As some people face account lock-outs from their banks, some have turned to Bitcoin and other cryptocurrencies to receive their salaries.
One such Bitcoin enthusiast, SVN, received his entire salary in Bitcoin for 2022, paid in fortnightly instalments.
In a Twitter thread, he stated that he used Coinbase’s direct deposit method, then migrated to Bitwage, Cash App, where his company paid him directly in cryptocurrency.
Took my entire salary in #Bitcoin this year. 100% net wage paid bi-weekly.
— svn ⚡️ (@rarepassenger) December 20, 2022
Started off with Coinbase direct deposit, migrated to Bitwage, Cash App, then got the company to pay me directly.
He stated direct deposit services were “simple and straightforward” from then.
He said: “Payment would go direct to wallet. Would send a % straight to cold storage for saving, the rest would use as needed.”
Explaining further, he stated the benefits of receiving his yearly wage in Bitcoin was that “accountants didn’t need to know [Bitcoin]” and that tax reporting was “easy.”
Conversely, he stated Know Your Customer (KYC) coins were a challenge.
Continuing, he said: “Getting the company to pay direct was a better experience. Because I was taking 100% net every other week, it required the business to change strategies for accumulation and earning.”
On the positive, he did not have to use KYC and was paid directly to his wallet. Despite this, he faced an “accounting nightmare.”
Getting the company to pay direct was a better experience. Because I was taking 100% net every other week, it required the business to change strategies for accumulation and earning.
— svn ⚡️ (@rarepassenger) December 20, 2022
Benefits:
Non-KYC coin
Direct to wallet
Cons:
Accounting nightmare
SVN added that obstacles to receiving his coins were transition tracking, with several wallets such as Sparrow Wallet and Mobile LN wallets offering separate transaction record-keeping.
Concluding, he wrapped up his analysis of a year’s worth of Bitcoin salaries, stating,
“Anyway, a whole year of accepting #BTC as pay has been interesting. Some days there’s a gain, some days a loss, other days neutral. It makes you take care of responsibilities faster, purchases are more considerable during drops and builds time horizon. Savings increases too.”
Anyway, a whole year of accepting #BTC as pay has been interesting.
— svn ⚡️ (@rarepassenger) December 20, 2022
Some days there’s a gain, some days a loss, other days neutral.
It makes you take care of responsibilities faster, purchases are more considerable during drops and builds time horizon. Savings increases too.
He added he would do things differently such as using less “off-ramps” or avoid automatic clearing house (ACH) payments, which conduct transactions between banks and credit unions.
Finally, he recommended using stablecoins more than other cryptocurrencies.
He concluded: “Haven’t had ANY banking issues considering I don’t have a bank account anymore. Would I go back? No. I really love the freedom having custody of my [hard-earned] funds feels.”
The United Kingdom has categorised “designated crypto assets” for Investment Manager Exemption (IME) for the 2022-2023 fiscal tax year.
Commissioners for His Majesty’s Revenue and Customs (HMRC) have enacted the legislation which lawmakers announced in April this year. The tax body of the UK government passed the new regulation this week, which will enter force on 1 January next year.
While the government has not defined “designated crypto assets,” the new regulations refer to “investment transactions” cited in Section Two of the Investment Transactions (Tax) Regulations 2014.
IME allows the UK to boost its status as a financial hub and allows non-UK investors residing in the country the right to select British investment managers. The latter can conduct some investments on their behalf without becoming subject to British taxation rules.
The new IME will place “designated cryptoassets” as stocks, included in Whitehall’s FinTech Sector Strategy in early April.
According to the consultancy paper, the measures,
“will provide certainty of tax treatment to U.K. investment managers and their non-U.K. resident investors who are seeking to include cryptoassets within their portfolios, and we anticipate that this will also encourage new cryptoasset investment management businesses to base themselves in the U.K.”
The news comes as multiple countries recommend financial regulations tighten across their respective governments. Countries such as Israel, South Korea, Australia, and the United States have submitted recommendations linked to the collapse of several key crypto exchanges.
This comes after FTX, one of the world’s largest cryptocurrency exchange platforms, filed for Chapter 11 bankruptcy after mismanaging billions in funding. Bahamian authorities have arrested the company’s former chief executive, Sam Bankman-Fried, who awaits extradition to the United States for his malfeasance.
Alaska is set to launch monetary regulations for virtual currencies starting 1 January next year, reports revealed this week.
According to the Cooley Law Firm, Alaska will force enterprises using virtual currencies to apply for and obtain money transition licences with the state government.
