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13/08/2018: Biggest Stories in the Cryptosphere

by BlockEx

1. Hedge Funds Not Sure How To Pay Taxes For Crypto Profits

A growing number of hedge funds is investing billions of dollars in cryptocurrencies such as Bitcoin. However, given the lack of regulatory clarity, they are not sure of what process to follow, in regards to paying taxes on the profits generated from cryptocurrency investments. Despite the Internal Revenue Service’s (IRS) announcement, in July, that it would focus on a system for crypto investors to pay taxes, there is still uncertainty. What many hope is that some tax firms will take upon themselves the responsibility of giving regulatory clarity to hedge funds. An example is New York-based law firm Seward & Kissel. Some would prefer CFTC’s definition of virtual currencies being commodities to be adopted in the mainstream.

2. Does Turkish Lira’s Decline Prove Cryptocurrency’s Potential?

Between September 2017 and now, the Turkish Lira fell from $0.3 USD to $0.15. This means a 50% decline. Despite Bitcoin’s decrease being more severe, it’s still easier to withdraw it, compared to the local currency. In fact, following a move by the president, is becoming increasingly difficult for businesses and individual to exchange the Turkish currency for foreign ones. This devalues the currency even more. On the other side, cryptocurrencies such as Bitcoin are easier to exchange as well as decentralised, meaning they are free of initiatives launched by governments. This would benefit the market for consensus currencies and decentralized financial networks. JP Morgan Analyst Kerry Craig stated that the situation is due, not only to economic factors, but also political ones.

3. Lambonomics: The Cryptocurrency Price Index

A new website introduced the Lambo Index, the crypto equivalent to the Big Mac Index. “If a Big Mac costs $5 in America, but the equivalent of $20 in South America, then the exchange rate between the two currencies should be 1:4”. The same principle is followed by the Lambo Index. The website shows how much it costs to buy a $ 200,000-worth Lamborghini Huracan using various cryptocurrencies. The difference between them reveals what the exchange rate should be along with assessing if their valuation is correct. For now, only Bitcoin, Litecoin, and Ethereum are quoted. Receiving data regarding the different prices set by countries would help increase the accuracy of this system.

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