Canadian Regulated Bitcoin Trust Achieves Mutual Fund Trust Status

A Canadian regulated bitcoin trust has achieved the mutual fund trust status, allowing eligible investors to invest in the trust through government-sponsored tax-efficient investment plans. The investment is approved by the Ontario Securities Commission and the British Columbia Securities Commission. 

Also read: 160 Crypto Exchanges Seek to Enter Japanese Market, Regulator Reveals

Mutual Fund Trust Status

First Block Capital Inc. announced on Monday, September 10, that its flagship product, the FBC Bitcoin Trust, “has now achieved mutual fund trust status.”

As such, the trust has become the “first and only” investment product approved by the Ontario Securities Commission (OSC) and the British Columbia Securities Commission (BCSC) to offer “unit holders the exclusive opportunity to hold units of a bitcoin investment in their Tax Free Savings Accounts (TFSA) and Registered Retirement Savings Plans (RRSP).”

Noting that the investment is available only to accredited investors, the firm explained:

The trust units are [now] considered a qualified investment for a mutual fund trust under the Tax Act, having exceeded 150 unit holders within one year of launching.

The firm describes itself as “Canada’s first fully registered, dedicated cryptocurrency and blockchain investment company” that holds exempt market dealer (EMD), portfolio manager (PM) and investment fund manager (IFM) licenses. Its co-founder and chief investment officer, Marc van der Chijs, detailed:

Our goal is to make investments in the digital currency asset class more accessible and we are one step closer to achieving this goal by allowing unit holders to place units in government sponsored tax efficient vehicles, and by providing daily liquidity.

Two More Funds Coming Soon

In addition to the bitcoin trust, the firm plans to launch two investment products. The company’s funds are kept in Xapo’s cold-storage vault.

The first of the two is the Active Blockchain Opportunities ETF which is “an actively managed ETF dedicated to uncovering the best companies exposed to this global secular theme,” the firm describes.

The other product is the Cryptocurrency Index Fund that tracks the performance of tokens selected by the firm’s management team. The company explains, “The evaluation of selecting a token into our index fund is mainly determined by the development of its technology, market capitalization, and market liquidity. The goal is to provide investors with a transparent benchmark in this new asset class.”

What do you think of this bitcoin trust? Let us know in the comments section below.

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Images courtesy of Shutterstock and First Block Capital Inc.

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Mt. Gox Victims Must Take Claims to Tokyo, Not US, Judge Rules

ETH: Time to Buy?

US Financial Industry Regulatory Authority Issues Its First Crypto Disciplinary Action

The U.S. Financial Industry Regulatory Authority has taken its first disciplinary action involving cryptocurrencies. The authority charges a broker with fraudulent and unlawful distribution of unregistered crypto securities. The owner allegedly “attempted to lure public investment in his worthless public company” by issuing “the first minable coin backed by marketable securities.”

Also read: 160 Crypto Exchanges Seek to Enter Japanese Market, Regulator Reveals

FINRA’s First Crypto Disciplinary Action

The U.S. Financial Industry Regulatory Authority (FINRA) has issued its first crypto-related disciplinary action. The organization announced on Tuesday, September 11, “that it filed a complaint against Timothy Tilton Ayre of Agawam, Massachusetts, charging him with securities fraud and the unlawful distribution of an unregistered cryptocurrency security called Hempcoin,” adding:

This case represents FINRA’s first disciplinary action involving cryptocurrencies.

FINRA is a not-for-profit organization authorized by Congress to protect investors in the US by ensuring that the broker-dealer industry operates fairly and honestly. Although the organization is not part of the government, it is overseen by the U.S. Securities and Exchange Commission (SEC). In addition, FINRA “has the authority to fine, suspend or bar brokers and firms from the industry,” its website describes.

According to Tuesday’s notice, “The issuance of a disciplinary complaint represents the initiation of a formal proceeding by FINRA in which findings as to the allegations in the complaint have not been made, and does not represent a decision as to any of the allegations contained in the complaint.” All parties named in the complaint can file a response and request a hearing before a FINRA disciplinary panel, the notice details, noting:

Possible remedies include a fine, censure, suspension or bar from the securities industry, disgorgement of gains associated with the violations and payment of restitution.

The Hempcoin Case

Ayre is listed as the president of Rocky Mountain Ayre Inc., a publicly traded company listed on the OTC Grey market under the RMTN trading symbol.

In its complaint, FINRA alleges that, from January 2013 through October 2016, Ayre made “fraudulent, positive statements about RMTN’s business finances,” elaborating:

Ayre attempted to lure public investment in his worthless public company, Rocky Mountain Ayre Inc. (RMTN), by issuing and selling Hempcoin – which he publicized as ‘the first minable coin backed by marketable securities’.

