Week 46 - Rallies, rampage, and regulatory restlessness
This week's newsletter brings the readers a series of headlines which the recent weeks have offered. From historical U.S. elections, to bitcoin rallies, and local regulatory challenges. The latter mentioned is something, which we at Penning and members of the Nordic Blockhain community want to address and bring forth to light. In the Penning Financial Services section you'll see a more detailed overview of the matter, and we've reserved that particular section solely for the initiative which Nordic Blockchain Association and its community members have worked tirelessly to bring to light. More on that further down this week's newsletter. We are also skipping the general world overview and heading straight to the core of the business, because we don't really need to tell you who won the election and what that meant for the bitcoin price action, and we also don't need to tell you that all of what's been going on the past few weeks is only the tip of the ice-berg. So without any further ado, here's week 46 newsletter.
WHAT'S NEW AT PENNING GROUP
?? Penning has now launched its proprietary investor dashboard. Now every investor in Penning Capital Management can follow their wealth being managed, as part of their overall portfolio management.
?? Penning Group is working on new consumer-oriented services, which include yield earnings, smoother savings opportunities, protected storage, and much more. Yes, it sounds a bit cryptic (pun not intended), but we don't want to ruin any surprises.
?? Penning Financial Services is hitting record numbers in transaction volumes. Whether that's due to the recent rally's, macro trends, seasonal activity or a combination of all is up for 'debate', however it has given Penning opportunities to get closer to our clients, as we offer a 1:1 support of clients, and transaction handling. More on this in this week's did you know section.
?? On a regulatory basis, Penning is keeping a close eye on, on the upcoming MiCA framework which comes into effect from the 31st of Dec. 2024. For those of you who don't know what MiCA (Markets in Crypto Assets) is, it's the regulatory framework that the European Commission proposed for better governance of the crypto space.
Penning Capital Management (PCM) is Penning Group's alternative investment fund, which offers direct access to high-yield market opportunities from the digital asset space. PCM offers a unique business model, with no ongoing management fees, only 1-year lock-up, quarterly dividend payouts, and a high watermark. PCM has developed its own Structured Digital Asset products (or SDAPS), an industry pioneer that collects a basket of market-neutral strategies.
This month, PCM's trading algo's has been 'exploiting' the movements from the bitcoin market. Unless you've been sleeping under a rock, the month of November has posed some significant events, from a historical US election, to potential ease of geo-political tension. Here's a short overview of what's been going on in the markets, and maybe you'll get a better grasp.
THE CRYPTO MARKET OVERVIEW
?? Bitcoin Nears $90,000 as Crypto Market Exceeds Pandemic-Era Peak: Bitcoin's record-breaking rally took the digital asset past $89,000, lifting the overall value of the crypto market above its pandemic-era peak. Read more
?? Dogecoin Surges: Dogecoin saw a 62% price increase this week, potentially signaling further gains.
?? Cardano's ADA Rockets: ADA increased by 35% as Charles Hoskinson announced a new U.S. policy office.
?? Election Impact: U.S. election bets saw a surge in trades, with Harris and Trump having near-even odds.
?? Arthur Hayes on Decentralization: BitMEX co-founder Arthur Hayes discussed decentralization and his journey in the crypto industry.
?? Bitcoin ETF Inflows: U.S. spot bitcoin ETFs saw record net inflows of over $1.38 billion following Trump's election win.
?? Crypto Market Cap: The crypto market cap reached $2.5 trillion after Trump's victory.
?? Cardano Founder as Advisor: There is a high likelihood that Cardano founder Charles Hoskinson will become Trump's crypto advisor.
?? Mt. Gox Moves Bitcoin: Mt. Gox shuffled $2.4 billion worth of Bitcoin between wallets.
?? Bitcoin Market Euphoria: Bitcoin's breakout has led to market euphoria, with BTC nearing $90,000.
?? MicroStrategy's Record: MicroStrategy surpassed its dotcom bubble highs, holding over $24 billion worth of BTC.
?? Dogecoin Flips USDC: Dogecoin's price surge pushed it above USDC, making it the seventh-largest by market capitalization.
?? Crypto Lender Celsius Shake-Up: Celsius' $800 million Ether staking shake-up extended Ethereum's validator queue to 44 days.
?? Shiba Inu Token Falls: Shiba Inu token fell by 10% amid Shibarium code drama.
Penning Financial Services (PFS), is the Nordic's market-leading platform for financial services, with over +190 tokens available, access to deep liquidity pools, customizable trading pairs, and large-scale OTC transactions tapping into nearly half of the global bitcoin order books. PFS offers trading, from a triple-a jurisdiction, with detailed invoicing, safety and compliancy.
If you're local to Denmark, the country where Penning Group is incorporated and operates from, here are some important updates from the last time where we announced a potentially new crypto framework that would allow crypto to be unpar with traditional financial assets. However, the reality proved to be something completely different. The Danish Tax Law council and most of the sitting parties have voted for an unprecedented and unfair taxing on the Danish crypto community.
