Digital Currency News Updates: The State of Crypto Taxes and More
Amid a flurry of global events, the digital currency world has not kept quiet.
In this week's digital currency update, we're going to focus on some of the major events both within the United States and outside of its borders. Those events include San Francisco-based exchange Kraken closing its doors in Japan, the state of digital currency taxes, and a true digital currency crime story.
Let's start with the United States, where Tax Day just came and went with very few Americans reporting digital currency gains or losses to the IRS.
U.S. Taxpayers Take to the Ground With Crypto
Considering that the digital currency market generated billions in profit in 2017, it shouldn't be surprising that the IRS wants to get its piece. The government agency was quick to remind investors that Bitcoin and other digital currencies are still subject to current tax law.
Some investors would describe current digital currency tax law as murky, with the IRS grouping cryptocurrencies like Bitcoin and Ethereum into the "property" category.
Yet despite warnings from the IRS, very few investors appear to be disclosing gains or losses.
Four days before Tax Day, Credit Karma said that very few investors were actually reporting their digital currency gains.
In fact, fewer than 100 of the first 250,000 tax returns filed reflected any kind of digital currency gain or loss. A spokesperson from Credit Karma told CoinDesk that the "reporting of bitcoin gains (is) still at negligible levels."
In a survey reported by TechCrunch, 5% of Americans have reported owning digital assets.
Investors who fail to report digital currency gains could be subject to fines or even imprisonment. As the regulatory space evolves, it’s likely that the tax law surrounding digital currencies will evolve as well. For now, investors interested in learning more about the current tax law can see the IRS's statement here.
Taiwanese Bitcoin Miner Shot by Gangsters
On April 15th, it was reported that a Taiwanese Bitcoin miner was shot by gangsters following an argument about mining profits that went awry.
Before the event, Taiwanese miner Wu had accepted 10 million in Chinese yuan from the gangsters. Wu had promised the gangsters that he could use the Bitcoin to turn a profit.
Unfortunately for Wu, the mining facility he was using was based in Mainland China, which has enforced strict cryptocurrency mining regulations over the course of 2017. In fact, Beijing was one of the first major cities to call for a pullback on digital currency mining.
These regulatory measures have made it challenging for digital currency miners to turn a profit.
When Wu met with the gangsters to report that he did not have the money, he blamed China's current regulations on the space. Unsatisfied, the gangsters shot Wu in the ankle before fleeing. They turned themselves in two hours later.
At this time, the regulatory conditions surrounding Bitcoin mining in China remain uncertain.
Verge Token Will Soon Be a Payment Option on Pornhub
On April 17th, adult entertainment website Pornhub announced that it would start allowing the digital currency Verge to be used as payment on the platform.
Customers will be able to use the token to purchase premium services. Pornhub plans to mark the token's introduction to the platform with events in both New York City and Silicon Valley.
Pornhub's vice president Corey Price made the following statement regarding Verge:
Not only is this an exciting announcement for us and the adult entertainment industry, it's exciting for the crypto space. History has proven that the adult entertainment industry plays a critical role in adoption for innovative technology. We saw that with VHS, Beta Max, credit card payment icons and, most recently, VR goggles. We expect to see widespread adoption of crypto and blockchain in short order.
Verge's backers touted the "mystery deal" earlier in April. After the announcement, Verge's price moved up by 5%.
Kraken to End Business Operations in Japan Due to Rising Costs
On April 17th, San Francisco-based cryptocurrency exchange Kraken released a statement saying it would cease operations in Japan.
Investors in the country have until the end of June to remove their funds from the exchange. For victims of the 2014 Mt. Gox hack, Kraken accounts will remain open to funding withdrawals should their payment from the ongoing bankruptcy case be approved by the court.
Kraken's decision to close services in Japan comes alongside mounting costs. According to the company, more resources have been needed to operate the exchange. That said, the company has also been facing scrutiny from the Financial Services Agency. Kraken is not registered with the agency, which has been trying to protect investors in the last couple of months.
These efforts began shortly after a devastating hack that robbed investors of over $530 million of the NEM cryptocurrency from Coincheck.
Another digital currency exchange that could be under scrutiny is Binance. Binance is currently the largest digital currency exchange by volume. It has already received a warning from the FSA directing the exchange to halt operations in Japan.
We will keep investors up to date as these events play out.
Coinbase Acquires Earn.com
The world's leading software wallet Coinbase is on the move.
The company just acquired Earn.com. With multiple years of experience in the blockchain sector, Earn.com is one of the blockchain industry’s best-funded startups.
Earn.com allows its users to pay peers in digital currency when they reply to emails or complete tasks. This benefits both normal email users and large-scale senders of commercial emails. To date, hundreds and thousands of users have used Earn.com, which has paid out over a million dollars in digital currency.
Earn.com, previously branded as 21 Inc, started its time in the blockchain space running a Bitcoin mining operation powered by Intel's technology. Later on, the company launched its developer-focused 21 Bitcoin Computer. Then it was backed by multiple major Silicon Valley investors, raising over $116 million through multiple funding rounds. It wasn't until October 2017 that the company rebranded itself as Earn.com with the plans of launching a social network aimed at incentivizing users.
Coinbase did not publicly disclose what it paid for Earn.com. A source close to the discussions told CoinDesk that the amount could exceed $120 million.
Balaji Srinivasan, co-founder and CEO of Earn.com, will become Coinbase's chief technology officer. The rest of the Earn.com team will be integrated into Coinbase's existing operations.
That's it for our digital currency updates this month. Stay tuned for our Monday article. We'll be breaking down some of the regulatory measures on blockchain from around the country and naming the most blockchain-friendly states.