KW 28: Crypto investors face higher taxes, EU draft to ban anonymous crypto wallets, Bitcoin reserves decline again


Crypto investors face higher taxes: Germany’s finance ministry recently published its draft for a nationwide regulation for cryptocurrencies, the result of consultations between the ministry and the highest tax authorities of the German states. The new regulation has the greatest effect with regard to the previous tax exemption of crypto investments after a holding period of one year. The divestment period is to be raised to ten years „if units of a virtual currency or token are used as a source of income and income has been generated from them in at least one calendar year.“ Income from crypto transactions has so far been comparable in practice to investments in gold bars or coins, as the physical sale of gold is a private disposal transaction for tax purposes.

EU draft to ban anonymous crypto wallets: An unofficial draft by the European Commission plans to ban the provision and use of anonymous crypto wallets. The draft calls for new guidelines in the fight against money laundering and terrorist financing, but opposition to it is already stirring within the EU Commission. If the plans are actually implemented, users of anonymous wallets such as Electrum, Wasabi or even the MetaMask browser extension would be affected. So far, however, this is still an unofficial draft that the Commission must first submit to the Council and EU Parliament. It will then be evaluated by them and the regulation will either be adopted or rejected. Trading in cryptocurrencies has already been restricted in several countries.

SEC charges individuals connected to former iced tea-turned-mining company: The US Securities and Exchange Commission (SEC) has filed charges against three people accused of insider trading with the Long Blockchain Company related to changing its name from the Long Island Iced Tea Company. The SEC said Eric Watson, Oliver Barret-Lindsay, and Gannon Giguiere were facing charges in the US District Court for the Southern District of New York for their role in trades connected to rebranding a beverage business to a blockchain firm, which caused the company’s stock price to rise significantly. Giguiere purchased 35,000 shares of Long Blockchain after having been allegedly tipped off to the change by Barret-Lindsay, who was first alerted by Watson. The decision to change the firm from Long Island Iced Tea to Long Blockchain happened in early 2018. After the company rebranded to focus on blockchain development, the stock price surged by 289% — more than 380% intraday according to the SEC.

Bitcoin reserves decline again: Bitcoin exchange holdings have rebounded significantly since the crypto market crashed in May, but numerous sell-offs have caused the total market capitalization to melt down by 4.4% to $1.34 trillion. This is about half of the record $2.55 trillion set two months ago. The cryptocurrency Bitcoin is increasingly buckling, with the BTC exchange rate struggling with a 6.2% discount.

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Rising number of experts are warning that the crypto bubble is about to burst: Bitcoin can be used not just to pay ransom demands. The auction house Sotheby’s now also accepts it as a means of payment at its auctions. However, experts warn of a bursting of the crypto bubble and speak of the so-called „boom-and-bust“ cycle. This is a speculative bubble in which asset prices rise rapidly over a longer period of time, only to collapse abruptly. Bitcoin has already experienced three such boom-bust cycles in recent years: 2013 to 2014, 2017 to 2018, and the latest in 2020, which continues to this day. Expert warnings are getting louder the longer the boom lasts. Three out of four fund managers still see Bitcoin in a bubble, according to a Bank of America survey. After its high in the spring, Bitcoin has now already lost around half of its value.

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What is crypto wallet Metamask capable of? The browser add-on Metamask offers access to decentralized exchanges in addition to the purchase and storage of tokens. Since its launch in 2016, Metamask has made a name for itself as a secure and open-source crypto wallet. It specializes in Ethereum and Ethereum-based tokens (ERC-20). Users of the wallet can also access their crypto tokens on decentralized exchanges such as Uniswap or Kucoin. Consenssys Software Inc, who are behind Metamask, also released the wallet as an app for Android and iOS in the fall of 2020, but it can also be used as a browser add-on. The creators were particularly concerned about user privacy. Hot Wallet is programmed in such a way that cyberattacks can be averted and sensitive data is safe. The application itself does not have access to personal data.


„The current ransomware boom would be inconceivable without Bitcoin and the associated service providers. No criminal would think of demanding ransom via wire transfer. The risk would be too high.“
German Green Party lawmaker Sven Giegold is in favor of the European Commission’s Regulation of Markets in Crypto-assets (MiCA) proposal.


Power plant wastewater from Bitcoin farm causes high lake temperatures in US village of Dresden: Residents at Seneca Lake, the largest of the Finger Lakes in upstate New York, are protesting a gas-fired power plant they say is polluting the air and heating the lake. “The lake is so warm you feel like you’re in a hot tub,” said Abi Buddington, a resident of Dresden, N.Y., whose home is near the plant. The facility on the shores of Seneca Lake is owned by private-equity firm Atlas Holdings and operated by Greenidge Generation LLC. They have increased the electrical power output at the gas-fired plant in the past year and a half and use much of that fossil-fuel energy not to keep the lights on in surrounding towns, but for the energy-intensive mining of Bitcoin.

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