SEC Chairman Gary Gensler Stresses Crypto Markets Are Open to Manipulation, Investors Vulnerable

SEC Chairman Gary Gensler Stresses Crypto Markets Are Open to Manipulation, Investors Are VulnerableThe chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, has called for more investor protection in crypto markets. “This asset class is rife with fraud, scams, and abuse in certain applications,” he said. “In many cases, investors aren’t able to get rigorous, balanced, and complete information on tokens or trading and lending […]
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Jack Dorsey steps down from Twitter, MicroStrategy snaps up 7K BTC and Square rebrands to Block: Hodler’s Digest, Nov. 28-Dec. 4

Coming every Saturday, Hodlers Digest will help you track every single important news story that happened this week. The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions and much more a week on Cointelegraph in one link.

Top Stories This Week

Jack Dorsey has stepped down as Twitter CEO

Twitter co-founder Jack Dorsey announced Monday that he has stepped down from his role as CEO. Replacing Dorsey will be Twitter board member and chief technology officer Parag Agrawal, who was unanimously appointed to CEO by the companys board of directors.

Dorsey also serves as the CEO and chairman of crypto-friendly payments tech firm Square, and it is unclear if he left Twitter to solely focus on the platforms plans to develop a decentralized Bitcoin (BTC) exchange. He did note, however, that the company does not need to be founder-led to thrive.

I believe its really important to give Parag the space he needs to lead, said Dorsey. I believe its critical a company can stand on its own, free of its founders influence or direction.

 

Former Citi banker launches $1.5B crypto fund, taps Algorand as first partner

On Monday, 14-year Wall Street veteran and former Citi banking executive Matt Zhang announced a $1.5 billion multi-strategy fund called Hivemind Capital Partners that is aiming to support up-and-coming crypto projects.

In particular, the fund will place a strong emphasis on crypto infrastructure builders, virtual worlds and Metaverse projects, and programmable money. The funds first technology partner will be proof-of-stake-based blockchain Algorand.

While Hivemind is yet to announce any major funding, Zhang said the firm will support crypto entrepreneurs with infrastructure that cannot currently be offered by traditional asset management models.

 

Square rebrands to Block as focus shifts to blockchain

Speaking of Square, the firm revealed on Wednesday that it had rebranded to Block, suggesting it may be ramping up its focus on the blockchain sector.

The company said the rebrand will bring the payments firm together with Cash App, the decentralized Bitcoin exchange project tbDEX, and music and video streaming platform Tidal. As part of the rebrand, Square Crypto, the cryptocurrency-focused unit of the payments firm, will be changing its name to Spiral and joining the Block family.

Block references the neighborhood blocks where we find our sellers, a blockchain, block parties full of music, obstacles to overcome, a section of code, building blocks, and of course, tungsten cubes, said Square.

 

MicroStrategy purchases $414.4 million worth of Bitcoin, with total BTC balance eclipsing $3.5 billion

MicroStrategy, the analytics software firm led by fervent Bitcoin bull Michael Saylor, announced on Monday that it had snapped up a 7,002 BTC worth $414.4 million.

After the purchase, Saylor stated that the companys total BTC holdings stood at a whopping 121,044, acquired for roughly $3.57 billion at an average price of $29,534 per BTC. To fund that latest shopping spree for digital gold, the firm sold 571,001 shares of company stock between Oct. 1 and Nov. 29 at $732.16 apiece.

MicroStrategy first bought Bitcoin back in August 2020 as part of its treasury strategy, and with Saylor at the helm, the firm has purchased the asset relentlessly sinceregardless of priceand is showing no signs of slowing down any time soon.

 

Meta expands crypto advertisement eligibility on Facebook

Social media virtual reality firm Meta expanded the eligibility requirements for running crypto ad campaigns on Facebook and Instagram this week, enabling companies more freedom in running digital asset product-related promotions.

Prior to Metas latest update of its crypto advertising guidelines, a limited number of crypto firms were able to advertise on Facebook as the platform only recognized a small number of regulatory licenses.

According to the updated policy, crypto exchanges, trading platforms, wallet providers, mining infrastructure firms, crypto lenders and borrowing services can now receive written permission to run ads on Facebook. The firm cited maturation and increased regulation of the sector as the reasons why it changed its tune.

 

 

 

Winners and Losers

 

 

At the end of the week, Bitcoin (BTC) is at $55,468, Ether (ETH) at $4,407 and XRP at $0.95. The total market cap is at $2.54 trillion, according to CoinMarketCap.

Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are Terra (LUNA) at 62.30%, Stacks (STX) at 33.85% and Polygon (MATIC) at 29.04%.

