Bitcoin and ether can be used to pay taxes in the Swiss Canton of Zug starting next tax season. Zug’s crypto valley is home to many cryptocurrency businesses, and by accepting bitcoin and ether for tax payments, the canton aims to “promote and simplify the use of cryptocurrencies in everyday life.”

Pay Taxes With Bitcoin

Switzerland’s Canton of Zug announced Thursday that it will start accepting cryptocurrency for tax payments. The Zug Department of Finance is collaborating with local company Bitcoin Suisse to offer tax settlement with cryptocurrencies, starting in the upcoming tax season which begins in February next year. The announcement details:

Beginning in 2021, taxes in the Canton of Zug can be paid using the cryptocurrencies bitcoin and ether.

Companies and private individuals can use BTC or ETH to pay their tax bills of up to CHF 100,000 ($109,900). Partial payments are not accepted. A pilot will take place in the coming weeks to ensure that everything is ready for the upcoming tax season.

Anyone wanting to pay their tax bills with cryptocurrencies may contact the cantonal tax office. They will be provided with the QR code for payment. Zug’s Finance Director Heinz Tännler clarified: “We do not take any risk with this new payment method, as we always receive the amount in Swiss francs, even if payment is made in bitcoin or ether.”

Founded in 2013, Bitcoin Suisse is a regulated Swiss financial intermediary that offers prime brokerage, custody, crypto payments, collateralized loans, staking, and other crypto-financial services for private and institutional clients. The company is currently in the licensing phase for the Swiss and Liechtenstein banking licenses.

As the home of the Crypto Valley, it is important to us to further promote and simplify the use of cryptocurrencies in everyday life. By enabling the payment of taxes with bitcoin or ether, we are taking a big step in this direction.

In January, Zermatt, a Swiss municipality known for its ski resort, announced that it started accepting bitcoin for government services, including payment for local taxes. Meanwhile, the Chiasso municipality started accepting bitcoin for tax payments since January 2018.

By Kevin Helms

Mastercard has launched a digital currency testing platform aimed at helping central banks test their digital currencies. The system will also demonstrate how consumers can use central bank digital currencies to pay for goods and services wherever Mastercard is accepted worldwide.

Mastercard’s Digital Currency Testing Platform

Global payments company Mastercard announced Wednesday the launch of its “proprietary virtual testing environment” for central banks to evaluate use cases of their central bank digital currencies (CBDCs). The company detailed:

The platform enables the simulation of issuance, distribution and exchange of CBDCs between banks, financial service providers and consumers.

“Central banks, commercial banks, and tech and advisory firms are invited to partner with Mastercard to assess CBDC tech designs, validate use cases and evaluate interoperability with existing payment rails available for consumers and businesses today,” the announcement continues.

Emphasizing the need for its new platform, Mastercard cited research by the Bank of International Settlement (BIS) highlighting that about 80% of central banks are researching CBDCs and about 40% have already progressed to the experimental stage.

“Central banks have accelerated their exploration of digital currencies with a variety of objectives, from fostering financial inclusion to modernizing the payments ecosystem,” Raj Dhamodharan, Mastercard’s Executive Vice President of Digital Asset and Blockchain Products and Partnerships, detailed. “This new platform supports central banks as they make decisions now and in the future about the path forward for local and regional economies.”

Sheila Warren, Head of Blockchain, Digital Assets and Data Policy at the World Economic Forum, believes that “Collaborations between the public and private sectors in the exploration of central bank digital currencies can help central banks better understand the range of technology possibilities and capabilities available with respect to CBDCs.”

The new platform can be customized for each central bank, allowing them to “Simulate a CBDC issuance, distribution and exchange ecosystem with banks and consumers.” This includes how a CBDC can interface with existing payment networks and infrastructures, including cards and real time payments, Mastercard described. The system can also be used to “Demonstrate how a CBDC can be used by a consumer to pay for goods and services anywhere Mastercard is accepted around the world.”

