Tax Authorities In Pakistan Zero In At Bitcoin Traders

Tax authorities across the globe have set their sights on Bitcoin traders as they reap windfall profits from the recent Bitcoin surge. Federal Board of Revenue in Pakistan has joined the game.

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Dutch Bitcoin Exchange BL3P Increases Reach to 34 European Countries

Dutch Bitcoin Exchange BL3P Expands to Serve 34 European Countries

BL3P announced the expansion of their services into the Single Euro Payments Area (SEPA). This marks a significant extension from their original operation which primarily served residents of the Netherlands. BL3P, a subsidiary of Bitonic, is a bitcoin exchange founded in 2013 that allows users to buy and sell bitcoin using Euros.

With their expansion complete, BL3P’s aims to grow their user base outside of their Dutch majority through the targeting of new customers in the EU region. Speaking to Bitcoin Magazine Jeroen Rijnbout of BL3P stated, “We want to put BL3P on the map as a reliable and user-friendly trading platform for users from the Eurozone.” In the long term, BL3P hopes to build its reputation “as an exchange that is run by an experienced team and take Bitonic to the international stage.”

The move brings BL3P into the EU marketplace, which is already competitive in the bitcoin space with dozens of exchanges competing for customers. Rijnbout views this competition with optimism stating, “We believe it is good to have multiple exchanges to choose from. This enables users to spread their risk, profit from arbitrage and choose a party that they trust. Centralization of the majority of bitcoin trading to one exchange is dangerous, as we have seen in the past. We see it as a healthy development for the ecosystem.”

With their recent expansion, the Dutch company now allows all SEPA countries to buy and sell bitcoin. Their current services offer the ability to use market and limit orders. BL3P charges a fixed trading fee of 0.25 percent on all buy/sell transactions. However, for the next five weeks this transaction fee is discounted by 50 percent as part of Bitonic’s 5th anniversary celebration.

BL3P currently offers services that support the bitcoin cryptocurrency, but has stated its plans to expand support to alternative cryptocurrencies in the future. “We pay close attention to the developments in altcoins and see great value in some of them as testbeds for future developments on Bitcoin,” says Rijnbout.

“We tend to be hesitant in adding new currencies, as we want to ensure an altcoin or token has added value before we add them to our platforms,” Rijnbout adds. “However, at the same time, we listen to and understand the needs of traders and investors and we want to be able to meet their wishes.” For example, Rijnbout suggested that support for Litecoin on their trading platform is of particular interest to BL3P with services coming “soon.”

BL3P is the only exchange with headquarters located in the Netherlands; it holds Dutch bank accounts to process euro transactions. Bitonic uses the iDEAL payment method which ensures that SEPA customers receive near-instant deposits and withdrawals of fiat currency into customer accounts.

Bitonic is the largest Bitcoin company in the Netherlands. With more than 11 full-time employees, BL3P has sold well over 250,000 bitcoins with 30-day volumes now processing over 8,200 bitcoins.

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China’s Interest and Investment in Ethereum’s Blockchain Expands

China's Interest and Investment in Ethereum's Blockchain Expands

Copyedit by DoEun

Ethereum Is Dominating in China

Bradley Fink

When we first heard Vitalik Buterin was learning Chinese, it was a clue to his ambitions in China. Less than two years later, the platform he co-founded is now a growing force in the Middle Kingdom. Since he joined the ChinaLedger Alliance (May 2016) and announced the expansion of BlockApps, an Ethereum building-blocks platform, in China (September 2016), there has been a movement in cities and among companies in big industries all throughout China. This is in some part due to the efforts of Wanxiang Blockchain Labs, which has made it their mission in China to bring Ethereum to the mainstream, and also in part to the savvy and persistent efforts of Buterin himself.

At a recent Ethereum meetup in Hong Kong, Buterin said that “Wanxiang Blockchain Labs are making good inroads into China.” Headquartered in Hangzhou, Wanxiang has led the Ethereum charge in China for more than a year. Having partnered with Ethereum early on for the Global Blockchain Summit following Devcon2 in Shanghai in July of 2016, Wanxiang is now China’s top funder of promising blockchain projects.

With its BlockGrantX sponsorship program, it has allocated funds to Ethereum startups including (for fully distributed cloud computing), Proof-of-Identity (for KYC, wallets, multisig, voting, authentication and reputation systems), Golem (P2P computation), Casper (a proof-of-stake consensus protocol), the Raiden Network (an Ethereum off-chain state network) and Micro Oracles (blockchain identity verification). And this month, Wanxiang launched its WanCloud platform for Chinese developers, giving them access to tools for building applications on open-source blockchains.

Since the recent Global Blockchain Financial Summit in Hangzhou, China’s rapid technological developments on the Ethereum platform has been garnering attention. One blog post in particular, from ConsenSys’s Head of Global Business Development Andrew Keys, gave some insight into the rapid rate of Chinese adoption. Highlights of the post, titled “Ethereum Growing Exponentially in China,” include:

  • The creation of an Ethereum Laboratory at Peking University, to work on applications for improving supply chain management and energy markets

  • The Royal Chinese Mint experimenting with a digital RMB on the Ethereum blockchain

  • Chinese companies such as Baidu, Ctrip, and Meituan utilizing Ethereum technology for aggregated payments services

  • Establishment of the Jiangsu Huaxin BIockchain Research Institute (JBI) in Nanjing, which Keys writes “will be a powerhouse in the Ethereum ecosystem and will become a beachhead for corporations outside of China.”