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HERE'S WHAT IT IS:
?? Taxing Unrealized Gains: The proposal aims to tax unrealized gains and losses on crypto assets held by Danish investors. What this means is, Danish investors will have to pay taxes on a particular asset ATH without actually having the money at hand. This effectively means, that an investor will pay on money they never had to the government.
?? Inventory Taxation Model: The preferred model treats an investor's entire portfolio as a single inventory to be taxed annually, regardless of whether the assets have been sold.
?? 42% Tax Rate: The proposed tax rate for unrealized gains is 42%. Unrealized gains, meaning a private investor would need to pay taxes when a particular digital asset was at a ATH, regardless of the same asset dropping to for example $0. This will investors in severe debt, as unrealized gain holds no value.
?? Loss Write-Offs: The new framework would allow investors to deduct losses against gains on other crypto assets. However, this provision is grossly asymmetrical. As taxes on gains are higher than tax-deductible losses.
?? Increased Transparency: Crypto asset service providers would need to report customer transaction information in a manner accessible to all European Union nations. While the general crypto community advocated for transparency and accountability, the provision allows very little ownership over personal identity, which is already compromised with the recent event of Danish citizen's personal identification platform sold to a private French Company.
?? Implementation Timeline: The bill is expected to be introduced to the Danish Parliament in early 2025, with the earliest possible implementation date being January 1, 2026. While this still gives time for investors to hedge a possible severe tax bill, the legislation also allows for a retroactive effect.
AND HERE'S WHAT IT MEANS:
?? Introduction of Taxation on Crypto: The SVM government plans to introduce inventory taxation on cryptocurrency, potentially leading to more scandals involving innocent Danes who would have to pay taxes on money they haven't earned.
?? Initial Tax Ruling: In 2014, the Tax Council stated that Bitcoin and other cryptocurrencies were not considered "real" money, and thus, gains on these were not taxable.
??Change in Tax Ruling: A few years later, the ruling changed, making gains on cryptocurrencies taxable.
?? Current Tax Issues: The current tax laws on cryptocurrencies are problematic, similar to past scandals involving property and dividend taxes.
?? New Tax Proposal: The new tax minister, Rasmus Stoklund, announced a proposal to tax the annual value increase of cryptocurrencies, regardless of whether they have been sold.
?? Example of Impact: If someone bought one Bitcoin in 2014 for 1,000 DKK and its value increased to 100,000 DKK by 2026, they would have to pay tax on a 99,000 DKK gain, even if they haven't sold the Bitcoin.
?? Retroactive Effect: The proposal would affect up to hundreds of thousands of Danes who invested in good faith under the current laws, which would be changed retroactively.
?? First in the World: Denmark would be the first country to implement inventory taxation on cryptocurrency.
?? Existing Tax Problems: The current tax rules for cryptocurrencies are already problematic, with gains taxed higher than losses.
?? Asymmetrical Taxation: Gains from cryptocurrency trading are taxed up to 53%, while losses are only deductible up to 26%.
?? Real-Life Example: In 2022, a schoolteacher named Rune Christiansen received a tax bill of 2.8 million DKK for crypto trading, despite not making any profit.
?? Potential for More Issues: If the proposal passes, many more Danes could face similar issues, affecting 300,000 crypto owners, or 7% of the adult population.
?? Practical Problems: The future inventory taxation system would require automatic third-party reporting, which is not currently in place for private wallets.
Nordic Blockchain Association , private investors, community members, and crypto companies a like initiated a so-called task force to shed light on the unfair taxation for private crypto investors.
To further enhance a healthy dialogue, and bring the legislative authorities, and the community closer together, Nordic Blockchain Association have planned a "Cryptotax Townhall" in Copenhagen, Denmark, where community members and legislative authorities will gather for an open dialogue and work together for mutual understanding and benefit.
AND HERE'S HOW YOU CAN GET INVOLVED:
Click on the link, sign-up and join the upcoming event in Copenhagen, Denmark.
??DID YOU KNOW: With each transaction, Penning Financial Services provides an accounting-ready receipt with details of the particular transaction? This makes it easier, smooth, and seamless accounting and bookkeeping either for yourself or your accountant. Anyone can understand the receipt, as it's offered just like any other order receipt for goods and services. For tax purposes, this also makes it easier for you to document your holdings to the local authorities, as Penning Financial Services is a Danish FSA-registered VASP entity and adheres to the strictest guidelines. Click below, and open a free account now to get started on your crypto journey.
Co-Owner Vibe Invest ApS
4 个月Thanks guys for this comprehensive update. Seemingly the government are attacking the whole crypto industry with these insane taxation policies. But always remember, the blame is on you, who elected these puppet politicians - irony on. I think this also says it all, how the government are trying to keep people from adopting this mind blowing new technology with all its potential and possibilities.