Mastercard has also been expanding its footprint in the crypto space. In July, the company announced the acceleration of its cryptocurrency card partner program aimed at making it “easier for consumers to hold and activate cryptocurrencies.” Wirex became the first native cryptocurrency platform to be granted the Mastercard principal membership that allows the company to directly issue payment cards. “The cryptocurrency market continues to mature,” Dhamodharan opined, adding that “Mastercard is driving it forward, creating safe and secure experiences for consumers and businesses in today’s digital economy.”

By Kevin Helms

The European Commission, the executive arm of the E.U., has drawn up regulation to tightly monitor cryptocurrencies it considers “significant”, including asset-backed stablecoins like Facebook’s libra. Euractiv, a European news outlet, first reported the news on Sept.10, citing a leaked 167-page draft crypto proposal.

According to the report, the regulation will seek to tackle bitcoin’s high volatility as well as “risks posed by systemic ones, like libra” by creating a “new college of supervisors” involving existing national and continental regulatory agencies – and one new additional body – all chaired by the European Banking Authority (EBA).

The legislation will be tied to the level of risk posed by each crypto asset, with tougher requirements on issues such as supervision and obligations applied to what it calls “significant e-money tokens”.

For example, the Libra Association, issuers of libra, will have to become a credit institution or an electronic money institution under the supervision of the EBA, with assistance from national bodies. This classification means libra and other notable e-tokens will face stricter regulation compared to other digital firms, said Euractiv.

With a potential reach of 2,7 billion people, Facebook’s libra is particularly feared by authorities around the world. The stablecoin is to be backed by central bank-issued currencies such as the U.S. dollar, and government debt.

Regulators are concerned this could destabilize monetary policy, enable money laundering while eroding user privacy. Some governments, such as France’s, have threatened to block its use within their jurisdictions.

On Friday, Germany, France, Italy, Spain, and the Netherlands said “stablecoins should not be allowed to operate in the European Union until legal, regulatory and oversight challenges have been addressed,” according to Reuters.

Under the Commission’s proposal, digital asset developers should issue a ‘white paper’ detailing information about the issuer, the token, or the trading platform “to enable potential buyers to make an informed purchase decision and understand the risks relating to the offering.”

All these documents must then be approved by national and EU regulators before issuers can start operating. Per the draft text, the EBA will be empowered to investigate, carry out on-site inspections and impose fines equivalent to 5% of the crypto firm’s annual revenue “or twice the amount or profits gained or losses avoided by these systemic cryptocurrencies thanks to the infringement.”

The Commission’s proposal, coming two years after it was first mooted, will be released sometime this year, Euractiv reported.

By Jeffrey Gogo

Morgan Stanley Investment Management’s chief strategist and head of emerging markets has recommended bitcoin as an alternative investment to stocks amid central banks’ massive money printing policies. He says that alternative assets, like gold and cryptocurrency, could keep doing well while stocks struggle.

Morgan Stanley’s Strategist Discusses Stocks, Gold, and Bitcoin

Head of Emerging Markets and Chief Global Strategist at Morgan Stanley Investment Management Ruchir Sharma discussed stocks, gold, and also bitcoin in an interview with CNN on Tuesday. The Indian investor and fund manager joined Morgan Stanley in 1996.

Sharma began by explaining that tech stocks and risk assets would really be hurt by rising interest rates. Despite the Federal Reserve’s indication, the strategist believes that interest rates could start to rise “more quickly than we think, possibly even as early as next year.” He explained that we have been seeing “such high stock prices even though the economy is very weak.” Next year, he expects to see the opposite, as the economy rebounds and the covid-19 pandemic is behind us. However, he noted that stocks will struggle “just because of the incredible support they have got from liquidity and interest rates and that support goes away next year.”

When asked about gold and cryptocurrency, Sharma said “it’s a generational thing,” adding that some older investors are still buying gold whereas “some of the younger ones are, the millennials are buying more of the bitcoin and cryptocurrencies.” He added

Generally I think what that’s telling you is that there is this lingering feeling out there that given what central banks are doing in terms of printing so much money there is a search for alternative assets, I think that these assets could keep doing well.

