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Tanya Abrosimova Tanya Abrosimova FXStreet Follow The US Tax Service publishes guidance for cryptocurrency owners

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  • The new rules define how to calculated the basis and what is considered a taxable event.
  • Income from forks and airdrops is considered to be the most contradictory part of the document.

The US Income Revenue Service (IRS) has released guidance for tax payers, The office explained how to treat cryptocurrencies for the purpose of paying taxes, and what are the consequences if they are not treated properly. 

Basically, the taxpayers received clear guidance on how they should determine the basis for purchased or otherwise received cryptocurrency. The basis is considered an amount an individual paid for the coins, whether they purchased it from cryptocurrency exchange or via P2P transaction.

“Section 1011 of the Code provides that a taxpayer’s adjusted basis for determining the gain or loss from the sale or exchange of property is the cost or other basis determined under § 1012 of the Code, adjusted to the extent provided under § 1016 of the Code,” the document says. Apart from that, the authority elaborated on issues related to forks and airdrops. According to the publication, any hard fork with new coins will trigger an income event for a taxpayer as soon as new coins are credited to their accounts and are made available for selling and purchasing. 
To put it simply, anyone who foes the claim may create tax obligations for coin users. The same is applied to airdrops and implies that a person does not have control over these events and maybe even unaware of them.
Actually, IRS answers raise even more questions as it is not always easy to define ownership. Also, according to IRS, a hard fork or airdrop is not an income event for those who store their coins at an exchange unless the exchange supports the new chain and credits their account.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.  

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Cryptocurrency

Cryptocurrency market update: Subdued trading action continues on Sunday, XRP/USD gains traction

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  • Bitcoin struggles to determine its next short-term direction.
  • Ethereum rebounds after posting modest losses on Saturday.
  • Ripple remains on track to register weekly gains for the second straight week. 

Major cryptocurrencies stay relatively calm for the second straight day on Sunday and continue to fluctuate between technical ranges in the absence of significant fundamental drivers that could impact the cryptocurrency market sentiment.

Top-3 coins price overview

Bitcoin (BTC/USD) posted small gains on Saturday and closed the $8,300 and is now moving up and down in a tight channel near that level. As of writing, the pair was up 0.5% on a daily basis at $8,345. Unless the pair advances beyond the critical 200-day moving average (MA), which is currently located at $8,700, and registers a daily close there, it is likely to have a difficult time finding its next direction.

Above the 200-day MA, $8,970/$9,000 (Fibonacci %78.6 retracement of June rally/psychological level) could be seen as the next resistance ahead of $10,000 (psychological level/Fibonacci %61.8 retracement of June rally). On the downside, the first technical support is located at $8,270 (20-day MA) before $7,700/$7,800 area (September 26th, September 30th, October 6th, October 7th low).

Ethereum (ETH/USD) lost 0.5% on a daily basis on Saturday and closed at $180. However, this move didn’t have enough momentum to suggest that sellers were looking to take control of the ETH/USD pair’s movements. In fact, the pair easily recovered Saturday’s losses on Sunday and was last seen trading near $182, adding 1.1% on the day. Looking at the near-term technical levels, $185 (50-day MA) aligns as the first hurdle on the upside before $200 (psychological level/October 11th high). Supports, on the other hand, could be seen at $177 (20-day MA), $170 (October 6th, October 7th low) and $152 (September 26th low).

After gaining nearly 2% on Saturday, Ripple (XRP/USD) is outperforming other major cryptocurrencies on Sunday as well. As of writing, the XRP/USD pair was up 1.95% on the day at $0.2783. With this weekend’s rally, the pair remains on track to gain more than 8% on a weekly basis after rising 6.3% in the previous week. 

Looking at the daily chart, the Relative Strength Index indicator continues to stretch higher above the 50 mark, suggesting that bullish momentum is gathering strength. The pair could face the first resistance at $0.29 (October 9th high) ahead of $0.3 (psychological level) and $0.3270 (September 18th low). On the downside, supports are located at $0.2635 (50-day MA), $0.2125 (September 24th low) ve $0.20 (psychological level).

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

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SEC Looks to Suspend “Unlawfully Sold” Telegram (GRAM) Cryptocurrency

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The upcoming launch of GRAM tokens has become somewhat of a spectacle for the cryptocurrency community in recent months. With final token disbursement on the horizon, the SEC has filed for emergency action against Telegram and Telegram Open Network (TON), both of whom are offshore entities to the United States. Out of the entire ordeal, the SEC’s classification of GRAM as a security is the biggest risk to the smooth launch and execution of the network, October 11, 2019.