According to FINRA, Ayre bought the rights to Hempcoin in June 2015. He then repackaged the token as a security backed by RMTN common stock and marketed it as “the world’s first currency to represent equity ownership” in a publicly traded company.

Investors, promised that “each coin was equivalent to 0.10 shares of RMTN common stock,” proceeded to mine more than 81 million Hempcoin securities through late 2017, FINRA described, noting that the coins were traded on two crypto exchanges.

FINRA believes that “Ayre defrauded investors in RMTN by making materially false statements and omissions regarding the nature of RMTN’s business, failing to disclose his creation and unlawful distribution of Hempcoin, and making multiple false and misleading statements in RMTN’s financial statements,” adding:

FINRA charges Ayre with the unlawful distribution of an unregistered security because he never registered Hempcoin and no exemption to registration applied.

What do you think of FINRA’s first crypto disciplinary action? Let us know in the comments section below.

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Images courtesy of Shutterstock and Rocky Mountain Ayre Inc.

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Government-Funded Drug Trafficking Makes USD the World’s Dirtiest Currency

Pablo Escobar. Joaquín ‘El Chapo’ Guzmán. Rick Ross. Household names, each and every one of them; drug lords collectively responsible for punting billions of dollars’ worth of narcotics. Yet their crimes pale in comparison to those their prosecutors have been perpetrating for years. After decades of fueling proxy wars and trafficking, the US government has powder on its hands – a combination of gunshot residue, cocaine, and heroin. Those same agencies that would decree what the public can and can’t do with their cryptocurrency have broken every rule in the book.

Also read: Terrorists Prefer Cash to Crypto, According to Congressional Testimony

Bitcoin, Drug Barons, and High Hypocrisy

In a 6×8 feet concrete cell in a Colorado penitentiary, prisoner 18870-111 meditates silently. He will perform this daily ritual another 18,250 times in his lifetime, which shall be expended within the confines of his cramped enclosure. The 34-year-old is serving life without parole, officially for operating a sprawling drugs marketplace. Unofficially, his life term isn’t for drug trafficking however – it’s for doing so without cutting the US government a slice of the action. His name is Ross Ulbricht and his crimes are a drop in the bucket to those perpetrated by the three-letter agencies whose fingerprints are all over his prosecution.

Even if one takes the view that drug dealing and money laundering are unlawful – and there are many, particularly in the Bitcoin community, who would demur – the hypocrisy of law enforcement is breathtaking. Many of the officials who would lock up dealers for life think nothing of committing the very same crimes. Sometimes these are rogue agents operating alone, such as Carl Force and Shaun Bridges, who helped bring down Ross Ulbricht while committing even more egregious crimes and tainting the evidence trail. But the most serious cases of government-orchestrated malfeasance see orders taken from the very heart of the so-called deep state.

A Short History of US Government Lawlessness

As the following examples show, there is a very strong case for asserting that the US government, typically operating off the books through shadowy proxies, is the world’s largest cartel. What follows is a handful of the crimes we know to have been committed with the blessing of US agencies. Consider this the tip of the iceberg.

Nicaragua, CIA cocaine trafficking: Widespread sources have alleged the CIA to have been complicit in cocaine smuggling in the 1980s. Funds from the narcotics operation were reputedly used to fund the Contra war in Nicaragua. It was later alleged that this operation was pivotal in creating the crack cocaine epidemic that wreaked havoc on major US cities in the 80s.

Mexico, CIA cocaine & marijuana: In 2013, it was alleged that CIA operatives oversaw the kidnap and murder of a DEA agent because he threatened their Mexican drug operations. A CIA spokesman denied the allegations. Naturally. The CIA was also implicated in similar misdeeds in Honduras and Panama, tied to its funding of the Contras in Nicaragua.

Venezuela, CIA cocaine importation: There’s a lot of drugs in South America and the CIA seems to have gotten its hands on a lot of them. After seizing a ton of cocaine in Venezuela, the confiscated narcotics somehow made their way onto the streets of the US. While the DEA objected to the operation, which was designed to flush out a Colombian drug cartel, the CIA proceeded anyway, because the CIA does what it wants.

Switzerland, CIA LSD importation: We have the CIA to thank for LSD. It was they who went over to Basel, Switzerland in the 1950s, where it had first been synthesized, and brought the whole supply over to the States. They then incorporated it into their secret mind control program called MK Ultra in conjunction with the U.S. Army Biological Warfare Laboratories, complete with illegal testing on humans.

Afghanistan, heroin cultivation: Reports of US government complicity in the heroin trade go back decades, with the CIA’s name predictably cropping up. Whether you believe the US was directly involved in allowing Afghanistan’s poppy fields to flourish, or simply allowed them to prosper as part of a laissez-faire policy, the end result is the same: by 2006, during peak US occupation, heroin production reached a historic high.

