A man walks past an electric board showing exchange rates of various cryptocurrencies at Bithumb cryptocurrencies exchange in Seoul, South Korea, January 11, 2018.Kim Hong-Ji/Reuters
Bitcoin's stratospheric jump in value was an investment spectacle reminiscent of the dot-com boom, including its recent decline in value. Other cryptocurrencies have also increased in value, market capitalization and, to some degree, legitimacy.
This flurry of investment activity has led to substantial gains for some and while cryptocurrency has been touted for its anonymity – with buying and selling executed by proxy through a virtual wallet – those trading or investing in cryptocurrency should be aware that this will not shield them from tax obligations. Indeed, south of the border, the Internal Revenue Service recently won a legal battle with the cryptocurrency exchange Coinbase that required Coinbase to produce thousands of customer records, identifying the real people attached to virtual wallets.
And so it is for good reason that in the past few months lawyers and accountants have been inundated with queries regarding the tax implications of trading and investing in cryptocurrency. While there is no substitute for individual professional advice in such a new, complicated and rapidly evolving area, there are some basic signposts for navigating the tax implications of your cryptocurrencies. Tax lawyer Kathryn Walker explains more.
This is the Globe Investor newsletter, published three times each week. If someone has forwarded this e-mail newsletter to you, you can sign up for Globe Investor and all Globe newsletters here.
The Rundown
Bitcoin skids to lowest since November after worst month in three years
Bitcoin, the world's largest cryptocurrency, skidded 11 per cent on Thursday to its lowest since November, as a Facebook ban on cryptocurrency adverts and a growing regulatory backlash against the nascent market frightened investors. Thursday's drop to as low as $9,022 on the Luxembourg-based Bitstamp exchange left bitcoin trading at less than half the peak price of almost $20,000 it reached in December. It slid more than 26 per cent last month, in its worst monthly performance since January, 2015. Reuters reports.
OMERS expands cryptocurrency presence with $50-million Ethereum public company offering
Ontario pension giant OMERS is pushing further into the rapidly expanding cryptocurrency business through the creation of an Ethereum-focused public company that is planning to raise $50-million. Newly-formed Ethereum Capital Inc. announced Monday morning it is launching a private placement co-led by Canaccord Genuity Corp. and CIBC Capital Markets to sell 20 million subscription receipts for $2.50 each. Its plan is to then amalgamate with publicly-listed B.C. shell company Movit Media Corp., with investors set to receive one share in Movit for each Ethereum Capital receipt after the offering's anticipated closing date of Feb. 16. The combined firm will be known as Ethereum Capital Corp. Ethereum Capital's strategy is to acquire Ether, the cryptocurrency native to the Ethereum digital platform, and by buying controlling stakes in Ethereum-based businesses. Ethereum is a token-based blockchain platform for building decentralized applications and facilitating transactions without an intermediary and Ether is the system's unit of payment. Jacqueline Nelson and Sean Silcoff report.
Crypto hedge fund Polychain said to plan IPO in Canada
Polychain Capital, the crypto hedge fund backed by venture firms Sequoia Capital and Andreessen Horowitz, aims to raise about $400-million in an initial public offering in Canada. The firm is seeking to list on the Toronto Stock Exchange in the coming months, according to a person familiar with the plans. Olaf Carlson-Wee, chief executive officer of San Francisco-based Polychain, didn't immediately respond to an e-mail seeking comment. Bloomberg News reports.
AMD, Nvidia blockchain prospects excite investors
Advanced Micro Devices Inc.'s blockbuster quarterly earnings has turned the spotlight on chip sales to providers of blockchain technology, a digital ledger that is set for explosive growth as it moves beyond cryptocurrencies. Blockchain is the technology behind bitcoin and ethereum, and cryptocurrency miners use fast graphic processing units (GPUs) to solve complex mathematical problems and get new digital currencies as a reward. AMD and Nvidia Corp., which reports results next week, provide GPUs and could reap major gains as prices rise. Analysts expect sales to increase further as more companies across the globe unveil plans to enter the bitcoin industry or blockchain technology. Reuters reports.
Kodak's bold move to cryptocurrency raises questions
Kodak, the 130-year-old company, is trying an unlikely sort of comeback — one built by betting on cryptocurrency. It's a bold gamble that has excited some investors, perplexed others and raised questions about how closely Kodak vetted its cryptocurrency business partners, which now include a paparazzi photo agency, a penny-stock promoter and a company offering what has been called a "magic moneymaking machine." This month, Kodak lent its name to a digital currency called KodakCoin, which is billed as "a photo-centric cryptocurrency to empower photographers and agencies to take greater control in image rights management." The basic idea behind KodakCoin is to use the blockchain to help photographers manage their collections by creating permanent, immutable records of ownership. The company also struck a licensing deal for a Bitcoin-mining computer called the Kodak KashMiner, which allows users to generate their own cryptocurrency. The New York Times News Service reports.
Others
Massive cryptocurrency heist spurs calls for more regulation
Israel's Blockchain Mining looks at Nasdaq, Toronto listings
On closer inspection your blockchain ETF may be a tech fund
Bitcoin is the new gold for the cryptocurrency age
How to avoid cryptocurrency pitfalls
George Soros: Bitcoin is a bubble, Trump is a 'danger to the world'
Do you have a question for Globe Investor? Send it our way via this form. Questions and answers will be edited for length.
Click here to see the Globe Investor earnings and economic news calendar.
More Globe Investor coverage
For more Globe Investor stories, follow us on Twitter @globeinvestor
Click here share your view of our newsletter and give us your suggestions.
Want to subscribe? Click here to sign up or visit The Globe's newsletter page and scroll down to the Globe Investor Newsletter.
Compiled by Gillian Livingston