Bitcoin ETF Delay; Cryptopia Enters Liquidation; BitGo Unveils New Institutional Service

Leading the crypto headlines over the past 24 hours was the all-too-familiar announcement by the SEC to delay a decision on whether or not to approve a bitcoin ETF. We also learnt that New Zealand-based crypto exchange, Cryptopia, pulled the pin on its short-lived attempt to revive its business following a recent hack, announcing it has gone into liquidation.

It wasn’t all bad news in the crypto space, however. One particularly promising piece of news came from leading custody provider, BitGo, who announced the launch of a new clearing and settlement service it believes solves a number of problems that have long deterred would-be institutional investors from gaining exposure to the cryptoasset class.

In the markets, bitcoin (BTC) dipped 1.17% for the day to trade at $7,883.1, at the time of writing. Indicative of traders taking BTC-denominated profits, ether (ETH) spiked 9.9% to $226.7, its highest point in over seven months. Additionally, the MVIS CryptoCompare Digital Assets 10 Index is currently tracking at 3,698.1, a 4.9% rise over the past 24 hours.

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SEC Again Delays Decision on Bitcoin ETF

In a document published by the U.S. Securities and Exchange Commission (SEC), the financial regulator revealed it would hold off on making a decision on the Bitwise exchange-traded fund (ETF) proposal filed with NYSE Arca.

Once the Bitwise ETF is published in the Federal Register, a three-week-long public comment period will commence. This will be followed by a two-week-long period for responses. The SEC has until August 14 to make a decision on the Bitwise ETF. Should they - for the last possible time - choose to delay once more, the final deadline will become October 13.

Crypto Exchange Cryptopia Halts Trading, Enters Liquidation

The recently-hacked crypto exchange, Cryptopia, yesterday announced it has halted trading immediately and entered liquidation. In a statement by the appointed liquidators – Grant Thornton New Zealand – they explained they “are focused on securing the assets for the benefit of all stakeholders.”

Customers and suppliers of Christchurch-based Cryptopia will be contacted by Grant Thornton “about its appointment in the next few days,” according to the press release.

BitGo Launches New Settlement Service for Institutional Clients

The world’s leading crypto custody provider, BitGo, announced it is launching a new clearing and settlement service for its institutional, regulated BitGo Trust Company clients. The product – which is an off-chain settlement solution – will ensure cryptoassets never leave custody whilst being transferred. This is possible because BitGo will, on either side of their clients’ trade, act as the custodian.

In addition to reduced counterparty risk, BitGo’s new solution promises to be a more efficient and compliant way for institutional investors to clear and settle cryptoasset transactions.

“Until now,” BitGo’s chief executive Mike Belshe explained in a press release, “in a digital asset trade, one party needed to assume all of the risk and act on the counterparty’s good faith, and this doesn’t really work for institutional investors.”

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 - 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.