Can the U.K. draw inspiration from the UAE and China to regulate cryptos instead of banning them? FCA decides.
Since the days of the British Empire, the United Kingdom has been one of the world’s largest and most influential economic powerhouses. Even though its financial control over the world has substantially decreased, the country is still one of the most culturally relevant regions in the world, especially when it comes to the adoption of a trend.
A survey by London-based law firm Michelmores LLP revealed that 20% of affluent millennials in the United Kingdom have invested in Bitcoin (BTC) and other cryptocurrencies. Keeping this in mind, when the U.K.’s Financial Conduct Authority (FCA) proposed a crypto ban, it caught the attention of the entire crypto ecosystem.
Crypto regulations in the U.K.
Up until now, the U.K. hasn’t made any specific crypto-focused law, and its regulators have had a fairly lenient approach to cryptos. Although the country has no explicit cryptocurrency legislation, cryptocurrencies are not deemed legal tender, while exchanges have registration requirements and need to be registered with the FCA, whose guidance stresses that entities engaging in crypto-related activities falling under the existing financial regulations for derivatives (like futures and options) require authorization.
The gains and losses from cryptos are subject to capital gains tax and income tax. The U.K. tax authority, Her Majesty’s Revenue and Customs (HMRC), has specified that buying and selling cryptos will be considered the same as gambling, and the individual will be subject to capital gains tax. However, if an individual is engaged in trading of these assets, income tax would take priority over capital gains tax.
HMRC even requested that cryptocurrency exchanges hand over the names of their customers and transactions, aiming to identify cases of tax evasion, but the U.K.’s Anti-Money Laundering (AML) laws doesn’t mention crypto specifically.
However, this will change by Jan. 10, 2020 with the impending implementation of the U.K.’s Fifth Money Laundering Directive. Talking to Cointelegrpah about the current regulatory situation in the U.K., Eric Benz, CEO of the exchange Changelly, said that the regulatory framework is attempting to keep up with the emerging market, adding:
“I do think regulation is a good thing but only if done in a way, which suits this new market. Applying traditional archaic regulation to crypto simply will not work as it’s been designed in its nature to avoid regulation. There has to be a much better understanding of the market and technology on behalf of Governments not just in the U.K. but globally.”
On Aug. 24, the National Liberal Party wrote a post on its website asserting that the U.K.’s current cryptocurrency strategy is nonexistent and affirmed the government has declined to take a position on regulation.
The FCA’s proposed ban
Back in July 2018, the FCA warned that cryptos pose a huge risk to consumers who are generally misinformed about them, and recommended that products such as derivatives and exchange-traded notes that reference crypto-assets were “ill-suited” to small investors. Sukhi Jutla, co-founder of the U.K.-based blockchain platform MarketOrders, said:
“The proposed ban will be seen as a major blow and backward step for innovation in the crypto-asset space. It will also signal that despite the U.K. being the leaders in the Fintech scene, they will have effectively be compromising on this position.”
This move by the FCA follows on from a public commitment to abide by the Cryptoasset Taskforce Final Report. Even though the report recognizes that cryptos can facilitate cheaper and more efficient transactions through the elimination of intermediaries, the majority of the report portrays cryptos in a negative light. In the report, the FCA mentions that it wants to “mitigate the risks to consumers and market integrity, and prevent the use of cryptoassets for illicit activity.”
Following the report, U.K. regulators ramped up their investigations on cryptos. As a matter of fact, crypto investigations in 2019 have surged 74% in comparison to 2018, and the FCA reported that crypto investors in the U.K. lost over $34 million due to cryptocurrency and forex scams from 2018 to 2019. Many, including Changelly’s Benz, believe that the consequences of the proposed ban would clearly make the situation even worse, since crypto will always find a way around the regulations:
“The decision to not have crypto investment products I feel is not the right decision but instead, the FCA should be looking to see how best to create a regulatory framework for these businesses.”
In an open letter on their website on Sept. 23, U.K.-based digital asset management firm Coinshare claimed the FCA has not provided enough evidence to justify the proposed ban on exchange-traded notes. It urged its customers to support them in “fighting these proposals by submitting a response.”
Government brushes aside inquiries on FCA’s proposed ban
On Oct. 21, the U.K. government made it clear that deciding whether to press ahead with the proposed ban is up to the FCA. This shows that the government is not keen to take part in the ban, or at least wants to distance itself from it. Talking about the apparent disconnect between the FCA and the government, Jutla of MarketOrders said:
“I very much doubt there is transparency of communication between the Government and the FCA.”
Jutla believes that governments are not comfortable dealing with the crypto industry and therefore, the government and the FCA may not want to move in the same direction. She said:
“Both parties have opposing agendas and viewpoints. Even if the FCA is not ready to embrace crypto assets, it has a duty of care to ensure that if these products are available, protection is in place for consumers and investors.”
Considering how the U.K. has already been failing to maintain its global leadership in finance, giving up on crypto innovation will be a major blow. It seems the country should draw some inspiration from the UAE government, which recently released guidelines on how crypto assets will be treated. Even China, which was previously one of the most hostile nations to crypto, passed its first “crypto law,” going into effect in January 2020.
Cointelegraph auf Deutsch presents a weekly digest of selected cryptocurrency and blockchain-related developments from the German-speaking world.
The German-speaking world has seen an array of crypto and blockchain-related developments over the past week, with the Federal Ministry of Finance concluding that cryptocurrencies are hardly involved in money laundering and terrorist financing (TF), Bitwala integrating a feature for automatically generating cryptocurrency tax reports, and the Graz startup Lab10 Collective developing a more energy-efficient blockchain.
