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U.S. IRS Starts Sending Warning Letters To Cryptocurrency Users

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U.S. IRS or the Internal Revenue Service started sending warning letters to cryptocurrency users urging them to start paying their crypto taxes as we previously read in the latest cryptocurrency news.

The U.S. IRS agency already sent three warning letters last month to multiple crypto traders advising them that they haven’t filed or have incorrectly filed their taxes. The agency is also telling some investors that they did report the wrong amount of income from the crypto transactions and they are now even willing to collect. According to one letter that was shared in the news with a taxpayer, he reportedly owed more than $4,000 in 2017 in taxes alone with another $200 in interest. The letter was sent out on July 29th, 2019. The co-founder of the tax software provider CoinTracker Chandan Lodha even stated that the IRS has started sending these CP2000 notices to many customers indicating that they are now hooked for revenue that it wasn’t reported. He stated:

 “The IRS is sending out these other notices and those are kind of like warning letters of varying degrees of how threatened they were. But the “CP2000 is a slightly different letter. Basically what it says is ‘hey we have a report from one of the financial institutions you use and the amount they reported to us the IRS is different than the amount you, the taxpayer, reported and this is the amount you owe’ and it’s a 30-day letter meaning you have to respond in 30 days.”

The co-founder and attorney of the tax calculator startup TaxBit Justin Woodward even noted that he has seen more of these letters starting to be sent out in August. According to the IRS website, a recipient of the letter should respond whether they agree with the tax assessment or not. Lodha added as we read in the previous altcoin news:

 “In terms of how the actual dynamic works, first they send you the CP2000, they send the proposed amount due and you say ‘yes, I’ll pay that’ or ‘no, and here’s the supporting documentation. I’m not sure if it’s a lack of understanding from the IRS or if they’re just blindly sending out these letters hoping people are too scared [or] too lazy to look at the letter and say ‘hey they made $13,000’ when they didn’t make $13,000.’’

DC Forecasts is a leader in many crypto news categories, striving for the highest journalistic standards and abiding by a strict set of editorial policies. If you are interested to offer your expertise or contribute to our news website, feel free to contact us at editor@dcforecasts.com

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Regulation

US SEC Wants To Close The Blockvest Case For Good

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The US SEC wants to finally close the case of Blockvest and its founder Reginald Buddy Ringgold III after they filed a motion for sanctions as reported previously in the blockchain news.The US SEC wants to crack down on other crypto scams that took place in the past few years and one of the most recent examples was the case against Blockvest and its founder. Back in January, the regulators filed a motion for sanctions against the platform and its founder and the United States Securities and Exchange Commission claimed that Ringgold used the company to defraud investors which could earn him a permanent injunction. The regulator wanted to impose civil penalties as well as disgorgement.The regulator also produced evidence against the founder of Blockvest showing that he knew when the submitted false and forged declarations in order to make his defense tighter. The reports of the regulator show that Ringgold attempted to persuade two pre-ICO investors to submit the fake statements that regarded their expectations of receiving profits from the Blockvest tokens. The profit expectations are one of the Howey Test’s key criteria and are the SEC’s main benchmark for determining whether a token sale is unregistered security or it is not.Ringgold also tried to convince another affiliate to lie to the regulators about a $147,000 payment which is supposedly dedicated to the company’s own development. The regulator stated that:
‘’Based on the evidence … there can be no genuine issue of material fact that defendants violated the federal securities laws through their fraudulent unregistered offer and sale of ‘BLV’ tokens.’’
The initial enforcement action from October 2018, showed that Blockvest had managed to raise up to $2.5 million in the pre-ICO sale and it was discovered that Blockvest had advertised the investors about the token sale being registered with the SEC which was of course, false. Not only did Blockvest did that but the founder also deceived the investors claiming that it was under the eyes of the US CFTC and NFA. The project also claimed that it was audited by Deloitte which also was not true.The SEC claims that there was no company listed as a partner to Blockvest and after hearing the accusations, Ringgold admitted that his company made mistakes but he also claimed that none of the misrepresentations involved securities.
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Hawaiian Banks Could Start Storing Digital Assets With New Bill