“Gold, in particular, does very well when interest rates, adjusted for inflation, are negative and I see that environment carrying on for a while,” the chief global strategist predicted, adding that even when inflation comes back, central banks are going to be far behind the curve to do anything about it quickly.

However, he said that “Gold is a very speculative asset,” emphasizing that “in the long term, stocks do much better than gold.” He cited an article on The New York Times suggesting that in the last 100 years, the inflation-adjusted return on U.S. stocks is about 7% a year, compared to 1% for gold.

Nonetheless, Sharma still feels that in the next three to five years, “gold is relatively ok.” Reiterating that “central banks are printing so much money and we want some safety out there,” he elaborated:

To have about 5% or so of your portfolio in gold is not a bad idea, and if you’re a bit more adventurous, and I guess it’s more to do with demographics, then obviously search for bitcoin and other cryptocurrencies.

Sharma is not the only one who believes that central banks’ mass money-printing could boost the price of gold and bitcoin. News.Bitcoin.com previously reported on Galaxy Digital CEO Mike Novogratz and an analyst with Weiss Crypto Ratings sharing the same sentiment. Moreover, Devere Group CEO Nigel Green expects bitcoin to break out this year and macro strategist Raoul Pal believes that bitcoin beats gold on every single measure.

Some analysts have predicted that the outcome of the November presidential election could collapse the U.S. dollar, boosting the price of gold and bitcoin. As the Federal Reserve shifts policy to “push up inflation,” some companies have already turned to bitcoin as a hedge against inflation, such as the Nasdaq-listed Microstrategy.

By Kevin Helms

A bipartisan quartet of US congressmen wants the IRS taxation policy not to dissuade taxpayers from participating in blockchain token staking.

These politicians believe America’s ingenuity can help drive this promising staking technology.

The four congressmen are Bill Foster (D) of Illinois, Darren Soto (D) of Florida, Tom Emmer (R) of Minnesota, and David Schweikert (R) of Arizona.

In their letter addressed to IRS Commissioner Charles Rettig, the quartet expressed concern that the “taxation of staking rewards as income may overstate taxpayers’ actual gains from participating in this new technology.”

They add this could result “in a reporting and compliance nightmare, for taxpayers and the Service alike.”

The letter, in which the U.S. politicians explain their understanding of proof-of-stake (POS), also gives reasons why they favor POS ahead of bitcoin’s proof-of-work consensus.

The politicians say in addition to needing “massive amounts of energy,” the Bitcoin network is “secured by a relatively small number of miners.” On the other hand, in POS, “all tokenholders can contribute to network security.”

By staking tokens, participating third-party tokenholders can also receive newly created tokens as rewards for helping to maintain the network.

The quartet says it agrees with the principle “that taxpayers’ true gains from these tokens should indeed be taxed.”

However, the politicians suggest a different solution:

Similar to all other forms of taxpayer-created (taxpayer-discovered) property — such as crops, minerals, livestock, artwork, and even widgets off the assembly line — these tokens could be taxed when they are sold.

Eager to keep the U.S. abreast with this technology, the congressmen end their letter by urging the IRS to continue pursuing its mandate “but also (to) ensure innovation won’t be driven elsewhere.”

This letter by the four members of Congress is the latest signal that the U.S. is moving to embrace blockchain technology and cryptocurrencies.

In July, the Office of the Comptroller of the Currency (OCC) clarified that national banks and federal savings associations can provide cryptocurrency custody services for customers.

Also in the same month, a U.S. federal court ruled that bitcoin is a form of money.

Meanwhile, reacting to the letter by the U.S. congressmen, Tim Ismilyaev, CEO and founder at Mana Security, says the growth of POS has finally forced some people in the U.S. government to see the importance of embracing cryptocurrencies.

“The US government recognizes the immense growth of assets locked in POS and defi [decentralized finance] markets (over $15B is already locked in such products) although these markets did not exist a few years ago. The value of locked assets is likely to surpass $100B mark in upcoming years, and this will happen with or without US approval. So this move by Congress toward crypto is rational.”

The bipartisan letter was written on July 29.

by Terence Zimwara