BitGo: Crypto Water Cooler — July 5
GM. It’s Wednesday, July 12.
Newsmakers
IMF Paper: Solving Tax Challenges Could Yield More Than 300 Billion Globally
The International Monetary Fund (IMF ) exists to “achieve sustainable growth and prosperity for all of its 190 member countries.” As such, it is keenly interested in helping its members incorporate crypto into their tax systems. By its rough calculations, a twenty percent tax on capital gains in 2021 (a good year for crypto) would have yielded around $300B USD. That’s equal to about twelve percent of global revenue from corporate income taxes. In a new working paper entitled “Taxing Cryptocurrencies,” researchers lay out the challenges on the path to collecting revenue of that magnitude.
Chief among them: taxation is yet another area where crypto doesn’t fit neatly into current rules. Its nature as an investment, property and currency poses a particular challenge: how to capture capital gains and losses without overcomplicating payment use cases.
Then there’s crypto’s quasi-anonymity. Since private addresses are by design not linked to beneficial owners, it’s hard for third parties such as exchanges to issue something like a U.S. form 1099-B reporting sales to taxing authorities. On the flip side, the IMF notes that the transparency of distributed ledger technology that has enabled authorities to seize illegally-obtained funds could potentially be leveraged for taxation purposes.
The authors also cite several studies to show that crypto holdings are concentrated among the wealthy — even more so than equities. At a time when the so-called super rich are under increased scrutiny from tax authorities worldwide, crypto presents an opportunity to collect taxes from this demographic. However, the authors believe that “the most compelling case for feasible corrective taxation” is environmental, suggesting that taxes could disincentivize carbon-intensive forms of Bitcoin mining.
Note that the views expressed in IMF working papers are those of the authors and not necessarily those of the IMF. However, the authors are probably on solid ground with their conclusion: “whether crypto withers or blossoms, the tax system still needs to deal with it.”
Read more →IMF
First 20 Companies Selected for New EU Blockchain Regulatory Sandbox
Now that the European Union (EU) has passed MiCA, it’s time to?play in the sandbox ?— the Pan-European Blockchain Regulatory Sandbox, that is. First?announced in 2020 ?by the European Commission and the European Blockchain Partnership (EBP) with a target implementation date of 2022, the EU has at last selected twenty companies in finance, telecom, IT, global trade, transportation, and more to participate. Over ninety companies applied.
Regulatory sandboxes can provide secure, flexible, and controlled environments for real-life experimentation with products, services and approaches to market. Regulators can allow activities on a test basis and observe results; companies must agree to guardrails to protect against excessive risk. Participants can ask regulators questions and receive legal guidance, in this case from international law firm Bird & Bird.
The hope is for both sides to gain a better understanding of use cases and potential for?job creation ?across various industries and for regulators to be able to craft laws based on a deeper knowledge of the technology. New EU sandbox participants will be selected annually through 2026 with each year’s projects spread throughout the Western, Southern, Nordic, Central, and Eastern regions of Europe.
The sandbox leverages the EU Digital Finance Platform and the Artificial Intelligence Sandboxes’ technologies with the goal of advancing the?European Blockchain Services Infrastructure ?(EBSI), Europe’s first public sector blockchain. The?EU and the EBP ?are?inviting early adopters ?in the region to use EBSI’s cross-border services and providing?use cases ?from July 2021 forward as evidence of its workability.
Read more →Finextra
Web3 Goes Phygital With Luxury Brands Leading the Way
If 2022 was the year of Web3 hype, 2023 is shaping up to be the year things get “phygital” with luxury brands leading the way. Unlike last year’s metaverse-only experiences that were long on cool but short on practical applications, this year’s offerings combine the physical and the digital to solve real business problems.
For example, counterfeit goods?cost ?the industry somewhere in the neighborhood of $3T annually.?Web3 pioneer Arianee, which provides digital certificates of authentication for luxury timepieces Breitling and IWC Schaffhausen, has added three additional watch brands as partners and is moving into fashion and wine and spirits. Prada, which has been using NFTs to engage and build loyalty through their Crypted Discord community, now lets NFT owners claim a physical good — a limited edition tank top — authenticated by the NFT.
Earlier this summer, LVMH’s?Louis Vuitton launched ?phygital trunks — digital collectibles that allow the brand’s super fans to receive special access to unique collections and events. With a price tag of $42,000, the limited launch of less than a hundred units sold out within the day, showcasing the potential for brands to use Web3 technologies to simultaneously engage, authenticate, and profit.