The US Government Is the World’s Biggest Cartel

These are just a few of the cases in which US government involvement in drugs crimes has been established. While these examples were primarily perpetrated by the CIA, every branch of the US government has been complicit in similar crimes. From the FBI to state police, every branch, state, and county has its share of bad apples, like the Baltimore cops who became robbers.

It is incumbent upon us to reflect upon these cases when we consider the proactive role the US government takes in dictating the freedoms the rest of us are granted. When it locks Ross Ulbricht up for life for committing what many believe to be a victimless crime. When they lean on crypto companies such as Shapeshift to enact full KYC. When they conflate cryptocurrency with terrorism, despite all the evidence to the contrary. If the US dollar is the world’s most tainted currency, bitcoin might just be its cleanest.

Do you think the US government is still complicit in drug trafficking? Let us know in the comments section below.

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Images courtesy of Shutterstock.

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Sales Tax and Bitcoin in the United States Can Be Confusing

Over the last two years in the US, the federal government and states have been trying to grasp the concept of cryptocurrencies and apply them to traditional finance laws like taxes. The task has proven to be extremely difficult for federal agencies and officials however. One confusing issue is the application of state sales tax towards a purchase made with bitcoin. A great majority of states across the US have zero guidance on this issue and some states like New York, New Jersey, and California have entirely different ways of handling digital currency purchases and sales tax.

Also read: Bitcoin Cash Hard Fork Debate Reconvenes After the Stress Test

Sales Tax and Bitcoin 

Bitcoins and taxation is not the most popular topic, and both topical conversations seem to mix like oil and water these days. In the US, most cryptocurrency enthusiasts understand that according to the Internal Revenue Service (IRS), digital currencies like bitcoin are considered property for Federal tax purposes. Essentially this means that current property transaction laws apply to transactions using virtual currencies. The US taxpayer is required to report the character of gains or losses from the sale or exchange of a cryptocurrency from the value it was acquired for at the time and for the value of the final sale. Additionally, the IRS treats cryptocurrencies like a ‘convertible virtual currency’ (CVC) which means theoretically if merchants accept a currency like bitcoin the state tax could be applied to both the merchant and customer.

However, only a few states offer clarification on the issue of sales tax and bitcoin purchases. Most US states have absolutely no guidance whatsoever on how a merchant and customers should handle sales tax. The few states that do offer some descriptive laws on state sales tax and cryptocurrencies also provide two different methods of applying sales tax to digital currency purchases. The subject was covered in a recent BNA tax report this week and the topic has been discussed in great detail over the last five years.

New Jersey’s Technical Assistance Memorandum

For instance, back in 2015 the state of New Jersey published a Technical Assistance Memorandum (TAM-2015-1 -R) which explains bitcoin and other cryptocurrencies are to be treated as a CVC. If a customer purchases an item from a New Jersey merchant who accepts bitcoin, the purchase or use is not subject to the state’s sales/use tax. Merchants in New Jersey, on the other hand, are subject to sales tax laws and the percentage of sales tax is based on the fair market value of the cryptocurrency used. Of course, the merchant is required to pay the tax in US dollars as well. According to New Jersey law merchants must:

• Register for sales tax purposes;
• Record in their books and records the value of the convertible virtual currency accepted at the time of each transaction, converted to US dollars;
• Record in their books and records the amount of sales tax collected at the time of each transaction, converted to US dollars; and
• Report such sales and remit any sales tax due in US dollars when filing their periodic sales tax returns.

The New York State Department of Taxation and Finance Rules

The State of New York’s law towards bitcoin and sales tax is quite similar to New Jersey’s sales tax guideline. New York defines bitcoin sales tax the same way by finding the value of the cryptocurrency or CVC used at the time of purchase and applying that to the value of the CVC amount spent determines the tax. Because the prices of digital assets fluctuate so much, merchants will have a difficult time formulating their revenue books with New York and New Jersey’s sales tax perspective.

“If the party that gives convertible virtual currency in trade receives in exchange goods or services that are subject to sales tax, that party owes sales tax based on the market value of the convertible virtual currency at the time of the transaction, converted to US dollars,” explains the New York State Department of Taxation and Finance.

If the party that trades property or services in exchange for receiving convertible virtual currency gives the other party a sales slip, invoice, or receipt, the first party must separately state the sales tax due in US dollars on the sales slip, invoice, or receipt.

California Uses the Advertised Selling Price of the Product for Sales Tax

However, another state with a powerful economy like New York has an entirely different way of handling state sales tax and bitcoin. The state of California has applied a sales tax law to virtual currencies as well, but instead of using the CVC value, the sales tax is only applied to the products sold. The California Board of Equalization explains that sales tax applies to bitcoin just like fiat and a tangible item of personal property. However, the measure of sales tax stems from the price of the product at the time of sale and has no correlation to the CVC’s value at the time. Just like New York and New Jersey, sales tax in California must be paid in US dollars.

