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Libra Association Holds Inaugural Meeting, Forms Board

The Libra Association, the governing body of Facebook’s proposed stablecoin, held its inaugural meeting today in Geneva, Switzerland. 

According to a report from Reuters on Oct. 14, the consortium reaffirmed their interest in creating a payments-oriented stablecoin that would be balanced by a basked of various, purportedly stable fiat currencies. 

Libra Association sets rules for governance

In addition to explicitly stating their interest in the project, the consortium’s 21 members also formed a five-member board and agreed to interim articles of association which, according to Swiss law, must describe how the organization will be governed. 

Most major decisions will reportedly require a majority vote of the ruling council, while proposed changes to membership or management of the reserve must pass by a two-thirds majority.

The five-member board comprises of Facebook’s David Marcus, representatives from non-profit Kiva Microfunds, PayU, venture capital firm Andreessen Horowitz and Xapo Holdings Limited.

Backers flee Libra Association

Today’s meeting in Geneva follows a spate of withdrawals from former consortium members. Earlier today, Booking Holdings, the owner of travel sites booking.com, priceline.com, agoda.com and Kayak, withdrew from the Libra Association.

Other major payments- and commerce-related firms have left the association, including Mastercard, Visa, eBay, Stripe and PayPal. According to Reuters, the only remaining payments firm in the Libra Association is Netherlands-based PayU, which purportedly does not operate in the United States, Canada and many areas in Africa and the Middle East.

Cause for optimism?

The Libra Association is apparently remaining optimistic about going ahead with the project. Dante Disparte, the head of policy and communications at Libra Association, told Reuters that the recent flight of major backers is “a correction; it’s not a setback.” However, Disparte further admitted that the coin could face delays as regulators continue to scrutinize the project. 

Earlier today, United States Treasury Secretary Steven Mnuchin said that the firms left Libra because it was not “up to par” with American Anti-Money Laundering standards. Mnuchin added that, if the project is not compliant when it launches, it could result in action from the Financial Crimes Enforcement Network, which is under the purview of the Treasury. 

Facebook CEO Mark Zuckerberg is slated to testify about the project before the House of Representatives Financial Services Committee at a hearing entitled “An Examination of Facebook and Its Impact on the Financial Services and Housing Sectors.”

Kik Announces It’s ‘Here to Stay’ in Apparent Reversal of Fortunes

Canadian social media and messaging app Kik has revealed it’s “here to stay,” in an apparent reversal of earlier plans to shut down amid legal difficulties.

In an official tweet posted on Oct. 13, the company announced:

“Great news: Kik is here to stay!!!!AND there’s some really exciting plans for making the app even better. More details coming soon. Stay tuned.”

“More soon” and “stay tuned”

As previously reported, Kik had been embroiled in a costly legal battle with the United States Securities and Exchange Commission (SEC) over its initial coin offering’s designation, with the regulator suing the company for having conducted an allegedly unregistered $100 million token offering.

Having pared down its workforce from 151 to just 19 and mulled a complete shutdown — according to a blog post from CEO Ted Livingston late last month —  the company closed the Kik X beta platform on Sept. 27. 

Yet the first hint of a turn in fortunes emerged on Oct. 7, when Livingston tweeted:

“Some exciting news: we may have found a home for Kik! We just signed an LOI [letter of intention] with a great company. They want to buy the app, continue growing it for our millions of users, and take the Kin integration to the next level. Not a done deal yet, but could be a great win win. More soon” 

Down to the bone 

With further details of the game-changing deal still to be announced, Kik’s apparent decision to close had meanwhile been harshly criticized among community members. The Kin cryptocurrency has also seen a steady decline — no doubt in part due to broader market conditions, yet unlikely helped by the company’s seemingly intractable difficulties.

Kin token 3-month chart, as of Oct. 14, 2019

Kin token 3-month chart, as of Oct. 14, 2019. Source: Coin360

As reported, at the peak of the firm’s stand-off with the SEC, Livingston had pledged to fight the SEC until we don’t have a dollar left.”

Telegram Responds to Investors on SEC Action, Hearing Set for Oct. 24

Telegram Open Network (TON) developers responded to its investors after American regulators abruptly announced that its $1.7 billion token sale was illegal.

