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| Hey Insider! The week has kicked off with the echoes of the new crypto tax reporting rules proposed by the Biden administration in the U.S. as the proposal received mixed reactions from the crypto community over the weekend. Today's Inside Cryptocurrency newsletter covers the details regarding the proposal as well as some of the other biggest stories from the market, including OnlyFans' Ether holdings, Binance's decision to delist sanctioned Russian banks from its peer-to-peer (P2P) payments service, the plummet in the key metrics of friend.tech, and more. Enjoy your reading, and if you find this newsletter useful, please share it with your friends and colleagues! Doğa
p/dogayurduneri | |
| 1 | | U.S. President Joe Biden's administration has proposed a new crypto tax reporting rule to increase its crackdown on the investors who may avoid paying their taxes on crypto transactions. The proposed rule is expected to bring nearly $28B to the government over a decade. More: - The new rule requires crypto brokers, including exchanges and payment processors, to report information on their users' digital asset sales and transactions to the U.S. tax authority, the Internal Revenue Service (IRS).
- The rule also holds digital asset brokers responsible for meeting the same reporting rules as brokers for other financial instruments.
- The proposal defines the broker to include both centralized and decentralized digital asset trading platforms, payment processors, and wallets while covering both cryptocurrency and NFT transactions.
- Under the new rule, the U.S. government tasks the IRS with defining the firms to be qualified as digital asset brokers and providing forms and instructions for reporting.
- Currently, crypto investors calculate their returns on crypto activities by themselves, and crypto trading platforms do not report this information to the IRS, which will change through the new crypto tax reporting rule.
- If approved, the new rule will take effect for brokers as of 2025 for the 2026 tax filing season.
- The U.S. Treasury Department and the IRS will continue to collect feedback on the proposal by Oct. 30 and hold public hearings on the rule on Nov. 7 and 8.
Zoom Out: - Over the last several years, President Biden repeatedly urged authorities to remove tax loopholes that only help crypto investors and address the tax evasion risks posed by digital assets.
- Biden's fiscal 2024 budget proposal, revealed in March, also suggested doubling the capital gains tax rate for crypto investors.
Q: How do you think the crypto should be treated by the tax authorities in the U.S.? Join the conversation here. |     | |
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What the numbers say: The daily user-paid fees on the recently-launched decentralized social network friend.tech fell to the $161,120 level yesterday, down from its peak of $1.68M on Aug. 21. The massive drop has suggested that the friend.tech craze faded away much earlier than expected. The number of new users on the platform also saw an almost 80% decrease within a few days. Also, daily trading volume on the network similarly experienced a 94% drop from its peak of $16.9M to only $953,000 on Aug. 27. Relevance: friend.tech, built on Coinbase's new Ethereum-powered Layer-2 blockchain network Base, launched its beta version on Aug. 11. The platform allows users to tokenize their social network by buying and selling shares of their connections and social media profiles on X, formerly known as Twitter. In this way, the users can send private messages to other users, including their favorite influencers like NBA player Grayson Allen, and interact with each other by purchasing shares. The protocol charges a 5% fee on transactions. The platform's massive popularity in its first days caused the network to experience a sudden jump in activity and 24-hour fees, making it one of the highest-earning service providers in decentralized finance (DeFi). However, the decline in the platform's key metrics has suggested that the hype has already started dissolving. Brands that should care: When the daily fees on friend.tech reached a peak, the platform outperformed some established players in the crypto ecosystem, such as Lido, Tron, Uniswap, Bitcoin, MakerDAO, and PancakeSwap. At the time, the network jumped to the second spot among other decentralized crypto projects by 24-hour fees, remaining only behind Ethereum. Nevertheless, the latest decline in protocol fees paved the way for friend.tech to retreat to the 11th spot. | | | |
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| 3 | | Binance, the largest crypto exchange by trading volume, has delisted sanctioned Russian banks from its peer-to-peer (P2P) payments service, disabling clients from paying each other in rubles through the related lenders. The move came several days after the Wall Street Journal (WSJ) reported that Binance continued to process transactions for at least five Russian banks, including Rosbank and Tinkoff Bank, blacklisted by Western countries after the invasion of Ukraine. More: - A Binance spokesperson said they regularly update their systems to ensure compliance with local and global regulatory standards and try to remove any gap pointed to them as soon as possible.
- The spokesperson also added that Binance enforces global sanctions on people, organizations, entities, and countries blacklisted by the international community, preventing such actors from accessing its platform.
- The earlier report from the WSJ pointed out that customers were able to convert their funds in rubles into crypto balances at Binance through sanctioned Russian banks.
- Besides, the popular media outlet underlined that Binance continued to host substantial ruble trading volumes, citing the data compiled by CCData.
- Binance started applying restrictions on Russian citizens, residents, and banks in 2022 after the European Union (EU) and the U.S. announced sanctions against Russia due to its invasion of Ukraine.
- However, the company hit the headlines with a possible violation again in April after several Russian users reported that they were able to access some Binance services despite the restrictions the platform began imposing last year.
- The exchange is already under investigation by the Department of Justice in the U.S. over potential violations of U.S. sanctions on Russia.