Telegram Crackdown as Expected

Choosing to launch their network and native token without regulatory consultation was seen as a bold move from Telegram; however this appears to have backfired as the SEC has finally decided to “halt” their token offering. Nearly $1.7 billion has been raised by TON to launch a blockchain-enabled payment network that can be used over their messaging app and the scope of potential mainstream adoption is arguably on par with that of Facebook’s Libra, should that ever see the light of day.

The biggest concern for the SEC, at this point, is that GRAM tokens will be sent to respective investors before October 31, 2019. In light of this, the regulator believes this opens up the possibility of the United States market becoming a dumping ground for the tokens.

What irks the regulator the most is when companies issue tokens and don’t register them with the SEC. As the SEC describes, they allegedly evaded registration of their “security” by simply designating it as a ‘cryptocurrency’.

Veering Treatment From the Regulator

In one instance, the regulator could decide to impose a fine on a $4 billion initial coin offering (ICO) that is less than a basic business purchase and allows the project to continue working; or, they decide to completely stop the project from running in the country because they didn’t bow down to U.S. authority, which may open doors for Libra.

By the SEC’s definition, both EOS and Telegram conducted “unlawful digital token sales”. Whether EOS and GRAM are securities or not is up for debate, but that one small difference can’t possibly account for such a large deviation in their treatment.

In the age of decentralized money networks that are self-regulating, the SEC is fighting a very obvious power struggle, and they will do anything to ensure they do not lose their authority over this segment.

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Cryptocurrency market update: Major cryptos stay quiet on Saturday

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  • Bitcoin stays above $8,000 despite Friday’s heavy sell-off.
  • Ethereum edges lower toward $180 after getting rejected near $200 earlier this week.
  • Ripple remains on track to close the second straight week higher.

Major cryptocurrencies edged lower on Thursday and Friday and now seem to be staying in a consolidation phase amid a lack of significant drivers. Earlier in the week, the US Securities and Exchange Commission (SEC) announced its decision to reject the latest application for a Bitcoin ETF by Bitwise and weighed on the cryptocurrency market’s sentiment. 

Top-3 coins price overview

Bitcoin (BTC/USD) rose to its highest level since the sharp drop witnessed on September 24th at $8,820 but failed to preserve its momentum and erased more than $500 from its highs before closing the day at $8,265. As of writing, the BTC/USD pair was trading at $8,310, adding 0.5% on a daily basis. Friday’s action also showed that for the third straight day, the pair tested the 200-day moving average, which is now located at $8,675, and failed to closed the day above that level.

With a decisive break above that level, the pair could target $8,970 (Fibonacci %78.6 retracement of June rally) ahead of $10,000 (psychological level/Fibonacci %61.8 retracement of June rally). On the downside, the immediate support is located at $8,300 (20-day MA), ahead of $7,700/$7,800 area (September 26th, September 30th, October 6th, October 7th low).

Ethereum (ETH/USD) rose to its highest level in more than three weeks at $197 on Friday but lost its traction before testing the critical $200 mark. Although there were no catalysts behind that fall, the BTC selloff weighed on the ETH. As of writing, the pair is up 1% on the day at $183. $185 (50-day MA) aligns as the initial resistance for the pair ahead of $200 (psychological level/October 11th high). On the flipside, $178 (20-day MA) could be seen as the first support before $170 (October 6th, October 7th low) and $152 (September 26th low).

Similar to the BTC’s and the ETH’s price action, Ripple (XRP/USD) turned south in the second half of the week and posted modest losses on Thursday and Friday before staging a technical correction on Saturday. As of writing, the XRP/USD pair was up 1.7% on the day at $0.2726. Looking at the daily chart, the Relative Strength Index indicator is edging higher above the 50 mark despite the recent drop, suggesting that buyers remain control of the price action. $0.29 (October 9th high) could act as the first resistance on the upside for the pair ahead of $0.3 (psychological level) and $0.3270 (September 18th low). On the downside, $0.25/$0.26 (20-day MA/50-day MA) could be the first technical support ahead of $0.2125 (Sep. 24 low) and $0.20 (psychological level).

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

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