Crypto lender BlockFi has announced adjustments to its interest rates on account balances for bitcoin (BTC) and ether (ETH).
The startup, through its monthly update published Tuesday, May 21, has informed customers that accounts whose bitcoin (BTC) balances are more than 25 BTC will benefit from 0.15% increase in interest rate.
On the other hand, interest rates for accounts whose ether (ETH) balances the range between 25 and 75 ETH will drop from 6.2% to 3.25%.
The interest rates for accounts with bitcoin balances of between 0.5 BTC and 25 BTC remains unchanged, the firm noted. However, accounts with more than 100 ETH stand to earn an annual percentage yield (APY) of 0.2%
BlockFi has explained the move by noting that the lending environment for the two cryptocurrencies has changed, with that of bitcoin flourishing while ETH’s has floundered.
In particular, cryptocurrency exchange Poloniex offers ether at a 0.01% borrowing rate. The same rates apply at crypto lending startup Compound, while it only made up 3% of Genesis Capital’s portfolio in Q1 2019.
According to BlockFi, its adjustments in interest rates correspond to the above scenarios.
When it launched its interest-bearing accounts for BTC and ETH on March 4, BlockFi’s interest rates for both cryptocurrencies was 6% APY. That however changed within three weeks when the crypto-lending firm lowered interest rates for top deposit accounts.
The initial rates for both accounts were set at 6.2%, slightly higher than what BlockFi had noted earlier.
But in its announcement, the startup said that it would cut the rates from 6.2% to 2%, with the reduction affecting BTC accounts with more than 25 BTC or ether accounts with over 500 ETH. The changes were set to take effect in April.
At the time, the above cuts did not affect a majority of account holders, with 75% of all the BTC and ETH accounts reportedly having balances lower than 5 BTC or 150 ETH.
Some industry players have sharply criticized BlockFi for the manner in which the firm’s terms and conditions allow it a free hand at setting interest rates on a monthly basis.
For instance, critics have said that the company’s advertising has very little to do with its policy. The founder of law firm Silver Miller, David Miller, noted that BlockFi’s T&Cs “shows that their advertising is not necessarily what they’re guaranteeing.”
He added that it would not be surprising to see people “confused” when the 6.2% rates didn’t materialize. According to him, the company’s advertising makes it appear as if the rates are “guaranteed,” (and they are not).
Gemini Trust Company, regulated by the New York State Department of Financial Services (NYDFS), is reportedly the custodial provider for BlockFi’s assets. Customers can withdraw all their assets at any time once they place a request for the same.
Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your research and consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.
New Israeli Bill Proposes to Consider Bitcoin as a Currency and Not an Asset
A newly-proposed bill with the legislative branch of the Israeli government Knesset submitted several changes to Bitcoin’s taxation. Instead of viewing BTC as an asset and subjecting sales to capital gains tax of 25%, the new legislation plans to recognize it as a currency.
New Proposal: Bitcoin As a Currency Not An Asset
According to a local publication, four representatives from the Yisrael Beiteinu party have presented the new bill on Tuesday. It seeks to amend the taxation of activities related to cryptocurrencies by altering the Income Tax Ordinance to view them as currencies for tax purposes.
Currently considered and recognized as assets, the sales or conversions of digital assets such as Bitcoin subject them to capital gains tax (25%). It provides taxation relief on capital gains only for short-term lenders and certain bonds-related activities as they are taxed at 15%.
However, the four reps argued that the perception of virtual assets needs reexamination. They reasoned that while cryptocurrencies are a relatively new concept, the Income Tax Ordinance hasn’t been amended in years and is falling behind the emerging new digital reality.
The four reps urged Israel to be “among the leaders” of the virtual currency field, whose merits are emphasized during this period of uncertain economic future.
Amendment In Reporting Of Digital Assets
The Knesset saw another bill proposing changes in regards to cryptocurrencies. This one sought to enable reporting of digital assets once every six months or once a year.
If accepted, this would be a significant change from the current format that requires cryptocurrency sellers to submit a tax report to authorities within 30 days of the transaction. Additionally, people need to pay an advance on the tax rate applicable to the transaction’s capital gains.
The explanatory memorandum of the proposed bill reads that “the Minister of Finance, with the approval of the Knesset Finance Committee, may accept cases in which an annual or semi-annual reporting obligation applies to property types. The submission of the report will be paid in advance in the amount of tax applicable under the provisions of the Ordinance on capital gains due to a sale.”
Manny Rosenfeld, Chairman of the Israeli Bitcoin Association, asserted that these proposed bills could enable the country to surface as a global financial center and a leader in the cryptocurrency field.