Alaska, the most northwestern state in the United States, changed money transmission regulations to determine the meaning of a “virtual currency.”
State Crypto Rules
The state’s Division of Banking and Securities (DBS) adopted changes to its local Administrative Code, stating: “[Virtual currencies are a] digital representation of value that is used as a medium of exchange, unit of account, or store of value; and is not money, whether or not denominated in money.”
The code will also require individuals “engaging in money transmission activity involving virtual currency” to submit licencing applications to conduct such transactions.
It also defines “permissible investments” and “monetary value,” but states reward programmes and online gaming virtual coins are not included as virtual currencies.”
Agreements Broken
Previously, crypto-linked platforms have received Limited Licensing Agreement (LLA) from Alaska’s DBS, but digital currencies were not included.
Under the current changes, Cooley Law Firm wrote: “As a result of the explicit inclusion of virtual currency activity as money transmission activity requiring a license, the DBS is phasing out the LLA requirement, and LLAs currently in effect will be voided and removed from the Nationwide Multistate Licensing System record on January 1, 2023. It is not clear if the change to the regulations will require current Alaska licensees that engage in virtual currency activity to take any action.”
Other nations such as Israel, Australia, South Korea, and others may require crypto firms to apply for licences under stricter regulations. The news comes amid the ongoing crisis with FTX, which collapsed into administration on 11 November this year, due to fraud and monetary misappropriation.
A key executive from one of the world’s largest cryptocurrency exchanges has backed decentralised protocols, adding open-source code and smart contracts were the “ultimate form of disclosure.”
In a blog post, Coinbase chief executive Brian Armstrong advocated tightening regulations on centralised platforms. He also outlined steps government regulators could take to reinstate trust in the crypto industry amid the ongoing FTX crisis.
In the post, he said:
“Second, smart contracts, which power DeFi and Web3 apps, are public and open source by default. This means anyone can go audit the code to see if it really does what it claims to do. This is the ultimate form of disclosure. Instead of ‘don’t be evil’ [we] can have ‘can’t be evil’, where you can trust the laws of math instead of human beings.”
A List of Recommendations
According to the executive, the industry needed “additional transparency and disclosure” to counter human error and fiscal malfeasance. Armstrong continued that the fall of disgraced crypto exchange FTX would “be the catalyst we need to finally get new legislation passed.”
He added that US lawmakers should pass stablecoin regulations to build standard financial service laws, where regulators could monitor implementing a state trust charter or similar mandate.
Stablecoin issuers should also meet “basic cybersecurity standards” and offer blacklisting [procedures] to comply with global sanctions regimes, he said.
Also, one major bill from US senator Bill Hagarty, the Stablecoin Transparency Act, is set to pass the Senate in the near future. Armstrong recommended targeting crypto exchanges and custodians with federally-sanctioned licencing and registration.
This would take place after Congress passed sufficient stablecoin regulation, according to the CEO. He also urged lawmakers to force the US Securities Exchange Commission (SEC) and the Commodities Future Trading Commission (CFTC) to sort the world’s top 100 crypto coins by market capitalisation and label them as securities or commodities.
Continuing, Armstrong stated: “If asset issuers disagree with the analysis, the courts can settle the edge cases, but this would serve as an important labelled data set for the rest of the industry to follow, as, ultimately, millions of crypto assets will be created.”
Foreign Sources, Domestic Consequences
He also called on regulators to determine how crypto exchanges from foreign sources operated in their respective subsidy branches worldwide.
He said: “If you are a country who is going to publish laws that all cryptocurrency companies need to follow, then you need to enforce them not just domestically but also with companies abroad who are serving your citizens.”
Concluding, Armstrong wrote,
“Don’t take that company’s word for it. Actually go check if they are targeting your citizens while claiming not to […] If you don’t have the authority to prevent that activity […] you will unintentionally be incentivizing companies to serve your country from offshore.”
The news comes as global regulators determine the next steps against cryptocurrencies amid the ongoing bankruptcy and prosecution of FTX and its executives. Currently, Bahamian authorities have detained FTX’s ex-chief executive Sam Bankman-Fried and may extradite him to the US.
Numerous countries, including Australia, South Korea, Israel, the United States, and others have begun developing recommendations for regulating cryptocurrency markets. The plans come amid a volatile bear market, which has seen numerous exchanges collapse due to fraudulent or mishandling of funding.
Stablecoins have gained popularity in the crypto industry despite ongoing market volatility.
A Coin Metrics report found that on-chain stablecoin settlements topped $7 trillion this year and is set to reach $8 trillion by the end of the year.
