Category: Bitcoin

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OKX presents investor risk questionnaires according to FCA

To adapt to the new Financial Conduct Authority (FCA) regulations in the UK, OKX Exchange has introduced a comprehensive user review system. Starting next week, UK-based OKX users will be subject to a detailed investor questionnaire. This metric is important to assess your understanding of the risks involved in buying and trading cryptocurrencies.

In addition, there is an additional level of evaluation. OKX implements another questionnaire aimed at checking the suitability of crypto investments for each individual. The exchange’s strict policy is that users who fail these checks or cannot demonstrate sufficient understanding of the risks will not retain their accounts.

OKX adaptation to FCA regulations

These measures are a direct response to the FCA’s upcoming regulations, which come into force on January 8th. The UK cryptocurrency market has undergone significant regulatory changes. As a result, other exchanges such as Binance have already made adjustments, including halting new user registrations in the UK from October 16th.

In addition, OKX proactively adapts its services. The exchange is reducing its offering of digital assets to around 40 tokens. Additionally, it integrates important risk warnings into its interface. This approach is part of a broader trend of regulatory caution prevalent in crypto exchanges worldwide.

Revised security measures

Recently, OKX overhauled its security protocols, improving the security of exchanges between users. The move includes the delisting of several privacy-focused tokens last week. Such changes reflect a growing trend in regulatory compliance and risk management in the cryptocurrency exchange industry.

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Bitcoin Spot ETF: Bitwise Closes Ranks with $200 Million Initial Fund

Competition among Spot Bitcoin ETF issuers is intensifying as the period for possible approval of these funds approaches. Asset manager Bitwise is the issuer currently making waves as it could potentially overtake the world’s largest asset manager, BlackRock, in terms of seed funding for its respective ETFs.

Bitwise Bitcoin ETF Could Receive $200 Million Seed Funding

Bitwise’s latest amendment to its S-1 filing with the Securities and Exchange Commission (SEC) shows that the asset manager has secured investor interest for its ETF to receive $200 million at launch. Bloomberg analyst Eric Balchunas highlighted its importance, saying it “exceeds” BlackRock’s initial fund of $10 million.

The analyst noted that Bitwise actually seeding its ETF with such an amount could be a “huge help” in the early days of the run. It is believed that the SEC will likely approve the pending ETF applications simultaneously. As such, Bitwise’s ability to create shares worth $200 million could give the asset manager an edge in terms of meeting client demands.

Bitwise had already demonstrated its intention to lead from the start following the launch of its commercial Bitcoin ETF. This move could help the asset manager gain a lot of interest in their Bitcoin ETF even before launch. This way, the public sees it as the first option at the time of launch.

Notably, Bitwise did not mention who the authorized participant (AP) of its ETF would be. The AP would act as an intermediary between the investor and the ETF issuer, as they are responsible for creating and redeeming ETF shares. While Bitwise has not named its AP, other issuers such as BlackRock have included it in their latest S-1 filing with the SEC.

BTC ETF Issuers Show Their Hands in Latest Wave of Registrations

Bitcoin ETF spot issuers have made some notable additions in their most recent and final amendment to their S-1 filings. These inclusions also give an idea of the strategy these issuers may seek to adopt to attract investors to their funds. In the case of Fidelity, the asset manager will seek to attract investors with its relatively low fees.

Balchunas noted that Fidelity’s “sponsorship fee” of 0.39% turns out to be the lowest so far among other issuers that have disclosed theirs. Interestingly, Invesco is adopting a more attractive strategy, as it revealed in its latest amendment that it will waive fees for the first six months and the first $5 billion in assets.

The Bloomberg analyst mentioned that fee wars will continue to exist in the Bitcoin spot ETF arena as issuers look to outdo each other.

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Canadian Crypto Exchange CatalX Temporarily Suspends Trading and Withdrawals

Catalyx, a Canadian cryptocurrency trading platform, announced a security breach on Thursday. It involves the loss of crypto assets in the exchange’s custody.

Crypto Exchange Security Breach

CatalX CTS Ltd., operator of the cryptocurrency exchange, said in a press release that the security incident is suspected to involve an employee.

The events disrupted normal trading and withdrawal activities on the Canadian platform.

It said: “Due to the loss, all cryptocurrency and fiat currency withdrawals from the Platform and all trading activities on the Platform have been temporarily suspended.”

Termination order details

Based on the December 21, 2023 injunction order, the Alberta Securities Commission announced the confidentiality of the admitted evidence.

The order was granted pursuant to sections 33 and 198 of the Securities Act (Alberta) and requires a 15-day pause in the trading and purchasing of any securities or derivatives by the defendants. The order will expire on January 5, 2024, if not extended by the Commission.

Although the crypto exchange has ceased all trading and withdrawals, it is being audited by Deloitte.

Crypto Losses in 2023

However, this is not the first incident where a crypto company has lost funds due to an internal breach.