No clear feedback from SEC for 18 months

According to a TON letter to investors obtained by Cointelegraph, the firm has been trying to solicit feedback from the United States Securities and Exchange Commission (SEC) for the past 18 months regarding the TON blockchain and does not agree with the recent action. It wrote:

“We were surprised and disappointed that the SEC chose to file the lawsuit under these circumstances, and we disagree with the SEC’s legal position.”

Court hearing is scheduled for Oct. 24

In the letter, Telegram stated that they are continuing to assess the best ways to resolve the situation in the interests of relevant parties, including but not limited to evaluating whether to delay the launch date.

After deeming Telegram’s initial coin offering (ICO) illegal, the SEC also filed a temporary restraining order, setting a court hearing in New York for Oct. 24.

Following the news, New York Times tech reporter Nathaniel Popper tweeted on Oct. 12 to point out the involvement of high-profile investors in Telegram’s $1.7 billion ICO, including Benchmark, Sequoia and Lightspeed. He wrote:

“The SEC’s move to shut down Telegram’s crypto project raises  questions about the big venture capital firms that gave it $1.7 billion and convinced themselves that it would pass regulatory muster. That includes Benchmark, Sequoia and Lightspeed.”

Yesterday, a private Telegram channel for TON investors removed all previous posts and announced it will be taking a break amid the increased level of regulatory uncertainty.

Criticism against SEC over no clarity for crypto

The SEC has been notably criticized for its lack of clarity regarding cryptocurrencies and ICOs. In late September, a group of lawmakers from the U.S. Congress sent a letter to the authority’s chairman Jay Clayton, urging the commission to issue clear guidance on cryptocurrencies. Previously, Representative Warren Davidson hosted a crypto roundtable where participants expressed their concerns over the existing legal framework for ICOs and crypto.

Earlier this year, John Berlau, a senior member at libertarian think tank Competitive Enterprise Institute, criticized the SEC’s approach to regulating cryptocurrencies, arguing that its “burdensome regulation” kills transformative innovation. He also argued that the SEC’s scrutiny could threaten the functionality of blockchain tech if the agency treats cryptocurrencies as securities. In early April, U.S. lawmakers reintroduced the Token Taxonomy Act that aims to exclude crypto from securities laws.

US SEC Halts TON Launch Over $1.7B ICO — Highest-Level Action Yet?

Late Friday, the United States Securities and Exchange Commission (SEC) announced that it is suing two offshore entities, Telegram and its wholly owned subsidiary, TON Issuer, for holding an unregistered token sale.

According to the complaint filed in the federal district court in Manhattan on the same day, Telegram sold approximately 2.9 billion crypto tokens, called Grams (GRM) to 171 buyers for a total of $1.7 billion. Around a quarter of that sum, $424.5 million, allegedly belonged to 31 purchasers based in the U.S. 

As a result, the SEC has obtained a temporary restraining order against Telegram and TON, seeking “certain emergency relief,” as well as permanent injunctions, disgorgement with prejudgment interest and civil penalties. Now, the official Telegram channel for TON investors is suggesting that the launch, scheduled for Oct. 31, could be postponed. So, what is happening with the largest private initial coin offering (ICO) in history?

Brief introduction to TON

GRM is a native currency of Telegram Open Network (TON), a blockchain platform aimed at facilitating payments and hosting decentralized applications (DApps) beyond Visa’s scalability levels. The project is developed by Telegram, an open-source encrypted messenger lead by two Russian entrepreneurial brothers, Pavel and Nikolai Durov, who fled their native country. TON will ostensibly be integrated into the app, which boasts over 200 million users worldwide and is widely popular within the blockchain and cryptocurrency community. 

According to third-party research, TON has the potential to serve as a gateway for crypto assets and related apps to “bank the unbanked” as well as become the first discovery platform for Web 3.0 applications — “akin to the App Store for Web 2.0.”

TON saw one of the most successful ICOs in the industry. In 2018, Telegram raised almost $1.7 billion in two private token sale rounds, held in February and March. According to the documents Pavel Durov filed with the SEC, only those investing a minimum of $1 million were allowed to partake in the TON sale. The offering was limited to accredited investors in order to minimize the scrutiny from U.S. regulators.