Peter Johnson, venture co-head at Brevan Howard Digital, said in a Wednesday tweet that stablecoin settlements had surpassed those from Mastercard and American Express.
Currently, Visa, the largest card platform, processes $12 trillion a year. According to Johnson, on-chain stablecoin volumes would exceed those from Visa.
Despite his observations, others have noted that credit card and stablecoin settlement volumes are completely different. The former involves consumer spending, with the latter involving cryptocurrency trading and decentralised financing.
Regulations remain the largest obstacle for stablecoins as they are an emerging technology compared to credit cards.
Some lawmakers in the United States Senate have submitted legislation to allow non-state and non-bank entities to issue stablecoins. Such institutions would need to receive a federal licence from the US Office of the Comptroller of the Currency (OCC) backed by “high-quality liquid assets.”
According to current figures, stablecoins also have a market capitalisation of 16.5 percent of the total market, or roughly $140 billion, with Tether (USDT) consisting of 66.3 billion.
South Korea’s northeastern and second-largest city Busan has announced it would drop most of its cryptocurrency partners on centralised global exchanges. The decision comes after several prominent exchanges and projects – FTX, Terra/Luna, and Voyager – collapsed in recent months.
The coastal city has been named South Korea’s blockchain capital and recently revealed an 18-person steering committee. None of the people sitting on the body were from major centralised platforms, including Binance, Gate.io, Huobi Global, FTX, and Crypto.com.
The steering committee aims to advise government authorities and investors on operating cryptocurrencies along with other digital assets. It also hopes to deepen cooperation for cryptocurrency frameworks and cooperate with foreign entities.
Second Thoughts?
News of FTX’s collapse forced Busan authorities to rethink including centralised exchanges. However, it stated it could proceed with its plans without assistance from outside sources.
According to reports, committee members stated problems with crypto platforms like FTX and others “seem to have influenced [the decision].” Other stated centralised exchanges were never included in city and supported initial liquidity offerings.
The city also plans to outline how it will separate securities and non-securities assets, along with listing and monitoring channels for assets. It established a fund for the initiative in the first half of the year, leading to the city founding a regulation-free zone for blockchain in July 2019.
Efforts to back the initiative increased after telecoms giant Korea Telecom (KT) collaborated with the city to develop infrastructure to support blockchain technologies.
Core Scientific, a key Bitcoin (BTC) mining firm, has reportedly filed for Chapter 11 bankruptcy shortly after creditors extended a lifeline to the embattled firm.
The company received the protections in Texas, citing poor earnings and plummeting BTC values.
Financial services platform B Riley offered the $72 million non-cash financing bailout to Core Scientific. The deal included zero contingencies and $32 million with stipulations. The news comes after the firm’s value plummeted from $4.3 billion in July last year to $78 million to date.
To remain in operation, Core Scientific sold off 9,618 BTC in April this year. While it can continue with its mining operations, the firm cannot earn enough revenues to cover costs due to operations.
While the company continues to generate positive cashflows, the income is not sufficient to cover the operational costs, which involve repaying the lease for its Bitcoin mining equipment.
The firm previously filed for financial distress with the United States Securities and Exchange Commission (SEC) in late October. The company stated in its filing that high electricity fees, Bitcoin hash rate hikes, and low BTC prices led to the collapse of crypto lending firm Celsius, eliminating the latter’s Core Scientific debts.
Courts ordered Celsius to pay back clients a total of $44 million following its collapse. The news follows an agreement the lending firm reached with stakeholders, stating crypto held in custody accounts belonged to users and not centralised platforms.
Solidus Labs, a company that assesses and monitors blockchain risks for the cryptocurrency sector, reported this month that fraudsters created over 350 fake crypto tokens per day to scam investors.
According to the firm’s Rug Pull Report, scammers deployed 117,629 fraudulent tokens, up 41 percent from 83,400 tokens found in 2021.
The report also found that BNB Chain contained 12 percent of the world’s fake BEP-20 tokens, topping the list of scam token holders to date. The Ethereum network arrived second place at 8 percent of scammy ERC-20 tokens.
Shamcoins and Sticky Situations
The news comes amid a rise in cryptocurrency schemes, including rug pulls and honeypots.
Rug pulls take place when groups create tokens, rapidly increase their value, and then abandon the coin after extracting the project’s value. Honeypots, the most popular form of fraud, is a smart contract for tokens prohibiting coin buying and reselling.
Most centralised exchanges (CEXs) and custodial wallets, namely under US regulators, have faced massive rug pulls in recent history, scamming over 153 exchanges for $11 billion in Ether (ETH) cryptocurrencies.
