Good morning Here’s what happens:
Prices: If Bitcoin manages to stay above $30,000, we could take another step higher, says analyst.
Insights: Japan’s recent change, which exempts unrealized gains from self-issued cryptocurrencies from taxation, fosters a healthy environment for crypto startups. This ongoing trend of regulatory adaptability has garnered praise from stakeholders.
ETF optimism fuels Bitcoin’s ongoing rally
Both bitcoin and ether got off to a strong start in Asia earlier in the week. The world’s largest digital asset is still above $30,000, while Ether is up 1.3% to $1,901.
Analysts say this mini-bull that followed multiple spot Bitcoin ETF applications is propelling BTC and ETH to some of their strongest weekly gains since March. CoinDesk Indices’ Bitcoin Trend Indicator (BTI) shows that the asset is in a “distinct uptrend,” with its price up 15.6% over the past week and 17% over the past 14 days.
“Last week we noted that the market was looking strong for medium to long-term opportunities and Bitcoin would likely be in the spotlight,” BitBull Capital’s Joe DiPasquale said in a note to CoinDesk. “This week we saw Bitcoin break the $30,000 resistance and manage to stay above it despite the volatility.”
DiPasquale expects continued market growth but also volatility in the coming weeks.
“On the other hand, the alts are also starting to rise now. But the market is likely to remain volatile in the coming weeks,” he said. “If bitcoin manages to stay above $30,000 for long, we could see another surge. On the upside, $27,000 remains strong support.”
Data from CoinGlass shows traders with short positions had a slight advantage over the weekend. In the last 24 hours, $9.5 million in long positions and $7.10 million in short positions have been liquidated. Open interest has increased to $14.6 billion from $11.7 billion earlier last week.
The Securities and Exchange Commission (SEC) has not said when it will announce a decision on BlackRock, Invesco, and WisdomTree’s Bitcoin ETFs.
Until then, the question is: how high will bitcoin go?
Crypto-friendly Japan is keeping it at the forefront of regulatory policies with its recent tax measures
Over the weekend, CoinDesk Japan reported that Japan’s National Tax Agency changed the country’s tax law to exempt unrealized gains from self-issued cryptocurrencies from taxation.
For crypto startups issuing their own tokens, this is a huge relief.
Before the change, Japanese tax law required companies to pay tax on unrealized gains on their cryptocurrency holdings at the end of each fiscal year, regardless of whether those gains were realized or not.
In short, if a company held a token and its value increased within the fiscal year, the company would have to pay taxes on the increased value (the unrealized gain) even if it had not sold (i.e. had not sold) the cryptocurrency. has “recognized” the win). This law applied to all types of cryptocurrencies, whether issued by the company itself or not.
Taxing unrealized profits is not a policy conducive to building a dynamic, thriving entrepreneurship environment. Norway tried and it resulted in an exodus. But taxes on a token’s unrealized gains are particularly damaging to the crypto industry, as developers and other team members in those tokens often receive hefty compensation to offset the industry’s inherent risk — with its tremendous ups and downs.
For Japan, this is another smart public policy move that has identified a problem and developed a specific, crypto-native solution.
“What we’re seeing in Japan is a very clear taxonomy for digital assets,” Rahul Advani, Ripple’s Asia policy head, said in a recent interview with CoinDesk. “Regulators are now looking beyond just money laundering and terrorist financing. They look at the capital, they look at the risks of the banks and a very important part of that is market integrity but also consumer protection.”
Advani said Japan was one of the first providers of cryptocurrency rules and introduced regulations and standards for crypto exchanges, praising the country’s laws on segregating customer funds on exchanges.
For example, despite FTX’s global bankruptcy, its Japanese subsidiary FTX Japan seems poised to pay its customers in full, largely due to Japan’s diligent regulation of crypto exchanges. It was the safest place to be a Sam Bankman-Fried customer.
“Japan has in its bankruptcy laws, [a priority for] Exchange customers before other creditors,” he said. “So that’s one reason why stock market clients could be compensated before other creditors.”
In contrast, none of this happens in the US
Certainly, given the existing capital gains rules in the US, tokens issued by crypto companies are unlikely to be taxed. However, there are no specific rules that say this will not happen. The U.S. Securities and Exchange Commission won’t even provide guidance on how it determines whether something — like the tokens being issued — is a security or not.
If the SEC doesn’t even voluntarily issue a recommendation, we wish you the best of luck on another US policy development
Bitcoin (BTC) is up 20% since last Thursday but may be taking a breather. Hany Rashwan, co-founder and CEO of 21.co shares his analysis of the crypto markets. This comes as the Nevada Department of Commerce and Industry said crypto custody firm Prime Trust was experiencing “a shortage of customer funds” and was unable to honor all withdrawal requests this month. Separately, Rajeev Bamra, SVP of DeFi and Digital Assets at Moody’s Investors Service, commented on the state of US crypto regulation. And Nick Neuman, CEO of Casa, explained why the cryptocurrency self-custodial company, which has historically focused solely on the Bitcoin blockchain, has added support for Ethereum.