Article by Joeri Cant

Facebook has acquired the artificial intelligence-based chat-bot startup Servicefriend for customer service for Calibra, the digital wallet for Facebook’s planned Libra cryptocurrency.

AI chatbots for Calibra’s customer service

A Sept. 19 article by Israeli business newspaper the Marker reported that Facebook has acquired startup Servicefriends in order to build a messaging bot for customer service for Calibra.

Announcing Libra and Calibra, Facebook said that it wanted to reach unbanked consumers and give them access to financial services and to make Calibra available through a specially created app and via its WhatsApp and Messenger platforms.

Servicefriend provides artificial intelligence-powered messaging bots that supposedly can mimic the intelligence, comprehension and empathy of a human to such a degree that customers won’t realize they are interacting with a bot. Its website says:

“We are thrilled to share that Servicefriend is now moving to the next chapter of our exciting journey. Over the past four years, we managed to standout and build a great platform for brands to deliver excellent experiences at scale over WhatsApp and Messenger. Our mission to transform the way business interact with people and to let people communicate with businesses as they do with their friends has always been our raison d’etre.”

Calibra will not be available in its largest markets

Cointelegraph previously reported that Facebook’s Calibra digital wallet, which can be used to store its Libra crypto coin, will not be available in some of the social network’s largest markets, including India. A spokesman said at the time:

“The libra blockchain will be global, but it will be up to custodial wallet providers to determine where they will and will not operate. Calibra won’t be available in U.S.-sanctioned countries or countries that ban cryptocurrencies.”

 

Article by Joeri Cant.

The United States House of Representatives Committee on Financial Services has scheduled a hearing with Securities and Exchange Commision (SEC) Chairman Jay Clayton and four other SEC commissioners to discuss, among other topics, crypto.

In a memorandum from Sept. 19, the Committee on Financial Services stated that it will hold a hearing on Sept. 24 entitled, “Oversight of the Securities and Exchange Commission: Wall Street’s Cop on the Beat.”

This one-panel hearing will include the Securities and Exchange Commission (SEC) chairman Jay Clayton, commissioner Hester Pierce (AKA Crypto Mom) and another three commissioners.

Libra coin could amount to a security

The Committee on Financial Services has included cryptocurrencies on its list of topics for discussion and points out that the federal securities laws apply to securities — including stocks, bonds, and investment contracts — regardless of whether they are digital.

The hearing will touch upon Exchange-Traded Funds (ETFs), whether or not digital assets are a security or exempt from securities law, and of course Facebook’s planned launch of its stablecoin Libra in 2020. The document adds:

“The Libra Investment Token could amount to a security since it is intended to be sold to investors to fund startup costs and would provide them with dividends. The Libra token itself may also be a security, but Facebook does not intend to pay dividends and it is unclear if investors would have a “reasonable expectation of profits.”

Zuckerberg continues tour of Washington DC

Cointelegraph reported on Sept. 19 that Facebook CEO Mark Zuckerberg is making the rounds with policymakers in Washington, D.C. to discuss “future internet regulations,” most recently with Senator Josh Hawley.

Earlier on Sept. 19, Cointelegraph reported that Zuckerberg had dinner with a handful of U.S. lawmakers, where he faced intense scrutiny over the Libra project.

Last year, the crypto community pointed fingers at tax payers liquidating assets in order to cover inflated tax bills due to the substantial gains realized during the 2017 Bitcoin bull run as among the chief reasons the bear market had begun.

In 2018, however, the inverse happened, and most cryptocurrency investors suffered massive losses as the price of Bitcoin and other cryptocurrencies fell by as much as 80-90% in most cases. With tax season rolling around again, investors should be liquidating assets in order to lock in realized losses that can be claimed on an individual’s taxes, offsetting other aspects of the individual’s tax bill, or possibly leading to a return.

However, new data reveals that only 34% of losses American cryptocurrency investors saw in 2018 have been realized, suggesting that most Americans don’t understand crypto-related tax laws, and don’t realize they can claim the losses on their taxes.

Nearly Two-Thirds of American Crypto Losses Could Go Unrealized

According to credit monitoring services company Credit Karma, United States citizens have suffered losses related to their cryptocurrency investments to the tune of $5 billion. However, only about a third of those $5 billion in losses will be realized losses, or roughly $1.7 billion.