Recently, Avraham Eisenberg launched a major rug pull on Mango Markets, defrauding investors of $117 million with his exploit altcoin Mango Inu.
He later stated he “did nothing wrong” and had conducted “legal” actions in the rug pull.
According to figures, US CEXs top the list of countries with fraudulent transactions, followed by the Bahamas, where FTX ex-chief executive Sam Bankman-Fried was arrested by authorities.
The Squid Game (SQUID) token ballooned 45,000 percent before its founders disappeared with its funds, costing investors $3.3 million.
Such concerning instances have been on the rise since September 2020, following the collapses of Voyager, Celsius, and most recently, the massive bankruptcy of crypto exchange FTX.
Are you interested in starting your crypto exchange in the UK and obtaining a crypto exchange license requisite for your project? Are you afraid of possible failures because of the too-complicated regulatory framework? You are right at some points – the risk of rejection due to the failed compliance requirements is huge here. But, this risk can be minimized thanks to the tested experience of professional lawyers.
At the same time, the opportunities for raising big funds are enormous in the UK as well. The country has one of the biggest capital markets in the world. So, if you wish to start your own exchange or any other crypto startup and are called to obtain a UK crypto exchange license for that purpose, lawyers of Prifinance company are ready to guide you through the procedure to ensure a winning application in the end.
Steps to Get the So-called Crypto License in the UK
Why does the “so-called” license? That is because authorization in the UK is anticipated only – the Financial Conduct Authority (FCA) ensures that. This registration is some kind of alternative procedure that is implemented instead of licensing in its traditional meaning. Still, without authorization from the FCA, it is impossible or extremely risky to close any crypto deals within the UK territory.
In order to validate a crypto license in the UK (as we call it conditionally), it is necessary to pass these preliminary registration steps:
- Incorporate a separate UK legal entity that will serve as an authorized person for the purpose of arranging crypto deals.
- Open bank and/or EMI accounts.
- Find the company’s officers with the respective qualifications. In particular, it is necessary to emphasize the role of a compliance manager.
- Gather all the particulars of the company’s founders and affiliate entities. Precisely, natural persons need to share copies of personal IDs; and legal persons have to provide copies of their statutory documents and the confirmation of good standing. Providing the financial statements is also required.
- Form the registration package, providing among others:
- properly filled registration form;
- business plan;
- organizational chart;
- monitoring, risk management, AML, record tracking, and reporting policies;
- description of IT facilities available (the standardized templates are provided).
- Paying all application fees.
- Handling all the negotiations with the FCA officials, including providing extra documents and details that may be requested.
A registration plan may vary from case to case. Prifinance lawyers are ready to assist with your case and draft a personalized plan that will maximize the chances of success.
How Prifinance Lawyers Can Facilitate You
If you wish to start your crypto project exactly in the UK, Prifinance lawyers are ready to facilitate you with the easiest practical realization of this business objective, including:
- evaluating comprehensively your commercial background and particulars to find the best solutions for your future UK crypto project;
- registering a separate legal entity in the exact legal and organizational form to serve as a future crypto exchange;
- guaranteeing the overall compliance with the risk management and AML/CTF demands, developing all the required policies for this purpose;
- opening any bank and/or EMI accounts;
- handling all the required local negotiations with state officials;
- supporting with resolving all possible issues that may come on the agenda in the course of the next functioning of your crypto UK project.
Provide the details of your current business situation to get a more precise assessment and business solutions to the point. Prifinance lawyers are ready to share with you tested registration expertise to facilitate your project’s success.
Binance, the world’s largest crypto exchange, has shrugged off concerns about its liquidity amid a surge in investor redemptions.
On Saturday, the cryptocurrency giant told Crypto Intelligence News that its management is “not worried” about the growing withdrawals, as many investors seek self-storage or move their holdings to rival crypto platforms.
They added that Binance meets strict liquidity requirements and is 1:1 backed, with all investor assets being held in segregated accounts and wallets.
This comes hot on the heels of FTX, another rival crypto exchange, going bankrupt after experiencing a surge in withdrawals.
Binance initially considered taking over FTX, before deciding against the takeover due to concerns about the firm having mishandled customers’ funds.
The company’s native token, BNB, is currently down by around 15 percent in the last week, after falling a further six percent in the most recent 24 hours of trading.
Earlier this week, on Thursday, Binance CEO Changpeng Zhao said “We are financially OK” when asked if the exchange could handle a $2.1bn repayment – an amount they could have to pay back to FTX.
Zhao’s comments have done little to settle investors, with billions continuing to flow out of Binance and the exchange’s native token continuing to get hammered.