, one of the world’s premier cryptocurrency exchanges, has announced the removal of a significant number of liquidity pools from its Liquid Swap platform. This decision stems from Binance’s periodic review aimed at refining the trading experience for its users by concentrating liquidity. Traders should closely monitor these tokens, as the removal of token trading pairs may influence their prices.


Users with positions in these liquidity pools will automatically have their deposited assets returned to their Spot wallets at the aforementioned date and time.

It’s crucial for users to understand that the removal of these liquidity pools won’t affect the trading of the corresponding pairs on Binance Spot. Starting from August 28, 2023, at 06:00 (UTC), the platform will cease accepting liquidity additions to these pools. However, users have the option to redeem their assets from these pools before the removal date. After September 1, deposits in these liquidity pools will be determined based on the prevailing composition ratios of each pool and will be automatically redeemed to users’ Spot wallets.

Binance has also emphasized that Liquid Swap positions might undergo changes in composition ratios due to the inherent nature of liquidity pools. For a deeper understanding, users are directed to the platform’s FAQ section.

The announcement was officially made on August 28, 2023, by the Binance Team.

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Conflux to Deploy Uniswap v3 on Network

Conflux, a regulatory-compliant public blockchain based in China, is seeking to expand its reach and attract new users by deploying Uniswap v3 on its network. Uniswap v3 is a decentralized exchange protocol that allows users to trade digital assets without the need for intermediaries.

The move comes just days after the Uniswap v3 code license expired, enabling developers to fork the protocol and deploy their own decentralized exchange. As per the proposal, the deployment of Uniswap v3 on the Conflux network would provide “access to millions of potential new users, particularly in the Chinese and Asian markets.”

Conflux has experienced a spike in traffic in the first quarter of 2023, and the network has a market capitalization of nearly $1 billion, with $45 million in total value locked on-chain. The blockchain has been gaining popularity in the region due to its regulatory-compliant nature, making it an attractive option for projects looking to expand into the Chinese market.

“Currently, 84% of worldwide blockchain applications are submitted in China. Compared to the UK and the US, 11% and 14%. This shows that China is one of the most mature markets in Web3, and exposure is important for all projects,” said Conflux in the proposal.

Conflux also notes that regulatory crackdowns in the United States and Europe would benefit the growth of the crypto industry in Asian markets. Over 80 crypto companies are planning to establish an office in Hong Kong, providing a crypto bridge to mainland China.

Ambre Soubiran, CEO of institutional crypto market data provider Kaiko, agrees that Hong Kong could become a hub for crypto trading and investments. “The U.S. being more stringent these days than ever on crypto and Hong Kong regulating in a more favorable way is going to clearly shift the center of gravity of crypto assets trading and investments more towards Hong Kong,” he noted in a recent interview.

Aside from potential market reach, incentives offered for projects building on top of Uniswap v3 on the Conflux Network are the creation of liquidity pools for CFX token trading pairs, specifically CFX-USDT, CFX-BTC, and CFX-ETH. These liquidity pools would be worth $2 million and locked for two years. The Conflux Foundation would also provide $1 million in “liquidity incentives.”

Conflux is a layer-1 blockchain operating using a hybrid proof-of-work and proof-of-stake mechanism. In a recent development, the network announced a partnership with China Telecom to develop a blockchain SIM (BSIM) card. The BSIM will offer a secure place to store digital private keys and will be able to call upon the said signature to transfer money to other users. In addition, a “one-click direct check” functionality will allow users to check for transaction information and status progress in real-time.

In summary, Conflux’s decision to deploy Uniswap v3 on its network could provide significant benefits to the blockchain and the wider crypto industry. The move will allow the network to access new markets, particularly in China and Asia, where blockchain applications are increasingly popular. Additionally, the creation of liquidity pools for CFX token trading pairs and the provision of liquidity incentives could attract more projects to build on top of the Conflux Network, increasing its overall value and adoption.

Furthermore, the timing of the deployment is interesting, as it comes just after the expiration of the Uniswap v3 code license, which has allowed developers to fork the protocol and deploy their own decentralized exchanges. By deploying Uniswap v3 on the Conflux Network, the blockchain is positioning itself as a strong contender in the rapidly evolving decentralized exchange space.

Conflux’s decision to partner with China Telecom to develop a blockchain SIM card is also noteworthy. The BSIM card will offer a secure place to store digital private keys, providing users with greater security and peace of mind when transferring funds. Additionally, the “one-click direct check” functionality will allow users to check for transaction information and status progress in real-time, improving the user experience.

The move towards greater regulatory compliance in the crypto industry is also a significant factor in Conflux’s decision to deploy Uniswap v3 on its network. The blockchain’s compliance with regulations in China and its partnership with China Telecom position it as a safe and secure option for users looking to invest in the crypto space. As regulatory crackdowns continue in the United States and Europe, Asian markets could see increased growth in the crypto industry, with Hong Kong emerging as a hub for trading and investments.

In conclusion, Conflux’s decision to deploy Uniswap v3 on its network could have significant implications for the blockchain and the wider crypto industry. By providing access to new markets, creating liquidity pools and offering liquidity incentives, the network is positioning itself as a strong contender in the decentralized exchange space. Additionally, the blockchain’s partnership with China Telecom and its compliance with regulations in China could attract more users looking for secure and compliant options in the crypto space. As the industry continues to evolve, it will be interesting to see how Conflux adapts and grows to meet the changing needs of users and developers.


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MonoX raise $5M to launch single-token liquidity pools

Automated market maker MonoX has today announced a debut capital raise of $5 million from venture firms including the likes of Axia8 Ventures, Animoca Brands, Divergence Ventures, among others.

MonoX will use the funds to support its ambitions in reducing the capital and liquidity prerequisites for decentralized finance (DeFi) projects offering swap, lending, borrowing and derivative capabilities on decentralized exchanges (DEXes).

The protocol will achieve this through the introduction of a single-sided liquidity model. Though not a revolutionary concept for liquidity pools, it will aim to support the DeFi ecosystem’s growth.

In traditional DEXes such as Uniswap, industry projects require two tokens to build a “liquidity pair,” increasing the capital barrier for entry. With the single-sided liquidity model, projects are only required to provide their native token. As such, they can offer more liquidity to the market.

Founder and CEO of MonoX, Ruyi Ren, shared his views on the potential impact of the funding:

“With a lot of innovation in the DeFi space, over-collateralization has become an increasingly big problem. We will use the funding to grow the team, further develop and build our community in new flourishing DeFi ecosystems like Solana.”

Related: Derivatives exchange dTrade raises $22.8M for market makers

Once a DeFi project contributes its native token, the MonoX-backed stablecoin vCASH steps in as the second token to form the liquidity pair. Pegged 1:1 to the U.S. dollar, vCASH aims to reduce trading fees commonly experienced within the transactions of traditional automated market makers (AMM).

MonoX is set to launch its mainnet version on the Ethereum and Polygon blockchains in Q3 2021.

Despite the vast potential of single token liquidity, this is by no means the first application of this kind within in the DeFi space.

This time last year, fellow AMM Bancor launched what it called “liquidity mining 2.0” — a single token liquidity provision designed to overcome the insidious challenges of sustaining liquidity and volume in the DeFi markets.