Failed Bitcoin deal lands two Indians in police custody
Two Indian nationals, Ramesh Reddy and his friend Prabakaran are now in police custody. The duo was arrested for overreacting, to the extent of threatening and extortion, because of a failed Bitcoin deal. A local news outlet, New Indian Express, reported the incident on Thursday. Fake Bitcoin deals As the local police narrated in the […]
Two Indian nationals, Ramesh Reddy and his friend Prabakaran are now in police custody. The duo was arrested for overreacting, to the extent of threatening and extortion, because of a failed Bitcoin deal. A local news outlet, New Indian Express, reported the incident on Thursday.
Fake Bitcoin deals
As the local police narrated in the report, Ramesh, who is a distributor of Ayurvedic medicines in Bengaluru, was contacted by an alleged fraudster, who only introduced himself as Naresh. He claimed to be in possession of Bitcoins worth about $4.4 million (Rs 33 crore). However, he told Ramesh that those funds are in the United States, and will give him a commission if he could help him (Naresh) move down the funds to India.
Adyar DCP V Vikraman precisely noted that “he [Naresh] promised 50 percent of that money to Ramesh, only if he found a person who could convert the online currency into Indian Rupees.” At that point, Ramesh reached out to his real estate friend, Prabakaran, on how to execute the Bitcoin deal. They later contacted and persuaded a Chennai-based techie, Mohan, to help them withdraw the funds to Indian.
Ramesh and his friend promised Mohan a one percent commission (i.e., Rs 33 lakh or $44,656) to open an e-wallet through which Bitcoins will be transferred. The money couldn’t be transferred to Indian directly because since it was in the United States, so Mohan had to create an account in the UK to moved to withdraw the money from there. However, the whole effort to execute the Bitcoin deal went sour as the money suddenly vanished, without reaching the UK nor reverting.
A sad ending
Mohan then realized that the e-wallet accounts, ‘Swift Global Pay’ and ‘Insta Merchant Pay,’ were fraudulent. Naresh, who made this entire proposal, was a fraud.
the DCP added.
Both Ramesh and Prabakaran didn’t believe the outcome of the Bitcoin deal, so they began threatening Mohan, who had to repay them the missing money from the money he borrowed using his wife’s jewels. Even at that, the duo continued threatening Mohan, who later reported them to the police, leading to the arrest of Ramesh and his friend.
Bitcoin Could Remain Slow Until the November Election
Bitcoin is presently trading for about $10,500, which is roughly $100 more than where it’s stood over the past few days, but it’s not quite where we’d like it to be. The fact is that bitcoin hit $11,000 again about 72 hours ago and has failed to keep up that momentum.
Bitcoin Is Struggling as of Late
There are many things that appear to be affecting bitcoin, one being the correlation between it and the stock market. As stocks are taking massive tumbles, bitcoin is also suffering, and so long as company shares continue to drop, the bitcoin market is going to remain in a bearish state.
There’s also the current political scene. As we all know by now, 2020 is an election year. There is just a little over a month left to go before America selects its next president for the next four years. Will the democratic contender Joe Biden come out on top, or will Donald Trump emerge as the country’s president through 2024? Either way, the situation is leading to heavy uncertainty throughout the nation, and many people don’t quite know how to react.
In addition, the death of Supreme Court Justice Ruth Bader Ginsburg is also adding to the concern and worry that are allegedly permeating people’s thoughts regarding the economy. Guy Hirsch – the managing director for cryptocurrency exchange e-Toro – explained in a recent interview:
Uncertainty around the election and in the aftermath of Supreme Court Justice Ruth Bader Ginsburg’s death has caused a panic in equities markets. When traditional assets nosedive as they have today, traders will often liquidate a broad cross-section of holdings while they try to cover liabilities, thus leading bitcoin to drop even more sharply today than any of the major equity indices in the US.
John Todaro – the director of institutional research at Trade Block – appears to agree, though he commented further that the continual drop of standard assets could potentially help bitcoin’s reputation further. With everything else in the red, people may turn to bitcoin as a hedge tool, and bitcoin could potentially return to form in the coming months.
You are seeing this spread across markets, including in digital currencies. Despite this drop, especially if uncertainty continues and markets become even more nervous about how the US election will play out, it makes sense if bitcoin were to see a significant recovery as equities continue to experience downward momentum.
Will Things Fix Themselves Over the Next Few Months?
Joe DiPasquale – CEO of Bit Bull Capital – mentioned that while the correlation between stocks and crypto has grown, he’s confident bitcoin and digital currencies have what it takes to break away and potentially enter bullish territory all on their own. He says:
While bitcoin’s correlation with the S&P 500 grew notably in recent months, the digital asset space remains highly volatile and able to decouple from traditional assets equally fast.
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