Risk analysis by the Federal Ministry of Finance: Crypto is hardly involved in money laundering and terrorist financing
Under the auspices of the Federal Ministry of Finance, 35 authorities from the federal and state governments took part in the first national risk analysis in the area of combating money laundering and terrorism financing, which was initially launched in December.
According to the analysis, the use of crypto assets in such illicit financing is currently low. There is more evidence that crypto assets play a role the fields of right-wing extremism and Islamism. However, there is no reliable evidence that cryptocurrencies have been used to a greater extent in financing terrorism.
Crypto banking firm Bitwala began providing automatic tax reporting for cryptocurrencies
Bitwala integrated a feature that enables customers to automatically create standardized tax reports. In Germany and Switzerland, country-specific tax reports “comply with all legal requirements”. The CryptoTax solution also makes it possible to create “customized reports that can either be processed by a tax accountant or routed directly to the tax authority.”
1000 times more energy-efficient than Ethereum: Austrian startup presents a climate-friendly blockchain
The solution was developed by the Graz startup Lab10 Collective and represents a fully Ethereum-compatible platform for smart contracts. The company thus aims to fight against climate change. Lab10 Collective Board Member Thomas Zeinzinger commented on the product:
“For the past three years, we have been working intensively on how decentralized Internet technologies can contribute to greater sustainability and fairness in the economy. Climate change and the associated need for decarbonisation are an urgent challenge that we now radically address. “
Crypto-crime around Envion: Procuratorate searches office premises by former CEO Woestmann
The public prosecutor’s office in Berlin initiated a search of the business premises of the insolvent crypto startup Envion CEO Matthias Woestmann and his lawyer. Former Envion CEO Matthias Woestmann lodged a second complaint against a judgment he had previously made, stating that he had unlawfully secured control of the company through a capital increase.
Following the court ruling, the founders of the Swiss crypto startup in liquidation had announced that they would return the remaining cash to the participants of their initial coin offerings.
IOTA and Fiware partner to launch smart solutions
The open source platform Fiware entered partnership with IOTA to use Tangle technology for smart solutions. Specifically, Fiware intends to deploy Tangle for the decentralized storage of data on devices.
Juanjo Hierro, CTO of the Fiware Foundation, pointed out that context data could be reviewed and shared with third parties, while the planned development will ensure the quality of the data stored in a ledger. This is purportedly especially important in applications such as quality management in food production and supervision of certain parameters of animal welfare on farms.
Authorities in Poland have clarified the taxation of revenues received from cryptocurrency exchange transactions. The Ministry of Finance has recently published a 2019 tax form that has a dedicated section where taxpayers are expected to declare separately proceeds from crypto trading.
Ministerstwo Finansów unveiled this month the new PIT-38 (personal income tax) form which will simplify the reporting and settlement of taxes related to cryptocurrencies. The form will be used by private individuals residing in Poland. The country’s finance ministry claims it will make crypto taxation easier and more transparent.
The updated form allows Polish taxpayers to enter proceeds from the sale of virtual currencies and provide data about the costs of acquiring digital coins and tokens. Investment costs from consecutive years can be added until they are fully deducted. However, no deduction should be claimed from other sources of income such as the sale of shares.
To properly report their profit from cryptocurrency trading, Poles need to obtain and provide financial statements from the digital asset exchanges they have used to purchase and sell the coins, Polish news outlet Kryptowaluty detailed.
Efforts to Regulate Crypto Taxation in Poland
The executive power in Warsaw has been taking steps to regulate the taxation of proceeds received from cryptocurrency trading since last year. The framework that has been developed and implemented since the beginning of 2019 covers personal as well as corporate income tax.
In the first case, profits from digital asset trading should be taxed as income from cash capital. If the trading is private, the revenue is classified as income from property rights and taxed according to the regular progressive scale with rates between 18% and 32%. If the profit comes from a business activity, the income may be subject to a 19% flat rate.
Revenues from trading conducted by corporate entities are regarded as capital gains. The base rate paid by larger companies is again 19%. Smaller corporate taxpayers enjoy a preferential rate which was 15% in 2018.
Since January 2019, however, entities reporting revenues of up to €1.2 million within a tax year and startups established this year will pay only 9% income tax if they meet certain conditions. The “small taxpayer” threshold will be increased to €2 million in January 2020.
The new tax regime for crypto trading does not concern entities registered and operating as providers of cryptocurrency exchange services. That includes crypto-to-crypto trading platforms as well as those exchanging decentralized digital money such as bitcoin cash (BCH) with traditional fiat currency like the Polish zloty.
What’s your opinion about the tax rates for crypto trading income in Poland? Tell us in the comments section below.
Bermuda became the first government to accept stablecoin USDC for tax payments, according to global financial services company Circle.
Global financial services company Circle announced that Bermuda became the first government to accept its stablecoin USD Coin (USDC) for tax payments.
Part of a broader government initiative to embrace stablecoins
According to a press release shared with Cointelegraph on Oct. 16, this development is part of a broader initiative, which sees the Bermuda government support “the use of USD-dollar backed stablecoins and decentralized finance protocols and services.”
Circle co-founder and CEO Jeremy Allaire said:
“Bermuda’s Premier made a broader announcement today about embracing stablecoins as the future of the financial system, with a focus on innovations in fintech that can deliver value not just for Bermudians, but also globally via company’s licensed under their Digital Asset Business Act.”