  • Experimenting with Ethereum technology by Ant Financial, Alibaba’s $60 billion financial arm, to improve their global payment platforms

In Hong Kong, there has also been a surge of new interest in Ethereum. Jehan Chu is the founder of the Ethereum meetup there and a partner at Jen Advisors, a Hong Kong–based early-stage blockchain VC firm. Though the technology is still very young, Chu has seen a huge uptick in activity.

“Ethereum in Southern China has been on a rampage of growth,” Chu told Bitcoin Magazine, “with the local HK meetup growing by 50 percent to nearly 800 members in the last six months, and ether trade skyrocketing. Banks, corporates and even casual investors have all heard about Ethereum’s white-hot growth and mounting challenge to Bitcoin dominance. More importantly, Ethereum startups worldwide from and Ox to Golem and MakerDao have made HK’s environment of high-level industry professionals a can’t-miss stop on their Asia business development and capital raising tours.”

Recently the Enterprise Ethereum Alliance (EEA), connecting Fortune 500 enterprises, startups, academics and technology vendors with Ethereum, announced its expansion into China with a new office in Hangzhou.

At the Global Blockchain Financial Summit in Hangzhou, EEA China said that its main objectives are to “explore and develop new standards and technologies using blockchains, so that Chinese enterprises can more easily meet domestic market needs.” Founding members of the EEA include JP Morgan, Banco Santander, CME Group, Microsoft, Intel, Accenture and blockchain startup ConsenSys.

Over the past week, the price of ether has surged from $85 on May 17 to a high of around $211 on Coinbase on May 25. While many credit this rise to the announcements of the EEA, it is also notable that ETH trading was added to some of China’s digital asset exchanges. On May 14 added an ETH/CNY trading pair, and on May 16 added ETH trading to its platform. It has also been confirmed that China’s top Bitcoin exchange OKCoin will soon add ETH trading.

The post China's Interest and Investment in Ethereum's Blockchain Expands appeared first on Bitcoin Magazine.

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Peach Airline to Accept Bitcoin After Japan Recognizes Cryptocurrency

Peach Airline

Peach Aviation will be the first Japanese airline to accept bitcoins as payment for plane tickets, according to a statement made by the budget carrier’s CEO Shinichi Inoue on May 22. Peach also plans to install bitcoin ATMs in Japanese airports as part of its bid to attract more tourism from Asia.

Peach operates domestic flights as well as flights to China, Korea and Thailand, and passengers should be able to purchase tickets with bitcoin by the end of the year, Inoue said.

Although Peach is not the first carrier to embrace the cryptocurrency, the decision is still significant.

Three years ago, airBaltic became the very first airline to accept bitcoin payments. In 2015, the Universal Air Travel Plan (UATP), a payment network owned by a consortium of major international airlines, partnered with Bitnet to accept cryptocurrency payments for its more than 260 member airlines.

UATP’s membership represents approximately 95 percent of global airline capacity, and the industry group had earlier added support for other alternative payment options like PayPal and Alipay.

Although paying for airline tickets with bitcoin on most major airlines is technically possible, it’s still up to individual airlines to decide if they will support the practice. As of yet, only a handful have elected to do so, despite the anti-fraud benefits of bitcoin transactions. Third-party online travel booking sites like CheapAir and Expedia accept bitcoin payments, but precious few airlines feature a simple “Pay With Bitcoin” button that UATP’s integration supports.

Peach’s announcement comes hot on the heels of a landmark regulatory decision: Japan’s official recognition of bitcoin as a legal payment method, thanks to an act of parliament that took effect on April 1.

The law came as the result of more than a year of debate in Japan about how to handle the cryptocurrency. The Japanese parliament first called for the regulation of bitcoin and bitcoin exchanges by the country’s Financial Services Agency, the country’s financial regulatory watchdog, in May of last year.

The new law also brings Japan’s bitcoin exchanges, which handle nearly half of global trading volume, under the same know-your-customer and anti-money laundering rules that apply to banks and other financial institutions.

Bitcoin exchanges in Japan must now meet minimum capital requirements, follow operational and cybersecurity best practices and submit to annual audits by the Financial Services Agency. More than twenty exchanges have applied for FSA licenses since the new law took effect.

Even before the Japanese government officially recognized bitcoin, merchants were already rushing to accept payment with the cryptocurrency. Merchant adoption of bitcoin quadrupled last year, from about 900 merchants at the start of 2016 to more than 4600 today, according to a survey by NHK. The rush of acceptance of the new payment method comes as consumer spending in Japan has stagnated in recent years.

Earlier ideas to boost consumer spending included “helicopter money” or simply mailing checks to Japanese citizens, but now both merchants and the government are hoping that a new payment method will encourage consumers to get out and spend.