In early October, Telegram published the entire TON source code on Github and announced that the launch of its long-awaited blockchain project would be scheduled for the end of the month. Additionally, the company revealed that all investors had been provided with TON key generation software and were to receive their GRM tokens by Oct. 16. 

Additionally, on Oct. 8, Telegram released the terms of use for its native cryptocurrency wallet, Grams Wallet, which is designed to be paired with TON. The company simultaneously stressed that it has no control over the blockchain. Those terms also distanced the company from regulations, stating “we are not responsible for determining whether taxes apply to any transactions you make using the Services or for collecting, reporting, withholding or remitting any taxes arising from any virtual currency transactions.”

ICO troubles: Unsolicited GRM sale in July, SEC’s probe

The first problems concerning the TON token sale surfaced in July, when Gram Asia — reportedly the largest holder of Telegram‘s Gram tokens in the region — started selling rights to its GRM holdings in partnership with Japan-based crypto exchange Liquid at $4.00 per token, thus tripling the original $1.33 sale price. 

Apparently, the sale — which TON did not sanction — contradicted the token purchase contract. As a TON investor shared with Cointelegraph at the time, all buyers had explicitly agreed not to let go of their ownership rights prior to the launch and were not allowed to:

“ENTER INTO ANY swap or other AGREEMENT THAT TRANSFERS, in whole or in part, ANY OF THE ECONOMIC CONSEQUENCES OF OWNERSHIP OF THE INVESTMENT CONTRACT represented by this Purchase Agreement or any Tokens.”

Now, just a couple of weeks prior to the TON release, the SEC has stepped in with a restraining order, halting the token offering. The regulator’s complaint alleges that Telegram and its TON subsidiary did not register the sale of the GRM token, which the SEC deems to be a security.

Because the Securities Act of 1933 requires that all securities be registered with the SEC, the agency considers the sale of GRM tokens “unlawful.” Notably, according to public documents from 2018, Telegram had informed the SEC that both of its $850 million offerings were supposedly made under Rule 506(c) and/or Regulation S under the Securities Act of 1933. Essentially, that means that because GRM tokens were sold only to accredited investors, the offering was not required to be registered with or qualified by the SEC.

However, it now seems that the SEC is not convinced. “Telegram committed to deliver Grams to the Initial Purchasers in conjunction with the launch of the TON Blockchain by no later than October 31, 2019 and it plans to sell millions of additional Grams at the same time,” the complaint reads. “As of October 11, 2019, Telegram has not filed a registration statement with the SEC for this planned offering of securities.” Steven Peikin, co-director of the SEC’s division of enforcement, claimed

“Telegram seeks to obtain the benefits of a public offering without complying with the long-established disclosure responsibilities designed to protect the investing public. We have repeatedly stated that issuers cannot avoid the federal securities laws just by labeling their product a cryptocurrency or a digital token”

The agency highlighted that once the GRM tokens are released, by no later than Oct. 31, their purchasers and Telegram “will be able to sell billions of Grams into U.S. markets,” therefore continuing the unregistered token sale. Stephanie Avakian, the other co-director of the SEC’s enforcement division, said:

“Our emergency action today is intended to prevent Telegram from flooding the U.S. markets with digital tokens that we allege were unlawfully sold.”

Telegram’s response

Telegram and TON did not respond to Cointelegraph’s request for comment on the complaint. However, TON Board, a private channel created “by investors and for investors in the Telegram Open Network (TON) as well as for future major holders of Grams,” wrote:

“Due to the increased level of regulatory uncertainty we take a break to analyze new information and adapt our policies. 

TON Board will be with you again once we have more clarity on the legal status of the TON and Gram as well as permitted type of analysis that may be published on them. 

We are looking forward to sharing more information with you as soon as it’s possible.”

TON Board has also deleted all previous messages from its channel. 

Experts: U.S. regulators are taking on crypto actors with renewed vigor 

Internet attorney and cybersecurity law professor Andrew Rossow believes that by putting the brakes on the TON sale, the SEC is showing it will no longer accept token offerings skirting securities regulations. He told Cointelegraph:

“The SEC isn’t playing around. It’s time these companies recognize this. It’s been very upfront and clear for several years now that most tokens offered by these companies qualify as securities and must comply with federal regulations.”