Allaire also explained that Bermuda’s economy already relies on a United States dollar-backed currency, namely the Bermudian dollar. Because of this, he believes that “it’s natural that they would both embrace USD-backed stablecoins for their own government services.”
He also claims that this Bermuda’s initiative highlights that the world is on its path towards mainstream acceptance of stablecoins for everyday payments and commerce.
A comprehensive regulatory crypto framework
Circle also announced that the firm has been awarded a “Class F” license under Bermuda’s Digital Assets Business Act (DABA) of 2018. The company claims that this license makes the company the first major cryptocurrency exchange and wallet service ever to receive such a permit. Allaire commented:
“Through the DABA, Bermuda is one of the first countries in the world to create a comprehensive regulatory framework for digital currency and digital asset-based products and services, including licensing of firms operating payment systems using stablecoins. It will be interesting to see how other governments will respond to this fundamental innovation.”
USDC was launched about a year ago by Circle in partnership with major cryptocurrency exchange Coinbase. As Cointelegraph recently reported, Coinbase now allows holders of USDC to earn a 1.25% annual percentage yield.
A Canadian judge has dismissed a motion to set aside an asset freeze in a civil forfeiture case involving the purported FUEL token.
A Supreme Court judge in British Columbia (BC), Canada, has denied a motion to set aside an asset freeze, which was requested by the defendants in a multimillion dollar cryptocurrency fraud case.
The defendants had filed to set aside an interim preservation order that was issued by the British Columbia Civil Forfeiture Office in order to prevent case-related assets from being sold or accumulating debt.
Vancouver news daily The Province reported the ruling on Aug. 19. According to the report, the defendants, Lisa Angela Cheng and Kevin Patrick Hobbs, stand accused of committing fraud, tax evasion and money laundering.
Alleged $22.5 million fraud via FUEL tokens
The Forfeiture Office alleges that the defendants’ companies, Vanbex Group Inc. and Etherparty SmartContracts Inc., launched and ran an investment offering with a token called FUEL, but only ever intended to pocket the proceeds for themselves.
Additionally, the Forfeiture Office alleged that the defendants received $22.5 million in crypto fraud, and were attempting to liquidate their assets in response to an investigation by the Royal Canadian Mounted Police.
The BC Civil Forfeiture Office previously seized the defendants’ Coal Harbour luxury townhouse, their two Range Rover SUVs and funds in Bank of Montreal accounts alleged to be the proceeds of the crime.
The townhouse was recently listed for sale at $5.9 million and the SUVs are worth as much as $67,500 each, per the report. BC Supreme Court judge Elliot M. Myer ruled:
“Looking at the matter overall, I do not think the defendants have demonstrated that the seizure is clearly not within the interests of justice.”
U.S. Securities and Exchange Commission wins asset freeze
As previously reported by Cointelegraph, the United States Securities and Exchange Commission recently won an asset freeze requested from a U.S. District Court. The court subsequently ordered a temporary freeze of $8 million, which were raised by the defendants Reginald Middleton and his companies Veritaseum, Inc. and Veritaseum, LLC. The defendants stand accused of violating U.S. federal securities laws and performing manipulative trading via activities involving their Ether (ETH)-backed VERI token.
Many cryptocurrency supporters believe the technology allows for the separation of money and state in a manner that’s never been seen before. Governments inflict two forms of robbery against nonviolent citizens by forcing them to pay taxes while also stealing from them silently through inflation. Now there’s a wide array of digital currencies competing in different ways to help remove the parasitic behavior perpetrated by the oligarchy.
The Monetary System Designed by Oligarchs Penalizes the People
Most everyone lives under government rule and they are compelled to pay taxes and use the legal tender by order of their rulers. In most countries, everyone who has a job must contribute a portion of their earnings to the government. For instance, a portion of payroll taxes in the U.S. goes toward safety net concepts like Medicare and Social Security. 70% of an American’s income tax goes toward national defense, health care security programs, interest on the national debt, education, energy, and agriculture. A quarter of the funds go directly to the military and the average American family paid $12,000 in income tax in 2018. There are roughly 80 million households which means the U.S. government pulls in close to a trillion dollars annually from income taxes alone. That’s not counting state-funded lottery, road tolls, sales tax, capital gains, building taxes, business tariffs, property levies, and more.
Despite the fact that most of the safety nets and health care systems are in shambles, roads are filled with potholes, bridges are failing, and the education system is failing, the only thing that continues to grow is the U.S. military. Oddly enough, people still believe these fools know what they are doing. Not only has the national defense budget grown absurd in America, but the evolution of for-profit-prisons and the expansion of the police state has amplified significantly. Since 1776 the U.S. has been at war 226 out of 243 years or 93% of the country’s lifetime and American citizens have paid for every last minute. Governments have also created a monetary system meant to enrich the representatives and their close friends. Meanwhile, the money system is manipulated and inflated so badly year after year, the nation’s citizens are forced to accept more taxes. The fraudulent monetary system pressures them into believing they need more benefits.
Cryptocurrency Solutions Are Tools for Increasing Freedom
There are many countries with different rules of law, taxation, and methods of managing the fiat currency governments produce and most of them are very similar. Meaning when someone says “If you don’t like it here, why don’t you just leave?” that really only gives them the choice to be ruled under another oppressive system. So if leaving isn’t so easy, there must be a way to circumvent the system where governments have control of our money but we must pay off their debts. The U.S. was founded by principles against taxation but the biggest foundation was the separation of church and state. For centuries humans have been forced to participate in the monetary system controlled by politicians and the world’s elite. But in 2009, the year the Bitcoin network went online, the monetary game changed and people now have the tools in cryptocurrency to disregard the rule of central money management.