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Hawaiian Banks will be allowed to store digital assets with the help of the new Senate Bill 2594 which was passed in the first reading. In our crypto news, we find out more about what this bill can do for the banks.Storing bitcoin has always been a question of interest and now most users will have the ability to store them in a bank. Representatives in the Senate last week introduced Senate Bill 2594 which will make it legal for Hawaiian banks to store crypto assets including digital securities, open blockchain tokens, and virtual currencies.The bill strongly implies Ethereum, Bitcoin and other decentralized coins that will be able to be stored by the banks if the bill is passed which could mark a strong step forward in the Bitcoin security game for the average user. Just because the bill was approved in the first reading, doesn’t mean that the banks in Hawaii will jump on the Bitcoin team but it can be presumed that the lawmakers are responding to the demands of the people. The banks may not be the only mainstream institution that will start offering crypto-asset custody.Passing new legislation in Germany’s parliament as well will also make it easier for German banks to sell and store digital assets and as per Reuters reports in December, people were familiar with the matter which revealed that large Dutch Bank ING is also working on a crypto custody project. Other centralized institutions holding cryptocurrency will go against the trustless and anti-bank ideas of something such as Ethereum and Bitcoin which are blockchains that both promote decentralization but it could help increase the adoption of digital assets.This is not the only potential legislation that has crypto in the center of attention in the US. The US House Representatives DelBenet, Soto, Emmer, and Schweikert introduced the Virtual Currency Tax Fairness act of 2020. If this bill becomes law, it would solve a huge issue in spending cryptocurrency for daily transactions and smaller transactions from crypto to fiat will not be a subject to potential capital gains taxes that ‘’steal’’ the wealth of Bitcoin holders.The act will make sure that the crypto transactions where the gains are made by individuals will be under $200 and will be exempt from capital gains taxes which will allow Bitcoin buyers to buy almost any everyday items including coffee without having to deal with taxes and the IRS. There are also a lot of people in the US politics that are huge fans of Bitcoin that want to champion the bill if it ever reaches the desks.
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Regulation

Tax Agencies Level Up Efforts To Hone On Crypto Tax Evasion

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Crypto tax evasion is a big thing in 2020 and people don't expect anything to change, the cryptocurrency news show. The previous year raised expectations that stablecoins would bring a mass adoption of cryptocurrencies. But this year, we can definitely see some movements and are seeing that tax agencies are levelling up their efforts to hone on the crypto tax evasion.2020 seems to be dousing the hopes with ever-tightening regulation that is putting pressure on investors and companies alike. The first complication came only 10 days into the year. In early January, the European Union and its landmark Fifth Anti-Money Laundering Directive (5AMLD) was signed into law.Meanwhile, the law is the latest evolution of EU's response to the Panama Papers scandal in which a leak of over 11 million documents uncovered the opaque financial networks used by the world's richest and most prominent individuals.The tax agencies level up their regulation now and lawmakers are constantly striving to tighten the legal loopholes which would allow for the world's richest companies and individuals to avoid paying their dues. There are still many states which willingly provide less legally restrictive environments.From the 5AMLD initiative to the central bank digital currencies, the Bitcoin and altcoin news show that governments and regulators are acting on their belief that the identities of individuals behind anonymous transactions should be made available to authorities upon request.Regulatory changes are coming and tax agencies level up many things. According to the Dash Core Group Chief Marketing Officer Fernando Gutierrez, “This was all bound to happen.” As he summarized in an email sent to one crypto media outlet:
“All these changes will make anonymity more difficult for the average consumer, as more exchanges comply and implement KYC. Those exchanges who don't will be forced to jump from jurisdiction to jurisdiction, which will impose extra costs that only those committed to anonymity will be willing to pay. For criminals, this will change nothing because they are in that group, among many others who are not criminals, who are willing to pay more.”
Regulation can affect crypto in many different ways and regulators are already preparing new laws now. It is certain that if this happens, an intense debate will also occur among investors, industry leaders and regulatory bodies.
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Bitcoin News

WEF2020 Announces Global Consortium For Regulating Bitcoin

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At the WEF2020 in Davos, Switzerland, there was a significant mark on the crypto market and the World Economic Forum announced the first global consortium focusing on creating a regulatory framework for the governance digital currencies including bitcoin and stablecoins. In our latest bitcoin news today, we find out more about their ideas.The World Economic Forum for 2020 happened the past week in Davos and cryptocurrencies were the center of attention. Yesterday during the last day of the consortium, the forum announced the creating of the first Global consortium for Digital Currency Governance. It will mainly consist of financial institutions, government representatives, international organizations, leading companies, academics, NGOs, technical experts and other members of the Forum’s communities.The report showed that if digital currencies receive proper financial inclusion, they will have to get paired with good governance. Therefore at the WEF2020, the forum discussed whether it is needed to establish a framework of regulations by implementing innovative approaches. In order to do that, the participants will have to use ‘’efficiency, speed, inter-operability, inclusivity, and transparency.’’ The Consortium will work with both the private and public sectors to explore the presented opportunities.According to the founder and Executive Chairman of the WEF, Klaus Schwab, ‘’ digital currency, a cross-cutting topic that requires input across sectors, functions, and geographies, is a key area of interest for the Forum.’’ The Governor of the Bank of England also commented:
 “Governance is the core pillar of any form of digital currency. It is critical that any framework on digital currencies ensures security, efficiency, and legitimacy of payments while ensuring fair and open competition. We welcome the WEF’s platform to help develop a robust governance framework for inclusion through digital currencies.”
As per the recent reports, the efforts of creating a regulatory framework on cryptocurrencies are getting more serious. As of this month, the European Union introduced an updated version of the 5th anti-money laundering directive and had increased regulatory focus. All of the crypto-related businesses are operating from Europe and they have to follow the rules which include a more in-depth know your customer process, filling suspicious activity reports and conduct transaction monitoring with law enforcement.  After the WEF2020, the world watchdogs will try to establish a framework of regulations for crypto so it will be extremely interesting to see whether this will be beneficial for the market.
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