According to Rossow, the SEC’s current enforcement action against Telegram is the highest-level action taken to date, and it will potentially jeopardize the company’s ability to continue selling its tokens abroad in other jurisdictions. “This means this is far from over and will have some legal ramifications for Telegram and consequences for its shortcutting,” the legal expert told Cointelegraph, elaborating: 

“This current action will do two things—legally establish the standard and seriousness the SEC has for token offerings and force the U.S. courts to now take a clearer stance in the world of digital monies and security offerings.”

The SEC’s intervention is happening against the backdrop of increasing scrutiny showcased by U.S. regulators, notes Selva Ozelli, international tax attorney and CPA.

As Ozelli pointed out, on the same day the SEC started its probe  into the TON sale, the U.S. Commodity Futures Trading Commission, the Financial Crimes Enforcement Network, and the SEC issued a joint statement to remind people — from both offshore and the U.S. — who are engaged in activities involving digital assets of their Anti-Money Laundering and Countering the Financing of Terrorism obligations under the Bank Secrecy Act. “Such persons need to also comply with U.S. tax laws, since U.S. regulators have jurisdiction over such entities,” Ozelli told Cointelegraph. 

It is yet another piece of evidence of U.S. financial watchdogs attempting to regulate coin issuances for any local markets, Robert W. Wood, a tax lawyer of San Francisco-based Wood LLP, agreed. “On the tax side, there is increasing evidence there too that the IRS is gearing up and pushing harder,” he told Cointelegraph. 

The court has ordered the defendants (TON Issuer and Telegram) to deliver “any opposing papers” no later than Oct. 18. Additionally, its representatives have been summoned to argue its  case in court on Oct. 24. Until then, the judge has warned Telegram against any ongoing or future violations, “including but not limited to by delivering Grams to any person or entity or taking any other steps to effect any unregistered offer or sale of Grams.”

Telegram’s TON Board ‘Takes a Break,’ Removes All History From Channel

Following a recent red flag from United States. regulators, a private Telegram channel for Telegram Open Network (TON) is taking a break.

Temporary halt for more clarity

On Oct. 12, TON Board channel on Telegram announced a temporary halt of work due to the increased level of regulatory uncertainty.

TON Board has also deleted all previous posts on its Telegram channel, making the latest announcement the sole post on the channel at press time.

As noted in the channel description, TON Board is a private channel created by investors and for investors in the TON as well as for future major holders of Grams. The channel has around 2,400 subscribers at press time.

In the announcement, TON Board stated that it is taking a break to analyze new information and adapt policies. The channel noted that they are planning to come back as soon as they have more clarity on the legal status of the TON and Gram, as well as an allowed type of analysis that may be published about them.

SEC flags Gram weeks before launch

The move comes after the United States Securities and Exchange Commission (SEC) abruptly announced that Telegram’s $1.7 billion Gram token sale in 2018 was illegal. On Oct. 11, the regulator filed an emergency action and restraining order against Telegram and the TON in order to prevent the initial investors from being able to acquire Grams.

The regulatory announcement took place just weeks before the much-anticipated TON launch in late October, as officially planned by the firm. In preparation for the launch, Telegram released the terms of use for its native cryptocurrency wallet Grams Wallet on Oct. 8, noting that Telegram should not be used in jurisdictions where its services are prohibited by any applicable law, regulation or rule.

One day before the emergency action, major U.S. crypto exchange and wallet service Coinbase announced that it plans to provide its digital custody support for Gram as soon as it goes live. Previously, a digital asset custodian of software firm Anchor Labs declared that it will be the first entity qualified to support institutional custody for Gram, noting that the token will launch on Oct. 31.

Breaking: US SEC Deems $1.7 Billion Telegram Offering Illegal, Orders Halt

The United States Securities and Exchange Commission (SEC) has announced that Telegram and the forthcoming GRM token constitute an unregistered digital token offering.

Per an Oct. 11 press release, the SEC has filed an emergency action and restraining order against Telegram and the Telegram Open Network (TON) in a complaint with Manhattan court.

The allegations

The full complaint alleges that Telegram and TON did not register their sale of GRM tokens, which the SEC considers securities and which, therefore, require registration with the SEC according to the Securities Act of 1933.

According to Stephanie Avakian:

“Our emergency action today is intended to prevent Telegram from flooding the U.S. markets with digital tokens that we allege were unlawfully sold.”