In the summer of 2015, Shapeshift CEO Erik Voorhees explained how we all learned 100 years ago about the separation of church and state. Voorhees detailed that at the time humans realized the practice was immoral and he believes that with the state currently having control over money the system today, it is rotten to the core. “[The state] could tell you what to worship and how, when and why — Somehow, society realized perhaps that it was unethical – that we shouldn’t permit control of something so personal and important to your life to be controlled by the state,” Voorhees told a crowd in Dallas that year. The Shapeshift executive added:
Money is absolutely as fundamental to our lives as religion, and for many people, it is far more fundamental to their lives as religion. It affects how your life unfolds. The choices that you make about money dictate the ramifications of your life and those around you. And so, to have an institution like money so controlled by a central entity — by a monopoly — is absurd. It is immoral. We should get rid of it.”
Bitcoin and a slew of other cryptocurrencies offer people a monetary system where there is no intermediary to trust, no middleman, and no state or corporate entity stopping you from transacting on a decentralized network. Instead of using fiat money which is predicated by force and violence, individuals and organizations can voluntarily choose to use a system that is transparent, permissionless, censorship-resistant, reliable, fast and empowering. Bitcoin maximalists will tell you that BTC is simply the only way to bypass the state’s manipulated monetary system, but right now there’s a wide variety of digital assets that can help achieve that.
Alternative means of circumventing the state like using precious metals can be difficult because the government has deep hands in these markets. Cryptocurrencies offer a high rate of portability and a way to hide money from agents trying to steal someone’s hard-earned wealth. With a cryptocurrency like bitcoin cash (BCH) for example, it’s possible to send funds across any border permissionlessly. An individual cannot hide a million dollars’ worth of gold, but can easily hide a small piece of steel with mnemonic phrase words etched into it and take things even further by memorizing the seed phrase. Agents cannot steal from your brain.
Like Many Ideas Before It, There’s Still a Chance That Bitcoin Could Fall Short of a Revolution
Cryptocurrencies are clearly tools that can be used to circumvent the state and these digital instruments could bring forth a new era of free markets. Despite the crypto enthusiasts who embrace the state daily and are literally begging for the institutionalization of Bitcoin, there are still thousands of individuals who participate in the crypto industry to promote the separation of money and state indefinitely. These people believe cryptocurrencies can empower the general population and not a group of oligarchs sitting on the hill. Libertarians and agorist philosophers who love cryptocurrencies don’t care about Bitcoin ETFs, Bakkt, and acceptance from congressional leaders. They care about separating the monetary system from the violent monopoly that steals from society every single day. In the summer of 2015, the founder of Defense Distributed, Cody Wilson, highlighted why cryptocurrencies like bitcoin could fall short of a revolution and fall victim to the same system we have today.
“Without a big expression of intentionality to what is considered not the polite things to do with Bitcoin — specifically money laundering, specifically private access to your coin, holding your own keys — without projects that express these principles, you have nothing of what you want with a revolution,” Wilson emphasized. “This leaves me to proclaim that most people involved with Bitcoin were not serious about that in the first place.”
Today Many Cryptocurrencies Offer a Road That Leads to Greater Freedom
There are now multiple avenues available for cryptocurrency users to circumvent the state’s control over money. Despite all the arguments and infighting within the cryptocurrency community, these roads toward freedom of choice are still wide open. If you find the idea of separation of money and state appealing but are relatively new to cryptocurrencies, it is well worth taking the time to read more into the subject to learn how you can wield these tools against the nation state for your advantage. If you’d like to participate in the counter-economy, you can also purchase digital currencies from trusted platforms as well as in-person using noncustodial, peer-to-peer marketplaces.
What do you think about how cryptocurrencies have opened the path toward separating money from the state? Let us know what you think about this subject in the comments section below.
OP-ed Disclaimer: This is an Op-ed article. The opinions expressed in this article are the author’s own. Bitcoin.com is not responsible for or liable for any content, accuracy or quality within the Op-ed article. Readers should do their own due diligence before taking any actions related to the content. Bitcoin.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any information in this Op-ed article.
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A look at green policy and crypto energy consumption in Japan.
Society is now witnessing the implementation of digital currencies, artificial intelligence (AI) and blockchain technology worldwide. These new digital technologies necessitate very high consumption of electric energy, which is currently produced with coal and fossil fuels that have adverse environmental effects. A global shift toward green energy will require the removal of the technological/infrastructural, financial and regulatory/tax-policy barriers. In this series, we evaluate the tax, digital technology and solar policies (including a space solar power satellite) of the top carbon dioxide-emitting countries.
In 2009, Japan — the Land of the Rising Sun — undertook important initiatives that set the tone for how it intended to solarize the world’s third-largest digital economy. Japan passed its Basic Space Law, which established a space power satellite (SPS) — the concept of collecting solar power in outer space and distributing it to Earth via satellites — as a national priority.
The Ministry of Economy, Trade and Industry (METI) of Japan sets the strategic energy plan for the world’s fourth-largest energy consumer and the sixth-largest emitter of CO2 — 90% of which is tied to hydrocarbon energy. METI believes that the impact of blockchain — which consumes large amounts of electricity — is huge and that its importance is similar to the emergence of the internet.
According to a World Economic Forum survey, global GDP stored on blockchain technology is expected to reach 10% by 2027. Therefore, in June 2018, Japan introduced a sandbox regime to accelerate the introduction of new business models and innovative technologies such as blockchain, AI and the Internet of Things.