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How to Hold Bitcoin in an IRA and Why It’s Still Not Easy


As bitcoin continues its bull run, more U.S. investors are looking for ways to protect their gains from taxation, and Individual Retirement Accounts (IRAs) are slowly emerging as a viable option.

While holding bitcoin in an IRA has technically been possible since IRS Notice 2014-21, which declared bitcoin property for tax purposes, the process remains complicated and fraught with liabilities.

Some regulators are trying to fix that. On January 9, the Government Accountability Office (GAO) released a report calling on the IRS to better inform taxpayers about the reporting requirements and potential liabilities of holding bitcoin and other cryptocurrencies in their IRAs.

But for adventurous and capable investors who want to bet some of their retirement on bitcoin, there are currently two ways to get the tax protection of an IRA.

First, investors will need to find a custodian to administer the IRA. Most IRA custodians allow “unconventional investments” like real estate and precious metals, but do not allow clients to hold bitcoin, at least not directly.

The alternative is to open an account with an IRA custodian that works with a fund like the Bitcoin Investment Trust (BIT), which holds bitcoin and issues shares based on its value. BIT is an approved investment vehicle offered by IRA custodians like PENSCO, Entrust, Millennium and Equity Institutional. However, there are several disadvantages to this method.

The first is that BIT shares are only available to accredited investors, those with a net worth of more than $1 million or with an annual income greater than $200,000. The second is that the account owner does not hold any bitcoin directly, only shares in a fund that promises to hold actual bitcoin on his or her behalf. The third is that the intermediary custodian who holds the asset, in this case shares in the BIT fund, charges fees to cover compliance and management costs.

For non-accredited investors who want to buy and hold bitcoin directly and avoid high custodial fees, there is really only one option, and that’s to set up a Limited Liability Company within a self-directed IRA.

A self-directed IRA LLC allows investors to hold bitcoin directly without giving up their wallet keys to a custodian and without seeking custodial approval for transactions, but it comes with more paperwork and liability risk.

Investors will still need to find the right custodian. Any IRA custodian that offers “checkbook LLCs” should allow clients to hold bitcoin in an LLC. However, only a few custodians specialize in bitcoin specifically and can streamline the process.

BitcoinIRA, headed by former U.S. Mint director Edmund Moy, specializes in setting up self-directed IRAs for clients who want to invest in bitcoin, but it charges a hefty one-time fee for the service. IRA Financial Group recently announced a self-directed IRA structure that will allow investors to hold bitcoin directly in an LLC, without the intermediary of a fund like BIT.

There are many risks to holding bitcoin in a self-directed IRA LLC, including a lengthy list of “prohibited transactions” that can disqualify the tax protection of assets within the IRA.

Legally, an IRA and its owner are separate entities and must act separately. The list of “prohibited transactions” is intended to prevent account owners from drawing double benefits from the IRA’s tax protection.

For example, account owners cannot put up the assets of their IRA LLC as security for a loan, since that would give them the double benefit of tax-protected assets and collateral.

Under these same rules, account owners cannot sell bitcoin to their own IRA LLC and must buy and store bitcoin in the name of the LLC, not their own names.

For investors who own bitcoin and want to transfer it into an IRA LLC, there’s only one option: sell the bitcoin, then contribute the proceeds — in U.S. dollars — to the IRA LLC, and then buy bitcoin in the name of the LLC with its own cash assets.

As with real estate and other unconventional investments, it’s also the responsibility of investors to report the fair market value of their assets to their custodian each year, whether those assets are held in an LLC or not.

For assets such as stocks and bonds, these values are assessed automatically. For real estate and unconventional investments like bitcoin, a third-party assessment is usually required.

If an account owner fails to report the value of their assets accurately to their custodian or engages in a “prohibited transaction,” their IRA can be disqualified and all assets distributed and taxed. Last but not least, account owners must also file annual reports and pay fees to the Secretary of State where the IRA LLC is incorporated.

Even if account owners cross all the t’s and dot all the i’s, bad custodians can still get them in trouble.

In some cases, custodians have failed to update fair market values accurately in their reporting to the IRS, and account owners have had to pay taxes on assets that have gone down in value. However, the potential tax savings still make self-directed IRA LLCs an attractive option for many bitcoin investors.

As property, investors must pay capital gains tax on any increase in the value of their bitcoin. With a Roth IRA, investors can buy bitcoins with post-tax dollars and avoid paying any taxes on their gains when they cash out. As with any IRA, however, investors can only withdraw disbursements without suffering penalties after age 59 ½.

Although holding bitcoin in IRAs has been possible since 2014, regulators are still worried the complicated process could land unwary taxpayers in trouble. As the GAO’s report pointed out, the IRS currently provides no guidance to IRA custodians or account owners about how to properly assess the fair market value of unconventional assets such as bitcoin, even though such assessments are mandatory.

This article is for general information purposes only and should not be taken as investment advice. Investors should conduct their own due diligence and consult with a qualified tax professional before attempting anything described in this article.

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