Other SEC actions

Earlier today, Oct. 11, Cointelegraph reported that the SEC, together with other U.S. regulatory agencies the Commodity Futures Trading Commission and the Financial Crimes Enforcement Network, issued a warning to crypto asset holders against violations of the Bank Secrecy Act, especially use of crypto in money laundering and terrorism financing.

Two weeks ago, Cointelegraph reported from an SEC hearing before the House Financial Services Committee, following which many questions remained as to who would be taking the lead on determining the status of cryptocurrencies, regulators or legislators. At the time, SEC Commissioner Robert J. Jackson Jr. told Cointelegraph: 

“Is this going to be more of a legislative move or an SEC move? […] At the moment I don’t know.”

US IRS Adds Question on Crypto Usage to New Income Tax Form Draft

The United States Internal Revenue Service (IRS) has added a question on crypto ownership to the standard 1040 income tax form for the coming tax season.

IRS wants to know about your crypto in 2019

On Oct. 11, a draft of the “Additional Income and Adjustments to Income” section of the new 1040 form surfaced that included a change was made to the ‘Additional Income and Adjustments to Income’ section. On the new 1040 form, the additional question reads:

“At any time during 2019, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?”

The question expects a straightforward yes or no, with no additional details requested.

Cointelegraph previously reported that the IRS had issued new guidelines for tax reporting on cryptocurrency airdrops and hard forks. The tax agency’s guidance answered questions about cryptocurrency transmissions for investors that hold cryptocurrencies as a capital asset and set general principles of tax law to determine that virtual currency is property for federal tax purposes.

H&R Block helps with crypto taxes

Cointelegraph reported in September that United States-based accounting firm H&R Block started acting as an intermediary between crypto users and the IRS after the agency began sending letters to crypto traders who may have failed to report income and pay taxes.

H&R Block can now assist people who have engaged in digital currency transactions, specifically providing consultations on how to properly file their cryptocurrency gains and losses on tax returns.

If Bitcoin Fails, Crypto Industry in for a Bad Time: Cardano Founder

Ethereum (ETH) co-founder turned Cardano (ADA) creator Charles Hoskinson believes that if Bitcoin (BTC) fails, the entire cryptocurrency industry could fail.

Hoskinson made his remarks during an interview for the Off the Chain podcast on Oct. 10, hosted by Morgan Creek Digital Assets co-founder Anthony Pompliano.

After multiple projects that included co-founding Ethereum, Hoskinson — a mathematician, cryptographer and entrepreneur — founded the peer-to-peer technology firm Input Output Hong Kong (IOHK) in 2015. 

As CEO of IOHK, Hoskinson created and launched the cryptocurrency Cardano in 2017, which uses a Proof-of-Stake (PoS) algorithm dubbed Ouroboros.

Bitcoin: “blind, deaf and dumb by design”

During the interview, Hoskinson reflected on Bitcoin’s origins, the parameters they set for subsequent projects, so-dubbed Bitcoin maximalism, and how Bitcoin’s future survival is intimately bound up with the fate of the entire industry.

“One of the biggest problems with Bitcoin,” he began, “is that it’s blind, deaf and dumb and that was by design.” 

This was appropriate for its earliest ambitions, he said, proposing that the two core features of the Bitcoin experiment were “will Proof-of-Work evolve into a decentralized system and will the token achieve value?”

Conversely, Bitcoin was never intended “to replicate the world financial system and also be fully compliant with that system, this was not in its scope.”

Hoskinson critiqued Bitcoin Maximalists for taking Satoshi’s vision as “the gospel” and dismissing any deviation from it as wrong: 

“I can’t even make pull payments with Bitcoin and that’s […] the bread and butter of most of our commercial systems.”

Maximalists should concede that Bitcoin’s not necessarily always fit-for-purpose, he said. And having to go off-chain to solve certain limitations isn’t the solution either:

“You don’t solve your decentralized reality, your decentralized dream, by centralizing it. That’s philosophically incompatible.”

“Bitcoin, frankly, is the brand of cryptocurrencies”

Hoskinson’s comments on Bitcoin’s importance for the entire cryptocurrency space spun out of a discussion of the merits of Proof-of-Work (PoW) vs. Proof-of-Stake systems, and which of the two is more likely to survive. 