Solar photovoltaic technology and its applications in solar energy in Japan
Japan’s Ministry of Technology and Industry (MITI) views solar photovoltaic power as an essential part of its digital economic transformation. Japanese science fiction author Haruki Murakami concurs “Japan, as an economic power, should find another source of power besides atomic energy. It may cause a temporary economic dip, but we will be respected as a country that does not use nuclear power.”
Solar photovoltaic (PV) technology — which converts light into electrical current — was born in the United States at Bell Labs when engineer Daryl Chapin, chemist Calvin Fuller and physicist Gerald Pearson worked together to develop the first silicon solar photovoltaic cell in 1954. The New York Times wrote that the silicon solar cell “may mark the beginning of a new era, leading eventually to the realization of one of mankind’s most cherished dreams — the harnessing of the almost limitless energy of the sun for the uses of civilization.”
First launched in 1974 by MITI, with METI joining in 2001, the Sunshine Project was a long-term comprehensive plan for the research and development of new solar energy technologies to resolve Japan’s energy and climate change problems. The program was heavily funded by the government because PV technology emits no CO2 while also being highly reliable and modular, and with lower construction and operational costs.
Starting in the 1980s, Japanese manufacturers began incorporating solar PV cells into electronic applications in various areas. In the late 1990s, Japanese government programs began promoting solar houses. In 2009, Tsutomu Miyasaka and his colleagues in Japan reported on perovskite compounds being light absorbers for solar energy applications, which outperform the efficiency of more established PV technologies and can be printed or woven into fabric. As a result, Japan emerged as the world’s third-largest solar energy power producer, with 45% of PV cells in the world being manufactured in Japan.
With the rise of Bitcoin and in the aftermath of the Fukushima nuclear plant disaster in 2011, the government encouraged the proliferation of decentralized solar energy by encouraging the production of more energy-efficient buildings, cars that combine solar panels with some form of energy storage as well as other devices. This compelled the solar energy sector to begin using blockchain technology. Professor Umit Cali of the University of North Carolina provided an exclusive comment, saying:
“In the solar energy sector, decentralized blockchain technology is used in person-to-person (P2P) energy trading, labeling, energy provenance and certification, smart metering and billing, electric vehicle charging and payments, and wholesale power trading and settlements.”
Reports published by Fitch Solutions Macro Research and Globadata conclude that over the next decade, decentralized solar technology may replace PV solar farms as the main growth-driver in Japan. Already, a blockchain-enabled solar energy-trading pilot project is set to link 100 solar rooftops of smart, zero-energy homes in the country, while another pilot project will administer an energy-trading marketplace using blockchain to connect a number of Japanese power production facilities with homes, offices, factories, batteries and electric vehicles.
Toyota Motor Corp. — which began testing high-efficiency solar cells for electric cars — has joined forces with the University of Tokyo and online renewable energy retailer Trende to test peer-to-peer vehicle-to-grid electricity trading using blockchain technology, which allows for electric vehicles to communicate with the power grid to buy and sell electricity to smooth out peak and low demand times.
Japan’s Marubeni Corp. has recently backed a blockchain-based power-purchasing platform called WePower that makes it easy for small- and medium-sized businesses to buy power from solar project developers, offering standardized, digital power purchase agreements to help underwrite new projects.
Japan is a predominantly mountainous land with varied weather conditions, and the area that a PV solar farm occupies is an important consideration, as it determines the yield. Accordingly, Japan has been creative in developing new PV solar energy generation stations at home and abroad — in seas, lakes, deserts and space.
In cooperation with the National University of Mongolia, Japan is also participating in the project “Energy from the Desert,” with the Japan International Cooperation Agency (JICA) providing financial support covering up to half of the initial investment costs. Marubeni Corp. built the world’s largest PV farm, the Noor Abu Dhabi photovoltaic power project, in the Sweihan Desert of the United Arab Emirates, which recently began producing solar energy at $0.024 per kilowatt hour.
The Japanese Space Agency (JAXA) began its SPS program in 2009, with the goal to set up a one gigawatt solar farm in space that can transmit energy back to Earth by 2030. In 2015, Japan came closer to harvesting solar energy from space when it transmitted condensed solar power converted to microwaves to a receiving antenna, which converted only 5%-10% of the power required to power three PCs.
For space solar power generation to become commercially viable, 50% of the solar power generated in space needs to be transmitted to Earth. JAXA is also designing kite-like orbiters that will travel in low-earth orbit above the equator, with a transmitting antenna on the Earthward face and solar collectors on spaceward face in order to transmit solar energy to Earth. In 2010, JAXA has already successfully launched Ikaros, a solar space kite, that sailed through deep space and was propelled by solar energy. Small satellites are ideal candidates for this type of solar propulsion.
Environmental, regulatory and tax policy in Japan
Japan has inadequate energy resources and imports 87.4% of its hydrocarbon energy. It is the world’s largest importer of liquefied natural gas and third-largest importer of oil and coal.
Japan has lower levels of subsidies for fossil fuel consumption when compared to other G-7 countries, but higher subsidies for oil and gas exploration and coal production. Because efforts to compensate for the drop in nuclear power generation after the Fukushima nuclear crisis — which was triggered by the 9.1 Tohoku tsunami in Japan and which forced the shutdown of Japan’s entire fleet of nuclear 48 reactors, effectively terminating the plan to supply half the country’s electricity with nuclear power — resulted in far more support for fossil fuels and increased CO2 emissions compared to renewable energy.