Collector fashionistas who want to show off their NFTs in the wild might want to scoop up a SmrtKuff, an Apple Watch-compatible bit of bling that lets the wearer seamlessly connect to a Polygon NFT. The cuffs, which debuted at the recent Paris Haute Couture Week contain a?near-field communication ?chip similar to those used in smartphones and smartwatches to exchange small bits of data. These designer pieces, crafted by Nicole Steel of La Maison Steel, discreetly hide the actual watch face under the wrist. Options include French leather with prices starting at $290 all the way up to a limited-edition SmrtKuff that contains four hundred diamonds totaling 2.5 carats. Fans can also buy Steel’s?NFT-enabled bags . Prices start around $10,000, and the most exclusive include NFT digital twins.
Read more →Forbes
News In Brief
Regulation and Security
领英推荐
Business of Crypto
DeFi and Web3
Midweek Market Pulse
Total Market Cap:?$1,187,931,944,679 –7 day change as of Tuesday 7/11/23 Noon EST: -2.0%
In a quiet week for digital assets,?Bitcoin (BTC, -0.7%),?Ethereum (ETH, -3.4%), and the broader market fell slightly despite bullish predictions from some interesting places and continued tailwinds from the “BlackRock effect,” an uptick in BTC activity since that company’s June 15 spot ETF application, as documented by?Glassnode .
Multinational banking giant Standard Chartered forecast that Bitcoin will hit?$50,000 this year ?and $120,000 by the end of 2024 as miners begin hoarding. Standard Chartered set a Bitcoin price target of?just $5,000 last year . If you’re in the mood for even frothier predictions, former BitMEX CEO Arthur Hayes?opines ?that Bitcoin will become the currency of choice for AI, leading to an eventual?price of $760,000 .
And, BlackRock CEO Larry Fink, who previously called Bitcoin a vehicle for money laundering, last week hailed it as “an international asset ” that can revolutionize financial services. Although some took issue with additional comments conflating Bitcoin with tokenization, his remarks gave the “BlackRock effect” legs for another week and propelled BTC to briefly touch a 2023 high.
This atmosphere of enthusiasm drove a?16.4% spot trading volume increase ?on centralized exchanges, the first increase in three months.
Elsewhere,?Solana (SOL, +14.8%)?continued shrugging off any troubles that came from the SEC classifying it as an unlisted security in the Binance and Coinbase lawsuits. It is now up over 40% for the past month and 120% year to date.?Fantom (FTM, -14.2%)?saw a steep decline after a hack of its Multichain bridge caused the?loss of over $126MM ?worth of digital assets, including?USD Coin (USDC, +0.0%),?Dai (DAI, +0.0%),?Wrapped Bitcoin (wBTC, -1.0%), and?Wrapped Ethereum (wETH, -3.5%).
The Last Word
Bridge
noun
: A portal connecting two or more blockchains
/ Bridges address the lack of interoperability between chains by allowing users to move assets among chains.
About BitGo
BitGo provides the most secure and scalable solutions for the digital asset economy, offering regulated custody, borrowing and lending, and core infrastructure to investors and builders alike.
Founded in 2013 — the early days of crypto — BitGo pioneered the multi-signature wallet and later built TSS to improve upon other companies’ MPC offerings. Between multi-sig and TSS, BitGo offers the safest technology on the market and safeguards over 600 tokens across a wide variety of blockchains.
Over the years, BitGo has expanded from offering wallets into providing a full-suite solution that lets clients hold assets safely and then put them to work.
BitGo launched BitGo Trust Company in 2018, providing fully regulated, qualified cold storage to complement BitGo Inc’s original hot wallet solution. In 2020, BitGo launched BitGo Prime, which allows its clients to trade, borrow, and lend. Moreover, BitGo also provides access to DeFi, staking, NFT wallets, and beyond, and serves as the world’s sole custodian for WBTC, or wrapped Bitcoin.
Today, BitGo is the leader in digital asset security, custody, and liquidity, providing the operational backbone for more than 1500 institutional clients in over 50 countries — a list that includes many regulated entities and the world’s top cryptocurrency exchanges and platforms. BitGo also processes approximately 20% of all global Bitcoin transactions by value.
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