When an individual American tax payer invests in a cryptocurrency, a cost basis is established for tax purposes. Selling an asset also triggers a taxable event. How much that asset has appreciated – or in the case of the 2018 bear market that is still currently ongoing, how much that asset has depreciated – at the time it is sold, determines what the individual is responsible for tax-wise. If an asset is never sold, the gains or losses are only paper gains and losses, meaning they cannot be claimed on an individual’s taxes, but may still be reflected in one’s portfolio.

Related Reading | U.S. Lawmakers Ask IRS for Clarity on Crypto Tax Laws

The data suggests that either Americans don’t understand that assets must be sold to trigger the taxable event and lock in unrealized losses that can be claimed on their taxes, or the HODL mentality has made it so they simply won’t sell their assets for any reason – not even to lock in unrealized losses for tax reasons.

Credit Karma general manager Jagjit Chawla says it’s the former.

“Even though those who sold their bitcoin at a loss can typically claim a tax deduction we found that before taking our survey, 61% of respondents who lost money on bitcoin didn’t actually realize they could get a tax deduction for bitcoin losses,” he explained.

The survey revealed that respondents were confused in general, with more than half believing their losses were too small to make an impact, while others didn’t even know they were required to file their cryptocurrency losses on their taxes. Not doing so could lead to severe penalties. Some claimed they didn’t even know how to file their crypto losses.

U.S. Crypto Tax Law Is Complicated, Varies By Duration of HODL

Complicating things further, in the United States, cryptocurrencies are treated as propertyand are subject to capital gains tax the same way real estate is. Capital gains tax rates vary by income levels, and are classified as “short-term” and “long-term” depending on how long the asset has been held by the owner. Each classification also has different rates.

Related Reading | Former U.S. Representative Ron Paul Pushes for Crypto Tax Exemption 

Locking in realized cryptocurrency losses could allow war-torn investors to claim up to $3,000 in losses on their tax bills. Losses exceeding $3,000 can be carried over into the following tax year. Investors can also use carried over losses to offset potential tax gains on next year’s tax bill, if the cryptocurrency market eventually turns around and a new bull run begins this year.

When investing in cryptocurrencies, be sure to also speak to a certified public accountant that is well-versed in capital gains tax law, and at least has a familiarity of cryptocurrencies. Given how new the technology and asset class, this may be like finding a needle in a haystack, but considering how important taxes are to any individual, knowing your cryptocurrency taxes are handled properly is worth the extra effort.

This post credited to NewsBTC. Image source: NewsBTC

Jerome Powell said today that the Federal Reserve has no choice but to face the mounting U.S. debt balance. That negative balance is now $21.9 trillion.

The annual U.S. deficit has reached sustained highs of over $1 trillion.

Speaking at The Economic Club of Washington, D.C today Powell said:

“I’m very worried about it.”

Jerome Powell. Image from Shutterstock.

Referring to the long-term implications which can be easily ignored when focusing on shorter-term policies Powell said:

“The long-run fiscal, non-sustainability of the U.S. federal government isn’t really something that plays into the medium-term that is relevant for our policy decisions.”

Adding:

“It’s a long-run issue that we definitely need to face, and ultimately, will have no choice but to face.”

Federal Reserve Policy May Have Exacerbated U.S. Debt

The Federal Reserve has been pursuing a policy of quantitative tightening. This to counter the quantitative easing put in place in response to the global economic crisis. It has been reducing the amount of U.S Treasury Bonds it purchased by allowing these holdings to expire.

This means the Federal Reserve is earning less interest on its holdings. Interest that usually contributes positively to the treasury balance. Through increased interest rates, government debt gets a higher cost of interest, adding to the debt balance.

That said, the Federal Reserve’s impact on the accruing U.S. debt is minor compared to the biggest culprit – government spending.

A Suicide Mission or a Debt Bomb?

U.S. Debt Bomb Imminent? Image from Shutterstock.

Wall Street legend Jeffrey Gundlach warned in December that the federal reserve appeared to be on a “suicide mission” to be raising interest rates at the same time as U.S. debt is increasing. An expanding deficit can often be a signal for the federal reserve to lower interest rates, instead of potentially compounding a problem.

Banker and author Satyajit Das questioned in April 2018 if in fact the process of normalization after years of quantitative easing to counter recession could “set off a debt bomb.” Das wrote:

“A decade of unprecedently low global rates and abundant liquidity appears to have encouraged a spree of public and private debt accumulation.”

Adding:

“Higher interest rates will exacerbate the risk of financial distress for highly indebted corporate and sovereign borrowers.”