Japan provides billions in taxpayer dollars for building highly polluting coal plants in Japan as well as overseas. Japan’s largest banks — MUFG and SMBC Group — along with other banks, have reportedly continued to finance fossil fuels with $1.9 trillion since the adoption of the Paris climate agreement. Therefore, Japan is the second-worst performer when it comes to reforming fossil fuel subsidies, according to a report by the Natural Resources Defense Council.
In October 2012, Japan implemented a carbon tax of 289 Japanese yen (about $3) per ton of CO2 equivalent. The government plans to use the revenues of $2 billion generated from this carbon tax to finance clean energy and energy-saving projects. Hydrocarbon air pollution is a drag for renewable energy. Dust and other sky-darkening air pollutants slash solar energy production by an estimated 11.5% to 13%. The haze blocks sunlight from reaching the solar panels, and if the particles land on a panel’s flat surface, they cut down on the area exposed to the sun.
Japan also introduced a feed-in tariff (FIT) system in 2012 to lower solar power generation costs, which are double that of Europe thereby shifting the price of solar energy on the public to the tune of 2.4 trillion yen (roughly $22 billion) in the 2019 fiscal year alone, with a cumulative total of about 10 trillion yen (nearly $100 billion) since its introduction in July 2012. The government’s steady lowering of the FIT purchase price, which stands at 14 yen ($0.13) per kilowatt hour in 2019, has brought a drastic drop in profits for solar energy companies, triggering a wave of bankruptcies, which have reportedly risen year-on-year for five consecutive years since 2013.
Globally, subsidies and financing for fossil fuels continue to remain stubbornly high. According to reports, 2018 actually saw an increase in money going into new upstream oil and gas projects, while investment in renewable power of all kinds dipped 2%. The World Bank still funds the fossil fuel industry at least three times greater than renewable energy.
This is despite G-20 finance ministers’ commitment to working together in redirecting public investments to renewable energies through fiscal policy and the use of public finance. Despite the International Renewable Energy Agency reporting that the cost of solar electricity has tumbled 80% in recent years and with three-quarters of coal production now more expensive than solar energy, the fossil fuel industry still receives benefits from governments.
In the latest G-20 meeting in Osaka, Japan reiterated its dedication to the Paris climate agreement and to phasing out fossil fuel financing and subsidies in order to tackle climate change. Enhancing zero-carbon energy is an urgent task for the Japanese government, which is aiming to derive 44% of power from renewable (7% from solar energy) and nuclear power by 2030 to fuel its burgeoning digital economy. Fossil fuel subsidies significantly reduce the use of renewables, according to an OECD report.
On Aug. 12, Australian energy technology company Power Ledger and Japanese Kansai Electric Power Co. announced they completed a joint trial of a blockchain-based peer-to-peer trading system for post-feed-in tariff surplus solar power in Osaka. Their announcement came on the heels of a report that highlights multiple ways blockchain technology could disrupt the peer-to-peer solar energy trading sector. According to the report:
“Blockchain technology could alter the manner in which electricity customers and producers interact. Traditionally electric utilities are vertically integrated. Blockchain could disrupt this convention by unbundling energy services along a distributed energy system. For instance, a customer could directly purchase excess electricity produced from their neighbor’s solar panels instead of purchasing electricity from the utility.”
Japan intends to replace FIT’s fixed price system with a competitive bidding/blockchain-based peer-to-peer trading system for post-feed-in tariff surplus solar power system as soon as 2020. This would thereby reduce inequality and provide cheaper, cleaner energy that reduces CO2 emissions and would help promote digital development in Japan as well as across the world.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Selva Ozelli, Esq., CPA is an international tax attorney and CPA who frequently writes about tax, legal and accounting issues for Tax Notes, Bloomberg BNA, other publications and the OECD.
If you have outstanding tax debt, the IRS may now want to take your passport. For U.S. crypto holders still waiting on promised IRS guidelines for filing — especially those overseas who may have missed these warning memos — the over 400,000 agency notifications issued since February last year are troubling. This kind of behavior from government is nothing new, however, but an oft-repeating pattern of parasitism which sucks value from producers of goods, services and surplus, and punishes progress.
It has been said that the most cruel and insufferable forms of tyranny are not those with the most rules, but those with the rules that are the most unclear. Even under extremely unfair and unjust law, if one knows what is expected, one can often survive. It’s the proverbial drunken hand of the volatile, abusive caregiver, who one day is reserved about some small matter, and the next flies into a violent rage about the same, which is truly the crushing burden to bear. In the case of the caregiver, old, unaddressed emotional wounds are likely to blame. In the case of the state, the leveraging of ambiguity to produce fear is intentional.
In May, IRS commissioner Chuck Rettig wrote in a statement: “We have been considering these issues and intend to publish guidance addressing these [crypto issues] and other issues soon.” To date, no such guidance on filing crypto taxes has been issued. What has been issued, however, are vague threats and warnings to crypto holders and traders.
Since February, 2018, notifications have been going out to over 400,000 taxpayers who owe more than $51,000 (recently adjusted to $52,000) in overdue taxes. Since June this year, letters specifically targeting crypto holders have been issued. These letters also clarified inexplicably that, contrary to Rettig and the IRS’s previous statements, crypto is not simply treated as a property under U.S. policy. Every transaction except for buying crypto with fiat is a taxable event.
Expats, who may not have gotten these letters due to residing overseas, could potentially have their passports revoked. Those attempting to visit the U.S. may find themselves trapped in an airport, now without a recognized nationality, unable to return home to their families overseas should they set off alarm bells at immigration. Such mobility-stifling measures are a key means to contain and control financial assets, as the value creators moving them are then unable to relocate to more favorable economic climes.