He made the case that PoW systems will only survive if they find a way to evolve in such a way that the work — computation — becomes useful, i.e. by monetizing excess computational capacity in order to establish a “marketplace for distributed computation.”

Currently, he argued, those who are evangelical about the need to preserve an absolutely trustless protocol ignore the fact that PoW systems always federate in reality, being determined by who has access to subsidized power, data centers and specialized ASIC miners. 

Notwithstanding his vision of how the PoW space needs to evolve in order to overcome these shortcomings, he concluded with the robust acknowledgment that:

“Bitcoin frankly is the brand of cryptocurrencies. We can’t say, oh, I’m going to succeed but Bitcoin’ll fail. if Bitcoin fails, the whole industry’s probably in for a really bad time.”

As reported by Cointelegraph, Hoskinson had announced the roll-out of Cardano version 1.6 this August.

Official: Alipay to Ban All Bitcoin-Related Transactions

Alipay, the digital payment arm of Chinese e-commerce giant Alibaba, has declared that it will be banning any transactions related to Bitcoin (BTC) and other cryptocurrencies.

Combating illicit players

On Oct. 10, Alipay reiterated its anti-crypto stance in a Twitter thread, which warned that the company is closely monitoring over-the-counter transactions to identify irregular behavior and ensure compliance with relevant regulations. Alipay wrote:

“If any transactions are identified as being related to bitcoin or other virtual currencies, @Alipay immediately stops the relevant payment services.”

This move follows various reports that Alipay is being used for BTC transactions.

Binance uses Alipay for buying crypto

On Oct. 9, major crypto exchange Binance confirmed on Twitter that it has begun accepting fiat currencies through online payment service Alipay and mobile messaging and payment app WeChat. 

Binance CEO Changpeng Zhao, also known as CZ, clarified that the exchange is not working directly with WeChat or Alipay, and users are still able to use them for peer-to-peer transactions.

This announcement followed the implementation of Binance’s peer-to-peer trading for Bitcoin, Ether (ETH) and Tether (USDT) against the Chinese yuan (CNY) earlier, as reported by Cointelegraph.

China’s CBDC plans

Originally founded in China in 2017, Binance made its first strategic investment in Beijing-based crypto and blockchain publication Mars Finance in mid-September. At the time, the crypto community was anticipating the People’s Bank of China to launch its own central bank digital currency (CBDC).

However, in late September, the bank shattered these expectations — claiming that it has no specific launch date for its CBDC and denying that the country is ready to roll out the new financial asset.

Bitwise Will Refile Its Bitcoin ETF Application ‘as Soon as Appropriate’

Bitwise Asset Management and NYSE Arca have confirmed they will refile their application for a Bitcoin (BTC) exchange-traded fund (ETF) after the United States regulators rejected it.

Bitwise: We intend to refile

According to a press release published on Oct. 9, the companies said that while the U.S. Securities and Exchange Commission (SEC) refused their ETF application, they were buoyant about the progress.

The verdict on Bitwise’s ETF proposal had seen multiple delays prior to this week’s final decision, which the SEC had no choice but to make, according to statutory rules. The press release states:

“We deeply appreciate the SEC’s careful review. The detailed feedback they have provided in the Order provides critical context and a clear pathway for ETF applicants to continue moving forward on efforts to list a bitcoin ETF. […] We look forward to continuing to productively engage with the SEC to resolve their remaining concerns, and intend to re-file as soon as appropriate.”

Officials “pleased with progress” from SEC

Bitcoin markets remained steady as news of the latest rejection arrived. Previously, Bitwise in particular appeared confident that a positive outcome could still occur.

“We’re closer than we’ve ever been before to getting a Bitcoin ETF approved,” CEO Matt Hougan told mainstream media on Oct. 7. 

Nevertheless, more than a year-long dialogue with regulators has not been for nothing, says the company, concluding:

“While we were not able to satisfy the SEC’s concerns inside the statutory 240-day review window afforded these filings, and while they have identified the need for additional data and context to interpret our key findings, we are pleased with the progress that the industry has made and believe that, with additional research and continued progress in the broader ecosystem, the remaining concerns and challenges raised in this order will ultimately be satisfied.”

In September, another ETF proposal, this time from VanEck and SolidX, was withdrawn by its sponsors. The SEC delayed its judgement on a third offer from Wilshire Phoenix around the same time.

