CNBC’s Fast Money Looks at Coinbase’s Five Candidate Cryptoassets (XLM, ADA, ZEC, ZRX, and BAT), Gives Its Prediction

On Friday (13 July 2018), following Coinbase's announcement that it was considering adding several new cryptoassets to its platform, CNBC's Fast Money decided to analyze each of Coinbase's five candidate digital assets: Cardano (ADA), Stellar (XLM), Zcash (ZEC), 0x (ZRX), and Basic Attention Token (BAT).

Here is what hedge fund manager Brian Kelly (the founder and CEO of BKCM) thinks about each one:

  • Cardano (ADA): "That is something similar to an Ethereum, if you will. They have a live working network. They have a live roadmap... That's important; that's what SEC said what was important so it's not a security."
  • Basic Attention Token (BAT): "You use this in the Brave browser. You can have an ad-free experience. You can BAT token to pay for content on the web."
  • 0x (ZRX): "This is one of the most interesting ones. That is a decentralized exchange protocol, up and running, and in fact, I believe, Coinbase launched a bulletin board exchange type of thing [he is referring to Paradex, which has not launched yet]... they use 0x technology."
  • Stellar (XLM): "Similar to Ripple [he meant XRP]"
  • Zcash (ZEC): "A privacy token, so you can send stuff back and forth without people knowing. Remember, Gemini has already said they are going to have Zcash on their platform. So, this one is probably the most likely."

The host, Melissa Lee, then asked Brian Kelly why Coinbase was not considering adding XRP if in fact XRP and Stellar are similar. Here is how Kelly explained XRP's absence from the list of candidates:

"So, I think probably it has to do with the uncertainty around whether or not it is a security, and I'm not going to opine one way or the other, but there are some lawsuits pending about Ripple [he meant XRP] being a security. So, I think just that uncertainty itself would cause Coinbase to say 'Let's tap the breaks on that one for today!'."

More importantly, he finished on a bullish note, saying that he wouldn't be surprised if these five cryptocurrencies go up 20%, 30%, or even 40% over the weekend, and that he was "long on every single one of them", but the two that he would rate a BUY at this moment are 0x and Zcash, which according to CryptoCompare, at press time, are trading around $0.9771 and $176.19. 

 

Featured Image Credit: Photo via Pexels; licensed under "CC0"

Latest Crypto Tax Guidance Shows IRS Still Confused

Written by Robin Singh, a cryptocurrency tax consultant based in the UK. He is the founder of Koinly.io - a cryptocurrency tax solution that automates capital gains reporting. He is a former Fintech engineer with a knack for numbers. Besides being a crypto enthusiast, he is also a passionate gamer and can be found in Orgrimmar when not at his desk.


After years of silence, the IRS finally released an update to their 2014 cryptocurrency tax guidelines in October. The update was welcomed by accountants and taxpayers alike, who had been left in the dark when it came to declaring their crypto taxes for far too long. While the IRS makes certain aspects of cryptocurrency taxes clearer, some of the new additions have only contributed to the overall confusion and left many unanswered questions.

If you have read the new crypto tax laws but still find yourself struggling to comprehend what these changes mean for you, this analysis will break down the major additions so that you can file your crypto taxes more confidently.

More Control Over Your Capital Gains and Taxes

Until now First In First Out (FIFO) was the only confirmed method for calculating capital gains on crypto but in the new guidance the IRS has also clarified that you are allowed to use Specific Identification (SI). For those unacquainted with FIFO, it’s basically a way to figure out the cost of an asset when you are buying and selling in multiple transactions.

For example, let’s imagine that you purchased 4 BTC for $400 in January and another 2 BTC for $400 in August. You then sell 5 BTC for $1,000 in November. The cost of the first 4 BTC will come from the first 4 BTC you purchased, while the remaining 1 BTC will get its cost from the second transaction. So, your final capital gain becomes $400.

Using SI, on the other hand, you can choose to calculate gains and losses using specific transactions - as long as you can prove that you are actually selling the assets from those transactions (for ex. by keeping the received assets in separate wallet addresses).

In this scenario, let’s imagine that you bought 1 BTC for $100 and another BTC for $500 and both are held in two different addresses. Now if you were to sell 1 BTC for $500, you can simply sell the one that you bought for the same price to avoid any capital gains. With FIFO you would have sold the one you bought first for $100 and realized a $400 capital gain. This extra control gives you the ability to make more tax-savvy trades.

Picking the Right Accounting Method

Which method you choose to use will ultimately depend on how much time you are willing to devote to your tax planning efforts. If you want to reduce your taxes - and have the time to do so - you may want to look into SI. If, on the other hand, you are filing crypto taxes just before the deadline you are unlikely to benefit much from SI and would do well to just use FIFO.

There is also another calculation method available called Last In First Out (LIFO) which is actually the opposite of FIFO. It is used by some for calculating capital gains on shares but the IRS has not explicitly confirmed that you can use it for cryptocurrencies too.

In the end you should pick a method and stick to it. You are not allowed to switch between accounting methods without prior approval from the IRS.

On Hard Forks

The IRS also released a number of Q and A’s that specifically addressed some questions related to hard forks and how they should be treated from a tax perspective.

To summarize the new information regarding forks, the IRS has stated that any cryptocurrency obtained as a result of a hard fork is considered to be taxable income. Regardless of whether or not you asked for the digital assets or you refuse to use them, you still must report these earnings to the IRS and pay the required taxes for the new crypto.

If you are disappointed with this, you are not the only one. Many crypto influencers took to Twitter to express their feelings, some saying they will owe taxes on the BitcoinSV fork even though the coin is practically worthless. While the IRS’s guidance does make sense for forks such as the Bitcoin Cash fork which was widely accepted, they still have a long way to go in defining fair laws that can be applied universally to all kinds of crypto transactions.

Keep in mind, however, that you will not always receive crypto when a hard fork occurs. If your wallet provider or exchange doesn’t support the new coin, you will not see any crypto available, which means that you won’t have to worry about reporting it either.

The Bottom Line

Tax agencies all over the world are grappling with cryptocurrencies and amending existing laws to also apply to virtual currency. In August the IRS even sent out thousands of letters to suspected crypto tax evaders to remind them of their obligations.

Next year you will also find a new question at the top of your tax return that specifically asks whether or not you traded with cryptocurrencies. Almost 150 million taxpayers are expected to answer this, so interest in cryptocurrencies is likely to skyrocket.

As awareness and adoption of Bitcoins and other cryptocurrencies continues to grow, we will see more and more regulations and laws being enacted to combat the threat of tax evasion and money laundering. It is important to keep an eye on new regulations concerning crypto taxes so you are not caught off guard come April.