The IRS will finally issue guidance on cryptocurrency taxes…
It’s been more than 10 years since Bitcoin was created… And the U.S. government still hasn’t issued clear tax guidance for cryptocurrency transactions. But that’s about to change.
The U.S. tax agency, the Internal Revenue Service (IRS), is working on “acceptable methods for calculating cost basis, acceptable methods of cost basis assignment, and the tax treatment of forks.”
I expect to see something come out in the coming weeks.
This progress is largely thanks to the work of House Representative Tom Emmer, who sent the IRS a request to clarify the tax implications of digital assets last month. Congressman Emmer is also a member of the Congressional Blockchain Caucus, a group of congressmen who are supportive of blockchain technology.
Through my work with the Chamber of Digital Commerce, I have had the pleasure to spend time speaking with the congressman.
The Chamber of Digital Commerce, for those of you wondering, is an industry-led advocacy group for blockchain technology. The Chamber works closely with industry executives, politicians, and policy makers to educate and recommend a clear regulatory framework that will still allow for innovation and adoption of blockchain technology.
In fact, we hosted Congressman Emmer at a luncheon at the Consensus conference, last week. He has been a strong supporter on Capitol Hill pushing for clarity and a light hand on regulations for the industry. We’re lucky to have him on our side.
The coming IRS guidance is a sign that cryptocurrencies – and other digital assets – are being recognized as a legitimate asset class. They are coming of age and need to be clearly acknowledged by the IRS.
And with clear IRS guidelines on cryptocurrencies coming soon, we can expect the adoption will continue to increase. Digital asset exchanges will soon be able to issue annual tax forms for those assets, for the purpose of tax filings. This is critical for mainstream adoption.
The Universal Translator is here…
Google just unveiled the Translatotron, which is the world’s first system that can translate speech in one language to speech in another language, in real time.
What’s more, this system creates a voiceprint of the speaker’s tone in his native language and injects it into the translated speech in the desired language. In other words, it mimics the speaker’s voice in the translated language.
This is just an incredible development. And it puts Google’s artificial intelligence (AI) prowess on display. Here’s why…
Existing AI-powered translation systems do not work in real time. They convert speech in one language to text in the same language. Then, they translate that text to text in the desired language. And then, they convert that to speech in the desired language.
It’s a three-part process. And that means it is slow… Too slow for real-time communication.
To overcome this, Google created and trained its own neural network. This is a computing system powered by AI and machine learning that is designed to learn and solve problems just like a human brain would. That’s what allows Google to skip the speech-to-text steps and make a direct translation in real time.
Now, this system is still in the “experimental” stage. But it won’t take Google long to perfect it. When it does, the Translatotron could be expanded to cover tens, if not hundreds, of languages. Any language pairs will be possible.
At that point, it will be just like the Universal Translator in Star Trek. Anyone with a smartphone and a pair of earphones will be able to have real-time conversations in any language he wants.
This will certainly remove barriers in international travel, business, and communication worldwide. I would think twice, however, about a career as a translator…
A blockchain bidding war…
News is out that cryptocurrency giant Coinbase is in negotiations to acquire digital asset exchange Xapo… But it has competition.
The other party interested in Xapo may surprise you: Fidelity Digital Assets – a division of Fidelity Investments.
Fidelity is the largest brokerage in the United States. Fidelity serves around 28 million individual investors and holds $2.5 trillion in managed assets.
So, here we have one of the most successful cryptocurrency businesses in the world, Coinbase, going up against a traditional financial services giant, Fidelity. That’s because Xapo is one of the most successful digital asset exchanges in Europe.
But Xapo isn’t just any exchange. It provides reputable custody solutions for institutional investors. That means it holds digital assets on behalf of pension funds, hedge funds, and family offices.
This is important because most institutions are required to have a third-party custodian. They can’t hold assets themselves. That’s so they aren’t liable if anything goes wrong, like a hack or fraud. It also makes it harder for a fund or institution to misuse those assets if they are not in its possession.
As companies like Coinbase and Fidelity Digital Assets are trying to grow their custodial businesses, they have been looking for ways to accelerate that growth. And Xapo now has $5.5 billion in assets under custody. That makes it a major player in the industry.
By comparison, Coinbase has just over $1 billion in assets under custody, which means Coinbase would quintuple its assets under custody with this acquisition.
In short, we are starting to see consolidation in the blockchain industry. We are seeing weak blockchain projects fail… better projects rise… and mergers and acquisitions happen.
We saw the exact same thing happen with internet companies in the early 2000s. During the late 1990s, internet companies sprang up, one after another. There were countless greenfield opportunities. All stocks were rising, and most companies believed they would all become multibillion-dollar corporations.
But then, the industry matured… weak companies folded or were acquired… and strong businesses like Amazon, Google, and eBay rose to the top.
That’s where we are in the blockchain industry. The industry is progressing to the next stage. Critical infrastructure is being built that the industry needs. And major players like Coinbase are building out their services to better address customer needs.
I wouldn’t be surprised at all if Coinbase becomes larger than Fidelity’s brokerage and custodial business in a few years’ time.
Editor, The Bleeding Edge
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