Report: Blockchain Among Highest-Paying Industries in Canada

A recent report from the Canadian Digital Chamber of Commerce shows that salaries in the Canadian blockchain industry are amongst the highest in the country.

Much needed legal clarity

The Chamber of Digital Commerce Canada released its October report on the country’s blockchain ecosystem, showing insights into the health of the industry, current strengths and legal needs throughout Canada.

The report collected data from more than 150 participants coming from the cryptocurrency and blockchain industries, Canada’s government and academia. The study was conducted by the Blockchain Research Institute (BRI) with support from professional services company Accenture.

The report, which takes a closer look at Canada’s blockchain ecosystem by region and company size, stated that the industry desperately needs government commitment to move this highly innovative technology sector forward by providing legal clarity. BRI’s chairman Don Tapscott said:

“While the research showed that the blockchain industry is diverse and growing in Canada, it also surfaced challenges regarding access to funding and business services, and uncertain regulatory environments.”   

Although the report claims that Canada is well-positioned to become a global leader in the blockchain industry, the ecosystem is facing major challenges that include funding, lack of regulatory environment, insufficient public education and little to no cooperation of banking and auditing services.

Blockchain salaries among the highest in Canada

A big positive, according to the report, is that the average annual blockchain salary in Canada is more than $98,000, making blockchain careers among the highest-paying in the country. Managing director of the Chamber of Digital Commerce Canada Tanya Woods said:

“Canada’s existing innovation ecosystem offers best-in-class talent and pro-growth policies that can be leveraged to establish a leading global blockchain hub here at home. It is clear that Canada’s blockchain ecosystem offers tremendous opportunity to those interested in a career in this field.”

Bitcoin tax payments in Canada

Cointelegraph previously reported that Evan Kuhn, the co-founder of Toronto-based cryptocurrency exchange Coinberry, claimed Bitcoin (BTC) is more efficient for paying taxes than bank cards. Kuhn explained that his company takes much lower fees than the ones that card institutions impose on their clients, adding: 

“A credit card company charges a 3% fee. […] Our fee is .5%, so that’s a lot more beneficial for the municipalities.”

Veteran Crypto and Stocks Trader Shares 6 Ways to Invest and Get Rich

Two of the most frequent questions that I get from people in the crypto community are: what do you invest in and what are the best investing strategies? As a general rule, the best investment strategy focuses on maximizing gains while minimizing risk. 

Historically, the best assets that fit this profile have been stocks, bonds, and real estate. A well balanced portfolio should have an allocation of all three, which is where I am most heavily invested.

Every investment strategy should always have a long-term horizon and investors that begin putting money away in their 20s have an exponential advantage over those who begin to save later. Furthermore, investing money that is not needed to cover expenses and leaving it in the market for as long as possible is the primary method for accruing wealth faster than any other single strategy. Ultimately, this is the secret to getting rich!

To show how this works in reality, let’s take a look at an easily achievable scenario. If a person invests $250 a month at an 8 percent average annual investment return the following retirement outcomes are achieved. 

A person starting at age:

— 25 will accumulate $878,570 by age 65.

— 35 will accumulate $375,073 by age 65.

— 45 will accumulate $148,236 by age 65.

As you can see, an investor who begins putting money away at 25 will end up with roughly 7 times as much money at age 65 as an investor who begins at 45. This is a result of compound interest and the key to successful long term investing. 

Long-term versus short-term investing

There is a significant difference between long-term and short-term investing. A lot of people, particularly millennials, don’t invest in stocks because they are afraid of losing money in the short term. If one is investing for the long term, then there is very little risk in legacy markets. Stocks can go down, but over any 10 year period in history they are always up at least 7% per year when the gains and losses are averaged out. With a longer term horizon, stocks have literally never been a bad investment. 

Personally, outside of my assets (house, cars, collectibles and art), I keep 60% of my capital in index funds like Vanguard and the SPDR S&P 500 Trust. The other 20% is in individual stocks like Amazon, Apple and other large cap companies. The remaining 10% is invested in physical real estate and Real Estate Investment Trusts (REITS). I also have 10% of my funds in cryptocurrency. 

