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New Zealand’s IRD requests customer details to ‘better understand’ crypto-assets



The Inland Revenue Department of New Zealand has re-ignited its interest in crypto-assets and its investors after it asked companies dealing with them to hand over customer details. The guidelines in question present a set of requirements which include the customer’s personal details, as well as info on the type of crypto-assets they are holding.

Understandably, the development wasn’t exactly welcomed the entities based in the country. Janine Grainger, CEO of New Zealand-based Easy Crypto, was one of them. Claiming that she was disappointed, but not surprised, she said,

“I guess [IRD] is just widening its net of the tax base and crypto assets are something that is definitely growing in popularity and we’re seeing a huge increase in New Zealanders getting involved.”

According to the exec, the requirement of handing over customer’s personal information is ‘heartbreaking’ as the tenets of cryptocurrency are freedom, autonomy, and privacy.

The new guidance comes on the back of guidelines issued a few weeks ago, guidelines that themselves seemed to have quite a few issues. In fact, according to Campbell Pentney, special counsel at the law firm Bell Gully,

“It doesn’t deal with some of the more pressing questions, for example, in blockchains, you have what are called forks, a fork is when a chain splits in two and then you have two different coins and then the question is if you sell both are you taxed in the same way for both of those coins?

Such developments are very interesting to see, and a parallel can easily be drawn with developments elsewhere. The IRS too was unclear about the treatment of crypto-assets earned as a result of hard forks, until the new Cryptocurrency Tax Laws 2020 stated that a plain hard fork would not result in taxable income, since the hard fork did not result in a taxable event.

Ergo, at face value it would seem that the IRD is unable to keep up with the pace at which crypto-technology is evolving. In a space where technology is constantly evolving, hard and fast tax rules are less applicable and more susceptible to loopholes. Hence, it seems like from a regulatory standpoint, oversight may be an inevitable by-product of growing crypto-adoption.

It doesn’t help that there is little to no standardization with respect to a governing legal entity’s definition of ‘crypto-assets.’ In New Zealand, for instance, crypto-assets are treated like property, just like in the U.S. In the U.K, however, it is treated as foreign currency while in Germany, it is treated as private money.

Countries like Singapore and Malaysia currently do not tax long-term capital gains, and as such, holders of cryptocurrencies are exempt from paying tax on their crypto-assets altogether. These vastly different tax regulations may as well result in individuals and crypto-companies moving their funds out of their countries and into countries where they are taxed more favorably.


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Crypto exchanges susceptible to breaches due to design | Bybit CEO



Bybit’s executive Ben Zhou asserted that he was no longer stunned by the attacks happening to crypto firms

Crypto exchange security has been a trending subject recently owing to crypto attacks that have occurred in the past few months. The subject was once again in the headlines after hackers drained about $150 million from Bitcoin exchange Kucoin.

According to Bybit CEO, Ben Zhou, such incidents should not shock crypto users anymore because crypto exchanges are vulnerable by design. He added that as a centralized web application, crypto exchanges are exposed to the same security issues other websites face.

Zhou explained that most exchange servers and storage networks hold virtual currencies in hot wallets. If not well secured, these hot wallets are vulnerable to theft. The Bybit executive asserted that a cold wallet system would be much safer than a hot wallet one.

Unlike hot wallets, cold wallets are not connected to the internet. This means they are less susceptible to hacks. The only inconvenience with cold wallets is the inability to make immediate large withdrawals from an exchange.

In Zhou’s opinion, security should be among the priorities for any exchange, more so those that operate online. Crypto exchanges need to address their current weakness and enforce more security layers to help prevent future hacks.

Security systems must be able to protect information across all points of interaction, including the securing of user data.

“This can be accomplished by applying best practices for application lifecycle management, hiring knowledgeable and reputable security consultants for penetration testing and running bounty programs within the white hat community to identify any potential vulnerabilities,” Zhou said.

He further suggested that exchanges should collaborate with trusted security firms to implement firm management processes, conduct security audits and bank on zero-trust architecture.

Zhou pointed out that there are several reliable security solutions from third-party vendors on the market.

The executive disclosed that Bybit had directed a lot of resources to strengthening its security protocols.  The crypto trading platform implemented a cold wallet system to protect its users’ funds, as well as carrying out bounty programs and red alert scenarios to eliminate system vulnerabilities.

Zhou explained, “Even when it comes to withdrawals, we subject any requests to at least three layers of risk-control verifications. Crypto asset consolidation among cold wallets follows the strictest policy, including physical environment security, system security, encryption techniques, operation authentication, monitoring and audit.”


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Bitcoin confounds the bears to close above $10K for 9th consecutive week



The last time BTC/USD closed below $10K on the weekly and daily logs was July 26.

Bitcoin held steady to post a weekly close at $10,780, meaning the top cryptocurrency has now closed above $10K for nine consecutive weeks. The previous record of 9 consecutive weeks was set in 2017 when BTC/USD rallied to highs of $20,000.

Bitcoin’s weekly price chart. Source: TradingView

To put that into perspective, BTC/USD has posted a daily close above $10K for 63 straight days, beating the 62-day streak set during the 2017 bull market.

According to data from crypto analytics firm Messari, the world’s largest cryptocurrency has had a daily close above $10,000 since July 27 when bulls rallied to close at $11,043.

It is 63 days since BTC/USD closed below $10 on the daily log. Source: Messari

The previous longest streak of daily closes above $10K happened between December 1, 2017, and January 31, 2018. At the time, Bitcoin was in a bull market that saw its value peak at $20,000 before a marked downtrend culminated in the 2018 bear market that pushed prices to lows of $3,000.

Short term pullback

Sentiment around crypto for the past week was overwhelmingly bearish as Bitcoin first fell to lows of $9,800 before finding it difficult to break above $10,600. Prices were largely capped under $11,000, which Skew Analytics has pointed out to be due to the low volatility registered over September.

As shown in the chart below, Bitcoin’s realized volatility has dropped considerably over the past three months to an average of 49% and 47% over the last 10 days.

Josh Rager, a respected crypto trader and technical analyst, says that despite the slow action Bitcoin is still in an uptrend although it’s puzzling why people remain largely bearish.

Weekly close looks good and I don’t know why people continue to be overly bearish. Bitcoin got a short term pullback and -20% is nothing unusual,” he tweeted on Sunday.

Morgan Creek Digital co-founder Antony Pompliano also believes the market is “proving” the bears wrong. He has pointed to the record 63 days of BTC/USD above $10,000 as a signal that the price is set to go higher.

As of writing, Bitcoin is trading around $10,900, more than 2% in the green. BTC/USD could therefore retest resistance at $11,000-$11,500 before bulls aim for 2020 highs around $12,500.

Elsewhere in the market, Gold (XAU/USD), and the Dow Jones will benefit from an upside over the week. However, any downward moves could see them extend a run that has already seen the precious metal fall to a 10-week low of $1860 an ounce while the benchmark stock index fell to an 8-week low.


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