The top three altcoin losers of the week are Gala (GALA) at -30.67%, WAX (WAXP) at -19.18% and Immutable X (IMX) at -17.85%.

For more info on crypto prices, make sure to read Cointelegraphs market analysis.

 

 

Most Memorable Quotations

 

There are certain services that we have that dont really fit the regulatory mold. So theres this gray area that the whole industry exists in, and thats not specific to us. […] Thats just the nature of the fact that were dealing with an innovative technology that really doesnt necessarily fit the criteria that existing regulators perceive as possible.

Jonathon Miller, managing director for Kraken Australia

 

A CBDC would be one of the tools to fight crypto. […] We assume that people would find CBDC more credible than crypto. CBDC would be part of an effort to address the use of crypto in financial transactions.

Juda Agung, assistant governor of Bank Indonesia

 

If a coin has a large number of users, then we will list it. Thats the overwhelming significant attribute. Consider, for example, meme tokens; even though I personally dont get it, if its used by a large number of users, we list it. We go by the community, my opinion doesnt matter.

Changpeng Zhao, CEO of Binance

 

Theres always hope for the Chinese crypto industry. We still have information sources and we keep getting more and more users, evangelists, developers and others. Theres nothing to worry about. Everything happens for the best.

Anonymous, executive at a Chinese crypto publication

 

It is one thing to say that a stablecoin issuer itself must be a regulated bank I think that is probably overkill, as there are perfectly effective ways for nonbanks to meet our legitimate regulatory concerns, but there is at least a clear relation between the existing framework of bank regulation and the specific measures that stablecoin issuers must address to operate safely. It is, however, quite another thing to contemplate that wallet providers may need to be completely separated from commercial firms.

Randal Quarles, exiting U.S. Federal Reserve governor

 

“Innovations are coming, proof-of-stake is much more computational efficient and low on energy consumption. Innovation is key here and it is coming.

Gary Nuttall, emerging technology consultant at Distyltics

 

Cryptocurrency may be tricky to understand, but the value of a major crypto donation converted into cash is not.”

James Lawrence, co-founder and CEO of Engiven

 

Undoubtedly, metaverse land is the next big hit in the NFT space. Outputting record sales numbers and constantly increasing NFT prices, virtual worlds are the new top commodity in the crypto space.

DappRadar post

 

Prediction of the Week

 

Bitcoin tests traders’ nerves as analyst reissues $400K BTC price forecast

Bitcoin started the week on Nov. 28 with a drop from nearly $55,000 down to almost $53,300, followed by a push up past $58,000, according to Cointelegraphs Bitcoin price index. Following Sundays price action, most of the rest of the week saw BTC trade in a range between $55,800 and $59,300.

In a Wednesday tweet, crypto trader Michal van de Poppe gave his thoughts on the crypto market, noting a desire to see sub-$60,000 BTC turn to support.

Its very simple. Below $60K Ive remained cautious/bearish as Id like to see that area flip, he tweeted. Levels to watch for buys; $53K-54K zone and $47-50K zones for #Bitcoin, he added. When to buy #altcoins? December. Nothing has changed past weeks.

In a separate tweet on Wednesday, van de Poppe also provided his thoughts on a few possible price targets for the bull cycle top, noting price ranges between $350,000 and $450,000 for Bitcoin and between $10,000 and $17,500 for Ethereum, in addition to ranges for other assets as well. He tweeted out the same list with the same numbers back in April 2021, with the exception of Elrond, for which the new list gave an updated possible price range target.

 

 

FUD of the Week

 

Vladimir Putin says cryptocurrencies ‘bear high risks’

Russian President Vladimir Putin, a man with a squeaky-clean reputation who has most certainly never engaged in any nefarious activity, took time out of his busy schedule this week to voice his concerns over the risky nature of crypto speculation.

According to reports from local media outlets on Tuesday, Putin aimed criticism at the “Russia Calling!” investment forum in Moscow. The 69-year-old called for greater monitoring and regulation of crypto in Russia and astutely pointed out that certain countries are seeing significant adoption of digital currencies.

“It is not backed by anything, [and] the volatility is colossal, so the risks are very high, he said. We also believe that we need to listen to those who talk about those high risks.

 

Bitcoin fails ‘worst-case scenario’ monthly close for the first time, starts December sub-$57K

Bitcoin failed to hit the November closing price of $98,000 demanded by Twitter personality PlanBs so-called floor model. With Bitcoin sitting at $57,000 on Nov. 30, the actual price was roughly 71% below the forecast price.