I invest as much as possible in tax shelters like Roth and SEP IRAs to avoid paying taxes on the gains and to increase the amount that is compounding. I also trade commission-free on E-Trade and try to only invest in index funds that have the lowest possible fees. I also dollar cost average in each investment, meaning that I buy most of these investments on a fixed date, with a fixed amount regardless of price. 

So where does crypto fit into an investor’s profile?

As a 42 year old with children and an expensive life, I am only comfortable allocating 10% or less of my net worth into cryptocurrency. A more risk averse investor would probably limit that to less than 5% and it’s likely that many in my age group would not be willing to put more than 1% to 2% of their money into such a risky asset class. 

That said, most of the people investing in cryptocurrency are millennials and can tolerate far more risk than the me. I lost everything more than once in my 20s and was able to recover. For a younger investor that is passionate about the crypto space, a larger allocation of 25% could be justifiable. Obviously, one should never be all in on any asset or asset class.

So how does one actively invest in markets and maximize their potential earnings?

Compound, compound, compound!

As Albert Einstein once said: 

“Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t pays it.”

The world’s most famous scientist issued this comment about compound interest and time has shown that Einstein was correct. As defined by Investopedia, “Compounding is the process in which an asset’s earnings, from either capital gains or interest, are reinvested to generate additional earnings over time. This growth, calculated using exponential functions, occurs because the investment will generate earnings from both its initial principal and the accumulated earnings from preceding periods. Compounding, therefore, differs from linear growth, where only the principal earns interest each period.” 

As mentioned earlier, compounding one’s gains is the key to accumulating wealth, period.

There are three key rules to maximize the advantages of compounding: 

— Reinvest dividends or interest into the asset. 

— Add more to the investment whenever possible.

— Invest over a long period, the younger one starts, the more powerful compounding will be. 

Compounding cryptocurrency investments is far more challenging than in legacy markets. However, there are tools that I personally use to make my money work for me in both places. 

Acorns

My favorite tool for passively investing in legacy markets is Acorns. Even though I have accumulated wealth, I still use this tool to help get more money into the market. As described on their site, “Acorns automatically invests your spare change and lets you invest as little as $5 any time or on a recurring basis into a portfolio of ETFs.” This is a fantastic way for developing a diversified portfolio and the platform invests in more than 7,000 stocks and bonds. Acorns also auto rebalances the portfolio to stay within reasonable target allocations. 

Acorns does the hard work of managing users’ portfolios based on their investing goals. Furthermore, the money that users invest is rounded up from their bank account transactions and credit card purchases, so it’s generally manageable and goes unnoticed. Personally, I use the 10x option to increase my investment.

RoundlyX

Think of this platform as the Acorns of crypto. Similar to their legacy market cousin, RoundlyX rounds up everyday credit card and bank transactions and invests them in cryptocurrencies. At present, users can choose from a number of options, which is effectively anything traded on Coinbase. The company is seeking additional offerings with lower fees to help maximize customer gains. 

RoundlyX does not provide custody for assets, they simply facilitate the transaction through Coinbase. This is a brilliant platform and I use the 10x option. I should add that this platform is my primary tool for dollar cost averaging into Bitcoin. 

BlockFi

BlockFi allows cryptocurrency investors to earn interest on their Bitcoin (BTC), Ether (ETH), and Gemini dollars (GUSD). This is where compounding gains come into play. The company offers up to 6.2% annual interest on Bitcoin balances smaller than 5 BTC and up to 8.6% on other digital assets. 

Platform users also receive interest on their principal and interest. Over the long term, this will result in satisfying exponential gains. For Bitcoin holders, this is a great way to grow the total investment while waiting for Bitcoin to reach a desired target price.

Voyager is an incredible exchange with a futuristic iOS app that offers US compliant commission-free trading on 20 tokens. Reducing commissions and fees is key to growing wealth and Voyager solves this problem by providing an easy to use interface to boot.

What’s the bottom line?

Invest early and often! This is the true key to investing success. Also seek low fee investments and exchanges that waive commissions. Take advantage of tax shelters like 401Ks and IRAs. Put your money to work for you and don’t touch it unless you absolutely need it! 

When you are young you can invest in almost any asset as younger investors should keep the long time-horizon in mind. Following these strategies is the surest way to leave you sitting financially pretty and you’ll have a nice stack when you need your money the most!