- Following Binance, some other leading crypto exchanges, such as OKX and Bybit, also removed sanctioned Russian banks from their payment options.
Zoom Out: - Binance users give their bank account details to buyers to receive funds directly when they sell any asset through the platform's P2P service.
- Binance charges a fee for facilitating the trade and holds the sellers' crypto funds in escrow until they confirm that they received the money.
- Over the past few months, the popular exchange faced increased scrutiny by regulators in many countries, including the U.S., Australia, France, and Belgium, due to compliance issues and had to withdraw from several markets in the West, such as Canada, Austria, the Netherlands, Cyprus, the U.K., and Germany.
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| 4 | | Bankrupt crypto exchange FTX has temporarily frozen user accounts with access to its claims portal following the recent cybersecurity incident targeting Kroll, a third-party agent managing creditor claims on behalf of bankrupt companies. The firm said the suspension is a proactive measure to prevent further incidents or harm related to the hack. More: - FTX added that users should not modify their claims or change the accepted schedules in response to the incident.
- The company also underlined that all claim data submitted through the claims portal is secure and valid.
- Earlier in August, Kroll announced that an unauthorized third party gained access to files in its cloud-based systems, confirming that the customer data of the claimants of FTX and the bankrupt crypto lender BlockFi was compromised.
- The files include some claimants' personal information, such as names, addresses, email addresses, and balances.
- At the time, both FTX and BlockFi said their internal systems were not affected by the hack, and client funds and crypto account passwords were safe.
- Following the incident, Kroll also stated that it took the situation under control, launching an investigation after becoming aware of the incident.
- However, blockchain analyst ZachXBT recently verified that some FTX customers started receiving phishing emails, suggesting their personal data began being misused.
Zoom Out: - FTX and BlockFi filed for Chapter 11 bankruptcy in November 2022.
- Both companies are currently undergoing their legal bankruptcy proceedings and trying to outline plans to repay their creditors.
- Kroll also caters to the bankrupt crypto lender Genesis Global as well as various other companies outside the crypto industry, though any other firm using Kroll's infrastructure has yet to announce an exposure to the incident.
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| 5 | | Crypto and stock trading app Robinhood has turned out to be the third-largest Bitcoin (BTC) holder, with over $3B of BTC holdings in a single wallet. The data from the blockchain analysis firm Arkham Intelligence has shown that 118,300 bitcoins in the wallet were transferred from several other smaller wallets within a three-month period. More: - Robinhood moved the Bitcoin holdings to a single wallet between March 8 and July 14.
- All the assets in the wallet are held on the Bitcoin blockchain and under the custody of the crypto trading firm Jump Trading.
- The mysterious owner of the wallet recently became the object of curiosity among the crypto community since it acquired large amounts of Bitcoin in a very short time before being revealed to be Robinhood.
- The wallet has made Robinhood the third-largest Bitcoin holder in the world behind crypto exchanges Binance and Bitfinex.
- The two exchanges hold $6.4B and $4.3B of BTC on single wallets, respectively.
Zoom Out: - Arkham Intelligence's data also revealed that Robinhood's exposure to Bitcoin is quite big despite the decline in its crypto trading revenue for four consecutive quarters.
- Most recently, the platform reported an 18% decrease in its crypto trading revenue for Q2 compared to the previous quarter.
NOTE: Inside.com founder and CEO Jason Calacanis is an investor in Robinhood. | | | |
| 6 | | The parent company of OnlyFans, the subscription platform notorious for sexual content, has reported its crypto holdings in a recent financial document submitted to the U.K. authorities. The filings have pointed out that the U.K.-based parent firm, Fenix International, invested $19.89M in Ether (ETH) between 2021 and 2022 to diversify its working capital. More: - The company also reported $8.46M of impairment loss for this investment since the price of ETH declined by nearly 75% over the period from the $4,600 level to $1,217.
- The price drop in the second-largest cryptocurrency by market cap took the value of the company's ETH holdings to $11.4M as of the end of November 2022.
- The filing said there are no limitations and restrictions on Fenix International's ability to sell its crypto assets.
Zoom Out: - OnlyFans, launched in 2016, allows creators to make money by selling content to subscribers.
- The platform made its first foray into the crypto space in February 2022 by allowing verified creators to use Ethereum-based NFTs in their profile pictures.
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Term of the Day Core Consumer Price Index (CPI): Core CPI measures the change in price of all items — less food and energy — for urban consumers. Question of the Week Do you share details about your salary with your coworkers? Join the conversation |
INSIDE CRYPTOCURRENCY LEADERBOARD (30 DAYS) |
 | Staff Writer | | Doga is a tech and science editor who has been writing news for nearly 10 years. She worked for leading tech platforms and mainstrem media channels as an editor and presenter throughout his career. Then, she carried her know-how to more than one platform. She is a part-time cat lover and binge-watcher, and also fond of science, space, and emerging tech. She always has a story to tell. She is a bit addict to the laughter and -unfortunately- the '90s culture. | | This newsletter was edited by Aaron Crutchfield | |
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