In a Wednesday Twitter post, PlanB noted that he would give his famous model one more month, but was adamant in stating that $100,000 per BTC is still on track by year-end as he pointed to the S2F model. He further explained:

No model is perfect, but this is a big miss and the first in 10y! Outlier/black swan? I will give Floor model 1 more month. S2F model unaffected and on track to $100K. Watch out for trolls confusing Floor and S2F model!

 

BadgerDAO reportedly suffers security breach and loses $120M

DeFi protocol BadgerDAO reportedly suffered a $120 million security breach this week, with users on Twitter highlighting a nasty frontend attack where funds had been taken out of peoples wallets using rug approval at about 2 a.m. UTC on Thursday.

While BadgerDAO hadnt officially confirmed the attack at the time, it said that all smart contracts on the platform had been paused to prevent additional potentially malicious withdrawals.

The malicious actors targeted the protocol on the Ethereum network at contract address 0x1fcdb04d0c5364fbd92c73ca8af9baa72c269107, and users that have interacted with this contract are urged to revoke permission from their wallet.

 

Best Cointelegraph Features

NFT art will never be mass-market NFT licenses may be

NFT digital art sales generate headline after headline, though this is not the real mass-market use of this novel technology.

Lines in the sand: US Congress is bringing partisan politics to crypto

There are too many members of Congress that dont have enough of a base of understanding. Congress needs to come in and bring regulations to this space.

Wear-to-earn NFTs target the billion-dollar fashion industry

Here’s how wear-to-earn NFTs will impact the fashion sector and what may happen if they become a trend.

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Things to know (and fear) about new IRS crypto tax reporting

The new law redefines “cash” to include “any digital representation of value” including cryptocurrency, but in an anonymous system, is this going to work?

The Infrastructure Investment and Jobs Act (H.R. 3684) put crypto in the crosshairs, where Congress and the Internal Revenue Service (IRS) hope to scoop up enormous tax dollars. This reporting regime is projected to rake in an astounding $28 billion over the next ten years. No other provision in this massive recently enacted federal law is supposed to produce tax dollars that are even close. If you don’t think that means the IRS is coming for your crypto in a very big way and that Congress is trying hard to facilitate it, think again.

The crypto community was outraged when the measure was first proposed and tried to push back hard. That effort resulted in some narrowing, but the provisions were enacted anyway. Some people are still talking about a repeal effort, but that could prove to be a hard sell when $28 billion is on the line that the Biden administration may need. As enacted, Form 1099 and other reporting rules don’t take effect until December 31, 2023. Even so, since Form 1099 reports are done in January for the prior year. That means 2023 will be a big tax year.

And with 2022 right around the corner and 2021 tax returns due soon thereafter, it’s a good time to get your tax affairs in order. Key new questions are whether you are a broker, and who is. And how will these sweeping onerous reporting rules be applied? With potential civil and even criminal penalties, you can bet that most exchanges, and others who might be in doubt about whether they are brokers subject to the new law, may resolve any doubts in favor of reporting. Surprisingly, exactly what constitutes being engaged in a trade or business may be open questions too.

Related: The major tax myths about cryptocurrency debunked

The IRS still says that many people are not reporting their crypto, but more reporting inevitably means a lot more compliance, $28 billion worth. The definition of a broker under section 6045 of the tax code now includes:

“Any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.”

Digital assets are defined as “any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology as specified by the Secretary [of the Treasury]”. Digital assets are now specified securities that are subject to reporting on IRS Form 1099-B. That’s the same form brokers use to report stock sales if you sell some Amazon or other stock.

The new law gives the Treasury Department and the IRS the ability to write regulations about these new rules. There are broker-to-broker rules and others.

Over $10,000 crypto reporting

The broker reporting on Form 1099-B pales in comparison to the new cash-like reporting form requirements with their staggering criminal liability. In 2014, the IRS announced that it would treat crypto as property, not as money. The reverberations of that rule to your taxes are huge. That’s the reason just about every successive transfer or trade of crypto (even for other crypto) triggers more taxes. Yet ironically, Congress and the IRS are now taking a page from cash reporting.

For decades, transactions of more than $10,000 in cash have generated a requirement for any business to file an IRS Form 8300 within 15 days, to report the cash transaction to the IRS. Buy a car with more than $10,000 of cash, and the car dealer has to report you. If you go to the bank and take out your own $10,001 in cash, the bank is required to report you to the IRS. Pay a consultant with more than $10,000 in cash, and your consultant must report you to the IRS.

Related: ​​More IRS crypto reporting, more danger

If you do successive smaller withdrawals or payments to avoid the cash report, that is “structuring” your transactions to evade the rules, and it is itself a federal criminal offense. Many people have been caught by this rule, trying to cover up some embarrassing but legal payments, and have unwittingly committed a crime, been convicted of a felony, fined and then jailed for up to five years. Whether for structuring or for ignoring the rules, you don’t want to mess around with these cash reporting rules.