The Attack on Sustenance
But, where there’s blood, there will be ticks. Where there’s self-sufficiency, surplus and charity, the government will be there to suck it dry. Attacking the geo-mobility of wealth holders through passport revocation is one desperate way to do this. But that’s not where the punishment of productivity ends, of course.
Much like the free exchange of bitcoin in the financial realm, being able to grow one’s own food is a major threat to the forced dependency of government. States worldwide have a long, continuing history of destroying food for price regulation, and shutting down private businesses serving their communities.
Just last month, for example, the U.K.’s sole organic hemp farming co-op was forced to destroy its crop worth an estimated £480,000 (~$583,000) due to licensing issues. The group, Hempen, states it had been completely forthright and transparent with officials, who had seen no problems for years until recently, suddenly deciding to revoke their license. The rationale for the revocation is of course, defined in tyrannically vague terms.
According to a BBC report, Hempen co-founder Patrick Gillen, lamenting the waste of potential tax revenue and benefits to the country from his products, stated:
Instead of capitalising on the booming CBD industry, the Home Office’s bureaucracy is leading British farmers to destroy their own crops, and millions of pounds’ worth of CBD flowers are being left to rot in the fields.
Historically, the New Deal legislation of the Great Depression (which also included the abandonment of the gold standard and a mandatory surrender of privately held gold) made these types of practices a norm in the U.S., when regulations were introduced in a bid to protect prices. John Steinbeck describes the travesty in sobering fashion, in his classic novel, “The Grapes of Wrath”:
And men with hoses squirt kerosene on the oranges … A million people hungry, needing the fruit- and kerosene sprayed over the golden mountains … And children dying of pellagra must die because a profit cannot be taken from an orange.
Though fiction, the novel describes actual events that took place during that tragic era. These wasteful practices continue in the U.S. today. After being ordered to dump 30 million pounds of cherries to rot on the ground in 2009, for example, Michigan cherry farmer Rob Manigold echoed Steinbeck’s words:
The food pantry shelves are bare, people going hungry, and here we are dumping millions of pounds of cherries on the ground.
Arguments for such massive waste based on “the greater good” or “necessary regulation” don’t hold up to economic principle or moral scrutiny, as stifling production where demand is present is irrational, unless justified by one class of individuals possessing a supposed right to determine what others may or may not do with their own bodies or property, which is slavery.
Why Crypto Is the Final Target
So what in the hell do mountains of rotting fruit and revoked passports have to do with crypto? Quite a lot, it transpires. A money that cannot be centrally regulated provides the same essential power that a flourishing, productive private farm does, but on a whole new level. Self-sufficiency. A passport allows free movement, which is another necessity for self-sufficiency. Once the state is not needed for money, however, that’s the very end. At that point, centralized governance is not needed at all. The advent of bitcoin made the financial transcendence of central banks, geopolitical restrictions, and third party oversight possible.
With global devaluation of fiat currencies ever growing, and reckless low and negative interest rate policies being instituted to create more credit bubbles worldwide, the state is beginning to panic. That’s a good sign. The way to sense a debate has been won is often to simply observe one’s opponent beginning to react with fear or irrational outbursts. In the state’s case the reaction is actual violence, however, and that’s why no matter how hard anyone might try, it cannot be said that there is any freedom to be had without a very real risk. What price one is willing to pay for that freedom is entirely up to the individual.
What are your thoughts on government parasitism? Let us know in the comments section below.
OP-ed disclaimer: This is an Op-ed article. The opinions expressed in this article are the author’s own. Bitcoin.com is not responsible for or liable for any content, accuracy or quality within the Op-ed article. Readers should do their own due diligence before taking any actions related to the content. Bitcoin.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any information in this Op-ed article.
Tax season is months away, which is why you need to start preparing for it now. Leave everything to the last minute and you’ll only end up cursing your procrastination. Organize your cryptocurrency activity in advance and you’ll breeze through tax deadline day without so much as flinching. Despite maddeningly vague or unfair legislation, filing your crypto taxes is surprisingly simple thanks to an array of tools that make tracking and calculating your obligations a cinch.
Whatever your thoughts on paying tax, the fact of the matter is that it’s an unavoidable obligation. Unless you’re fortunate enough to live in a country that doesn’t impose income tax (here’s looking at you Bermuda, Monaco, Bahamas, Andorra and the United Arab Emirates), come April, you’re going to have to pay your dues. There’s no getting around it, but that doesn’t mean you have to approach the close of the tax year with a sense of dread. With the right planning, you can automate much of the process, saving yourself no end of time, hassle and expense.
Accurately filing your crypto taxes calls for maintaining detailed records of all your transactions and trades that occur over the course of the year. As a result, most of the specialist tax software on the market also doubles as an excellent portfolio tracker. That’s right: even if you have no interest in paying tax, you can still derive value from a product that records all of your crypto gains (and losses), and presents them in an attractive package that can be viewed on desktop or mobile. The following tools provide all that plus a whole lot more.
Koinly promises to help cryptocurrency owners calculate their taxes and minimize their bill in the process. It’s compatible with the tax system in over 100 countries and is free to start using: you’re only charged when you need to generate a tax report. When you sign up, you’re prompted to select whether you wish it to realize gains every time you trade crypto; if you select no, Koinly will simply serve as your portfolio tracker. Like the other tools profiled here, Koinly requires you to link exchange accounts and wallets, which can be done manually or via API. You can then review your transactions, tag airdrops, forks, and lost or gifted coins. 33 exchanges are supported as well as six blockchains including BCH, LTC, and BTC.