“The measure of tax is the total amount of the sale or lease, whether received in money or other consideration,” the California Board of Equalization details.

Therefore, if a retailer enters into a contract where the consideration is virtual currency, the measure of tax from the sale of the product is the amount allowed by the retailer in exchange for the virtual currency (generally, the retailer’s advertised selling price of the product.)

There are a few other states in the US including Vermont, Illinois, Arizona, Wyoming, and Georgia that have cryptocurrency laws either being drafted or being reviewed by governors, senators and house representatives in those regions. Internationally sales tax law in other countries such as Germany, Denmark, Belarus, and Slovenia are far friendlier than the US but also use entirely different methods of taxation. Then there are a few regions that don’t apply a capital gains tax to virtual currencies like Mauritius, Hong Kong, New Zealand, Switzerland, and Barbados.

It doesn’t seem like the US or the IRS will be defining bitcoin in a different way and will continue to be treated as a property rather than a currency. As far as state sales tax is concerned, a large majority of merchants from different states are still very much in the dark when it comes to sales tax and bitcoin.

What do you think about applying sales tax to bitcoin and how each state is taking different measures? Let us know what you think about this subject in the comment section below.

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Images via Shutterstock, Bitcoin.com, and Pixabay.

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Verify and track bitcoin cash transactions on our BCH Block Explorer, the best of its kind anywhere in the world. Also, keep up with your holdings, BCH, and other coins, on our market charts at Satoshi Pulse, another original and free service from Bitcoin.com. 

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Huobi ‘Aggressively’ Enters Japanese Market With Plans to Become the Largest Exchange

Crypto exchange Huobi is entering the Japanese market by acquiring a majority stake in one of the 16 government-approved crypto exchanges in the country. The company says it plans to “aggressively scale this trading platform into the largest in Japan,” with an eye on global expansion in the future.

Also read: 160 Crypto Exchanges Seek to Enter Japanese Market, Regulator Reveals

Huobi Entering Japanese Market

Huobi is expanding into the Japanese market by acquiring a majority stake in Bittrade, a Japanese government-approved crypto exchange.

Bittrade’s owner announced on Wednesday, September 12, that Huobi Global’s wholly-owned subsidiary, Huobi Japan Holding Ltd., “will take a majority stake” in the exchange. Speaking of his strategic partnership with Huobi, Singaporean entrepreneur Eric Cheng, who owns 100% of Bittrade, said:

The parties intend to aggressively scale this trading platform into the largest in Japan with the potential to extend its services globally.

Established in China in 2013, Huobi has since moved its headquarters to Singapore. The company now claims to have an accumulated trading volume of over US$1 trillion, with “millions of users” worldwide. “Geographically, Huobi has compliance teams in Singapore, Korea, Hong Kong, Australia, the UAE, Luxembourg, and other countries around the world,” the company wrote.

In addition, Huobi has been expanding to other regions through partnerships with local companies. Last month, Huobi announced that it is launching crypto exchanges in the Philippines, Russia, Taiwan, Indonesia, and Canada.

Bittrade Already an Approved Exchange in Japan

One of the biggest hurdles in entering the Japanese market right now is getting approval from the Financial Services Agency (FSA). Since Japan legalized cryptocurrency as a means of payment in April last year, all exchanges in the country are required to register with the FSA.

Last year, the agency approved 16 crypto exchanges. However, the approval rate has plummeted since the hack of Coincheck in January. The agency has since tightened its evaluation process of new exchanges. This has led to 13 of 16 quasi-exchanges to withdraw their applications. Bittrade is one of the 16 FSA-approved crypto exchanges.

Last week, Japan’s e-commerce giant Rakuten acquired Everybody’s Bitcoin, one of the three remaining quasi-exchanges, to fast-track into the Japanese crypto market.

Bittrade Previously Acquired by Singaporean Entrepreneur

In May, Cheng “acquired 100 percent stake in two Japanese licensed companies,” Singapore Business Review reported. “With the acquisition, Cheng, the CEO of Upper Joyful Ltd, will own [the] controlling stake in the two firms — FX Trade Financial Co Ltd (FX Trade) and its affiliate company, Bittrade Co Ltd.”

Cheng has been investing in high-growth opportunities and currently has investments in regions such as Australia, Mainland China, Cambodia, Japan, Malaysia, Singapore, Taiwan, Thailand, and Vietnam, according to Wednesday’s announcement.

What do you think of Huobi entering the Japanese market? Do you think Huobi will succeed in becoming the largest exchange in Japan? Let us know in the comments section below.

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Images courtesy of Shutterstock, Huobi, and Bittrade.

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