In early July 2023, reports revealed that crypto payments provider CoinsPaid suffered a loss of $37 million. The breach reportedly resulted from hackers gaining access to an employee’s computer through a misleading job offer. The employee was later tricked into installing a program that led to the theft of critical data.

In a separate incident, LastPass, a company specializing in password data encryption, faced a security breach in its cloud storage service due to employee credentials being compromised.

According to a recent De.Fi report, the decentralized finance sector faced losses totaling around $1.95 billion in 2023. Meanwhile, Ethereum emerged as the most attacked blockchain, suffering around $1.35 billion in losses in 170 violations.

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Market cap of Bitcoin and Altcoins will reach $1.85 trillion and $2.2 trillion

Amid the current financial scenario, analysts have focused their attention on the cryptocurrency market, which is showing signs of recovery. Michaël van de Poppe, a respected figure in the trading community, recently predicted that the total cryptocurrency market capitalization could rise to a staggering $2.2 trillion. This projection comes at a time when the market is going through a consolidation phase, falling below the crucial mark of 1.6 billion dollars.

The role of Bitcoin in market dynamics

Bitcoin, the leading cryptocurrency, plays a key role in this projected growth. It recently surpassed major resistance at $38,000, prompting optimistic predictions about its future trajectory. Van de Poppe correlates the advance of Bitcoin with the potential increase in the market capitalization of cryptocurrencies. He suggests that breaking through the $1.6 trillion resistance could push the market to pre-Earth collapse levels, targeting the first $1.85 trillion and eventually reaching $2.2 trillion.

Altcoins Preparing for a Milestone

At the same time, altcoins are not far behind in this potential financial revolution. EGRAG, another market analyst, predicts that the market capitalization of altcoins will reach the trillion-dollar mark. This level of growth has not been seen since the collapse of the Terra ecosystem in May.

EGRAG recalls the dramatic decline that followed, falling from $1.268 billion in April 2022 to a low of $485 billion two months later. Currently at a 19-month high of $735.5 billion, the altcoin market is recovering steadily, indicating a possible uptrend similar to the post-May 2022 scenario.

Implications for Bitcoin and Altcoin Valuations

If these predictions come true, the impact on individual cryptocurrencies could be substantial. For Bitcoin, a total market capitalization of $1.2 trillion would mean a price increase to around $61,301 per token. Meanwhile, altcoins could see a 2.3x increase in valuation, reaching as much as $1.7 trillion. This outlook has led analysts to advise investors to watch out for a recovery around March 2024.
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Crypto Tax Planning: Merging Tax-Loss Harvesting with Charitable Donations

As the year comes to a close, cryptocurrency investors can combine tax-loss harvesting with cryptocurrency donations to charities, a move that optimizes tax benefits while supporting worthy causes.

Adopt Year-End Tax Strategy with Charitable Giving

As the end of the year quickly approaches, cryptocurrency investors are not only focusing on tax-loss harvesting but also exploring the benefits of cryptocurrency charitable contributions. This strategic approach allows investors to potentially reduce their tax obligations while supporting charitable causes.

The concept of tax-loss harvesting in the cryptocurrency space involves selling digital assets at a loss to offset capital gains taxes. This method can be particularly advantageous given the volatility and potential for significant price fluctuations in the crypto market. Investors can offset capital gains or reduce ordinary income by up to $3,000 per year in the US, with the ability to carry forward any additional losses.

At the same time, donating bitcoins (BTC) and other cryptocurrencies to charities has become a tax-efficient method of supporting philanthropic causes. The IRS classifies cryptocurrencies as property, meaning donations are tax deductible to the fullest extent permitted by law. An important advantage of this approach is that donating cryptocurrency directly to a charity allows the donor to potentially avoid capital gains taxes that would be incurred if the cryptocurrency were sold and then donated for cash. Additionally, donors can typically deduct the fair market value of the crypto at the time of donation.

Organizations like The Giving Block are at the forefront of facilitating crypto donations. They provide platforms for donors to contribute various cryptocurrencies, including BTC, ETH, and USDC, to a wide variety of charities. Giving Block initiatives demonstrate the growing acceptance and use of cryptocurrencies in the nonprofit sector, offering a tax-efficient avenue for donors.

The cryptocurrency donation process is designed to be simple and secure. Donors can choose from a wide selection of charities, select the crypto asset and donation amount, and complete the transaction via a wallet address provided by the charity. Additionally, donors have the option to remain anonymous while receiving a receipt for tax purposes.

Crypto philanthropy has received significant support from prominent figures in both the crypto and non-profit sectors. High-profile donations such as Vitalik Buterin’s $1 billion SHIB donation and Pineapple Fund’s 5,500 BTC contribution highlight the potential impact of such acts of charity.

As the end of the financial year approaches, advisors encourage cryptocurrency investors to consider a combined approach of tax-loss harvesting and charitable donations. This strategy not only offers potential tax benefits, but also contributes positively to social causes. With organizations like The Giving Block and others facilitating these donations, the process of contributing to charities through cryptoassets is becoming increasingly common, allowing investors to support causes they care about while optimizing their positions as promoters.