Koinly automatically matches transfers between your wallets and shows you gains or losses for each transaction. There are also tools for analyzing your trading habits, tax loss harvesting, and cost tracking including mining expenses. The Hodler plan ($79 per year) covers 300 transactions and can record income and capital gains tax. The Trader plan ($179) covers 3,000 transactions, while Oracle ($399) has capacity for 10,000 transactions and offers enhanced support and import assistance.
Blox offers many of the same features as Koinly, but is targeted at crypto businesses as well as individuals. It benefits from CPA tools that allow teams to create an auditable record of all crypto activities, which can be exported as a CSV or imported directly into accountancy software that Blox has integrated with. Your current portfolio is neatly displayed in the dashboard, where you can view an account overview, access specific transactions, and see a daily snapshot of your portfolio. With thousands of cryptocurrencies listed within Blox, even the most dubious of tokens can be tracked and the corresponding tax obligations calculated.
If you don’t feel confident filing your crypto taxes yourself, Blox provides the means to export the data for your bookkeeper, who can take care of the rest. There’s also a suite of tools devised specifically for cryptocurrency miners, including cloud-hosted mining solutions. Blox even operates its own nodes to help ensure that transactions and balances are accurate. The Pro plan is free and covers 100 transactions (tx) and up to $50K AUM, while the Business plan, at $99 per month, covers 10K tx and $20M in assets. There’s also an Enterprise plan ($249) for heavy users that will accommodate a whopping $60M AUM.
Cointracking’s greatest strength is as a cryptocurrency portfolio monitor. Its tax prepping properties are also useful, but the quality of the insights it provides active traders is particularly good. There’s a timeline tool, which populates with trading milestones, there are charts displaying your balance per day, trades per month, trades per exchange, average purchase price and much more. When it comes to taxes, Cointracking supports the FIFO, LIFO, HIFO and LOFO methods, of which FIFO (first in, first out) is the most commonly used.
There’s the ability to track coins that have been held for longer than a year, and which can thus be sold tax-free in certain jurisdictions. Other tools include the ability for U.S. citizens to create an FBAR report in the event of them owning foreign financial accounts containing assets worth over $10,000. The number of exchanges and wallets that Cointracking supports via API or CSV is impressive; there’s even legacy support for closed exchanges, from Btce to Mt. Gox. The free plan covers 200 tx, rising to 3,500 for Pro. There’s also an Unlimited plan for heavy traders. Another good thing about Cointracking is that you can pay for your subscription in BTC including the option to take out a lifetime license.
Don’t Let Tax Take Over Your Life
In many countries, the U.S. especially, the laws concerning crypto taxation are unfair, vague, and subject to interpretation. Only last month, North Carolina’s Rep. Ted Budd reintroduced the Virtual Value Tax Fix Act in the U.S. House of Representatives. The bill seeks to put a stop to the double tax that is currently imposed on cryptocurrency, making it unnecessarily complex to calculate and record tax every time a purchase is made.
As a cryptocurrency user, there’s little you can do to influence government policy when it comes to taxes; the state moves ponderously, and it may be a while yet before citizens in the U.S. and elsewhere see anything approaching a fair crypto tax policy. In the meantime, the best thing you can do is record your transactions using a purpose-built tool and then get on with your life in the knowledge that the hard part is done. Automate your tax and then you can relax.
What other tax tracking tools do you recommend? Let us know in the comments section below.
Disclaimer: Readers should do their own due diligence before taking any actions related to third party companies or any of their affiliates or services. Bitcoin.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any third party content, goods or services mentioned in this article.
New Zealand’s tax authorities have ruled that income in cryptocurrencies is legal and provided guidance on how exactly it should be taxed.
New Zealand’s tax authorities have ruled that income in cryptocurrencies is legal and provided guidance on how exactly it should be taxed.
In a tax information bulletin published on July 4, the New Zealand Inland Revenue Department summarized the provisions of the public ruling, made under s 91D of the country’s Tax Administration Act 1994.
Crypto used must be “money-like” to be taxed
Specifically, the guidance on the income tax treatment of crypto assets applies to payments in crypto that form part of the employees’ regular salary and are fixed at a predetermined amount or rate — rather than, for example, payments that form part of an employee share scheme.
Moreover, it applies only to salary and wage earners — not to self-employed taxpayers — covering both remuneration for services and bonuses, commissions and gratuities.
For a crypto asset-denominated salary to be taxable, the ruling determines that the crypto asset paid to employees must not be subject to a lock-up period and must be directly convertible into fiat currency, clarifying that:
“In the current environment where crypto-assets are not readily accepted as payment for goods and services, the Commissioner’s view is that crypto-assets that cannot be converted directly into fiat currency on an exchange […] are not sufficiently “money-like” to be considered salary or wages.”
“Money-like” crypto assets are further defined as those that provide a general peer-to-peer payment system, rather than assets that function in a similar way to vouchers, shares, or debt securities.
Thus for the wage to be taxable, the agency deems that a significant purpose of the crypto asset in question must be that it functions as a currency, or is otherwise to be pegged to one (or more) fiat currencies.
Tightening the noose
As reported, tax authorities and lawmakers globally are increasingly turning their attention to cryptocurrencies — both clarifying which provisions they fall under and attempting to tighten their grip on evasion.
Last week, crypto industry sources claimed that the United Kingdom’s tax authority was allegedly requesting that digital currency exchanges provide it with information about customers’ names and transactions aiming to identify cases of tax evasion.