The bank, merchant or person in business must fill out the person’s full name, birth date, address, Social Security number and occupation. And now, Congress and the IRS are requiring this form for crypto, too. As amended, the new law redefines “cash” to include “any digital representation of value” involving distributed ledger technology, such as blockchain. In an anonymous system, is this going to work?

Starting Jan. 1, 2024, a crypto transaction may trigger a Form 8300 filing when any “person” (including an individual, company, corporation, partnership, association, trust or estate) receives digital assets in the course of a trade or business with a value exceeding $10,000. Valuation is done on the day of receipt, and as with all things crypto, valuation matters a lot. Again, structuring transactions into smaller receipts to avoid reporting is a felony. And since receipts must be aggregated if they are related in a series of connected transactions, virtually any receipt of digital assets is potentially reportable, regardless of dollar value.

Of course, the IRS being interested in crypto is nothing new. Everyone is already required to report crypto gains to the IRS. There’s even a “do you crypto” question on every IRS Form 1040 or individual income tax return now. It’s often compared to the “do you have a foreign bank account” question that appears on Schedule B, and that has led to many criminal convictions for the IRS, and big civil penalties.

The new requirements are sweeping. And although there is a grace period until Dec. 31, 2023, many changes will be needed to make them suitable and applicable. The new law mandates that a recipient of more than $10,000 in crypto who is in business must collect, verify and report a sender’s personally identifiable information within 15 days. If you don’t, you can face fines and even criminal liability.

Saying that you are an investor and not in business might seem to be attractive if you have strong arguments on that point. However, there is an enormous body of tax law on that topic, with some discernible standards, and the stakes are big. Will any of this be easy in what is often an anonymous peer-to-peer system? Probably not, but there will likely be fear about the new rules, and some degree of filing to be safe rather than sorry.

This article is for general information purposes and is not intended to be and should not be taken as legal advice.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Robert W. Wood is a tax lawyer representing clients worldwide from the office of Wood LLP in San Francisco, where he is a managing partner. He is the author of numerous tax books and frequently writes about taxes for Forbes, Tax Notes and other publications.
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US lawmaker urges congressional action on crypto as government avoids shutdown

“Chairman Gensler’s failure to provide clear rules of the road for cryptocurrencies underscores the need for Congress to act,” said Senator Pat Toomey.

Pennsylvania Senator Pat Toomey, one of the ranking members of the Senate Banking Committee, has suggested Congress step in with legislation should the Securities and Exchange Commission (SEC) be unable to provide sufficient guidance on cryptocurrencies.

In a Friday announcement from the Senate Banking Committee, Toomey said he was dissatisfied with the answers SEC chair Gary Gensler had provided on the differences between securities and commodities in regards to token projects and stablecoins. The senator questioned some of the SEC’s seeming disparities in enforcement actions between crypto firms and advisory services companies, including Glass Lewis for similar allegations of providing “fraudulent and misleading information.”

“For investors to benefit from a fair and competitive marketplace, federal agencies should answer questions about whether — and if so, how — new and emerging technologies fit under existing regulations,” said Toomey. “Chairman Gensler’s failure to provide clear rules of the road for cryptocurrencies underscores the need for Congress to act.”

Toomey has previously come out in support of the U.S. government launching a central bank digital currency and said he would vote in favor of President Joe Biden’s pick for the next Federal Reserve chair, Jerome Powell. In addition, the senator was behind a bipartisan effort in August to amend some of the provisions in the recently passed infrastructure law to not apply to developers, miners and others in the crypto space. Other U.S. lawmakers have proposed solutions to the tax reporting requirements following Biden signing the bill into law, as Toomey said Congress would “have to do it in subsequent legislation.”

Related: Lawmakers push back on crypto provisions in infrastructure bill

Though Congress has not yet acted on crypto as Toomey suggested, both the House and Senate were occupied passing a bill extending funding for the U.S. government through Feb. 18 in an effort to avoid a shutdown. President Biden signed the “Further Extending Government Funding Act” into law today.

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World’s First Tokenized Crypto Index Fund Turns 4

World’s First Tokenized Crypto Index Fund Turns 4

Crypto20, the world’s first tokenized cryptocurrency index fund, has officially been operational for 4 years. We’re incredibly grateful for the caliber of investors who have joined us on our journey and are eager to continue to deliver access to democratized financial products that are efficient and affordable to people around the globe, regardless of socioeconomic […]

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