Bitcoin regulation at a glance: Rumours, court hearings, taxation

Something’s going on with the regulation of crypto currencies. Hardly a day goes by without a central bank issuing a warning against digital currencies. But the crypto currencies don’t just cause negative headlines – some authorities also report positive news.

USA: Bitcoin loophole is property of the IRS says

The IS Internal Revenue Service published a report at the end of March in which the “mined” Bitcoin loophole is classified as taxable property as soon as it passes into ownership. In addition, Bitcoins are taxable when used as payroll or commercial means of payment:

The reaction of Bitcoin supporters in the USA was mixed. If the Bitcoin is treated as an investment, it gives access to preferential capital gains rates for all Bitcoins held for more than a year and a day. At the same time, however, it also provides a basis for recording the winnings of each Bitcoin sent or received.

For US taxpayers who treat the Bitcoin as a long-term asset that is good news. For those who primarily trade Bitcoins, however, it is rather bad news.

The subtleties and effects of the IRS announcement are likely to create a lot of discussion among Bitcoin enthusiasts in the coming months: for example, the IRS has not addressed whether the exchange of Bitcoins into other crypto currencies also entitles them to tax profits.

USA: Does Texas follow the New York example?

This week, the Texas Department of Banking published a letter addressed to all “virtual currency companies” that already trade in Texas or want to do so. The letter states that crypto currencies based on a promise to convert it into money at a later date or elsewhere do not constitute an act of money transfer in the state.

However, since the Texas Department of Banking represents only one government agency, the statement does not affect FinCEN’s registration requirement.

Texas has aggressively built up a business-friendly climate in recent years, attracting many high-profile and higher-tax companies. Most importantly, Austin is known as a progressive center for technology companies, including many Bitcoin startups.

USA: If the Bitcoin is not money, can money laundering be done at all?
On April 1, Ross Ulbricht, lawyer of the now disbanded online platform Silk Road, kicked off a debate to drop some accusations against his client. If the Bitcoin is not money, his client cannot be charged with money laundering.

Great Chances for the news spy in 2019

Opinions can be divided about 2018. From an investor’s point of view, at least, it was not a good year: Bitcoin’s share price fell by more than 80 percent since its all-time high in December 2017, the bursting of the ICO bubble and repressive action by stock market regulators against token sales. On the flip side of the coin, the past year, however, held some delicacies in store. Fidelity, one of the largest investment companies on the planet, announced its intention to immerse itself in the world of crypto currencies. Furthermore, the accreditation of the first Bitcoin ETP in Switzerland is a sign of progressive acceptance.

2019 is preparing to build on this development. Beyond all course prognoses here are the five large chances for crypto in 2019.

Bitcoin ETF and the news spy

In 2017 it was the news spy, in 2018 it wasn’t, but in 2019 the first accredited Bitcoin ETF, the VanEck SolidX Bitcoin ETF, could finally be launched. Once again, the deadline for the news spy decision by the US Securities and Exchange Commission (SEC) cannot be postponed. At the end of February it will be time to keep your fingers crossed for SEC approval. If the stock exchange supervisory authority approves the financial product, it would be a bang. Because then, according to the narrative, Bitcoin gains the legitimacy of a secure and regulated financial product.

This would then call on institutional investors whose capital is just waiting to send the Bitcoin share price on its lunar journey. At least the Galaxy Capital CEO Mike Novogratz claims and coined the term pair “institutional FOMO” in this context.

The chances for a permission on the part of the SEC are not bad. After all, there are already regulated Bitcoin derivatives such as the Bitcoin futures contracts on the Chicago options exchange CBOE – and these work perfectly.

Bitcoin lighting network

The inclined Bitcoin maximist likes to project his hopes for a penetration of the crypto currency no. 1 onto the development of the Lightning Network. All attacks on the supposedly inadequate usability of BTC in daily use are casually parried with reference to the second-layer solution.

For some this is the obvious solution of the scaling debate, for others the development is a waste of time, one should rather concentrate on updates of the blockchain. The camps are inseparably split. This trench warfare can be illustrated by the rejection of a donation from Roger Ver by the Lightning development team OpenNode. The US company rejected a US$1.25 million donation. They wanted to improve BTC and not BCH.

Meanwhile, Lightning’s capacity is growing briskly. It was not until December 2018 that the network passed the historic 500 BTC mark.

The Lightning Network just hit 500 BTC in network capacity. The network keeps growing at a staggering pace

Start running your own node and open channels while on chain fees are low before the next bull market.

Enjoy private bitcoin transactions settled instantly ⚡️

The growth in network capacity is steady to exponential, as illustrated in the graph below:

But you have to be realistic at this point. Although Lightning will grow in 2019, we won’t see a mass adaptation this year.