The fact that Powell is concerned about debt is not bad news for the markets. It actually makes further interest rate hikes less likely as Powell will be concerned about further compounding the U.S. debt balance. It could even mean the Federal Reserve considers an interest rate reduction.

This post credited to CCN. Featured image from Shutterstock.

Blockchain platform Tron has hired a former United States Securities and Exchange Commission (SEC) supervisory attorney as its first chief compliance officer. The company has revealed this to Cointelegraph in a press release on Jan. 9.

David Labhart, who previously worked as an attorney for the U.S. regulator, will also take on the role of co-general counsel at the company.

Tron, along with its associated TRX token, has built a major presence over the past year, in part due to the continued, and at times controversial, publicity efforts centred around CEO Justin Sun.

Designed to offer an alternative platform for decentralized applications (DApps) to Ethereum, Tron celebrated its one millionth user account last month.

TRX has risen 6.4 percent in the past 24 hours according to CoinMarketCap data, making it the best daily performer in the top twenty cryptocurrencies by market cap.

Evolving regulatory compliance obligations remain an issue for cryptocurrency entities serving both the U.S. and most other major markets. As Cointelegraph reported, some businesses such as crypto exchange Bittrex have opted to split their operations in order to segregate U.S. users, who are bound by different rules.

This post credited to Cointelegraph.

Image source: Cointelegraph

The Federal Reserve Board governor is still not fond of the idea of central bank digital currencies, despite the fact that the reserve is equipped to issue one.

The Fed Says No to CBDCs

It’s been a year since bitcoin’s price exploded and launched cryptocurrencies into the mainstream, which pushed many to believe that the future of money was just around the corner. With an incredibly high number of companies promoting blockchain-based—assets popping up each day—the idea doesn’t seem all that far-fetched.

Despite the number of advocates promoting the benefits of cryptocurrencies, there is still a long way to go before major financial institutions decide to enter the market.

Quartz reported on Dec. 27th that back in May 2018, Lael Brainard, a Federal Reserve Board governor, spoke at the Decoding Digital Currency Conference in San Francisco, where she delivered a speech criticizing cryptocurrencies and their lack of transparency.

Banks Launder $2.7 Billion Every Day, Crypto Exchanges $9 Million in Two Years
Related: Banks Launder $2.7 Billion Every Day, Crypto Exchanges $9 Million in Two Years

While her speech praised blockchain for being one of the most significant technological innovations of the decade, she was skeptical about the usefulness of cryptocurrencies. Citing the high price volatility of cryptocurrencies such as Bitcoin, Brainard said that such coins couldn’t be used as a store of value or a unit of account.

She also noted that cryptocurrencies were extremely vulnerable to hacks and money-laundering, making it hard for any major financial institution to deal in these assets. Raising concerns about how a national digital currency would affect retail banks, which make loans to the public, Brainard said that the Federal Reserve maintains that issuing central bank digital currencies (CBDCs) is generally a bad idea.

The Infrastructure for CBDCs is Already Here

The subject of central bank digital currencies got a lot of media traction after Christine Lagarde, the director of the International Monetary Fund, supported the idea at the Singapore Fintech Festival in November.

Lagarde highlighted some of the benefits that national cryptocurrencies would bring, saying that they could solve the problems of financial inclusion and privacy, as well as security and consumer protection.

Even Kevin Warsh, a former governor at the US Federal Reserve, who was among the candidates to become the new chairman of the Reserve, was in favor of the idea. Earlier this year, Warsh told the New York Times that he would have allocated resources to explore a national currency.

Former Top Official Said He Would Consider FedCoin to Rival Bitcoin
Related Story: Former Top Official Said He Would Consider FedCoin to Rival Bitcoin

According to Quartz, the blockchain-based “Fedcoin” had the potential to improve the transparency and efficiency of the U.S. dollar and could have given the Federal Reserve access to unconventional financial tools, such as negative interest rates.

Aleksander Berentsen and Fabian Schar, researchers at the St. Louis Fed, studied the idea even further. In February 2018, they concluded that any central bank could “easily” create its own digital currency.

Bernsten and Shar argued that, as the key characteristics of cryptocurrencies are red flags for central banks, and consequently they wouldn’t be issued on a “permissionless” network. These digital currencies would effectively be centrally-managed electronic money.

However, the researchers noted that the idea would be hard to put into practice:

“cryptocurrency is still a very young technology and there are large operational risks. Overall, we believe that the call for a ‘Fedcoin’ or any other central bank cryptocurrency is somewhat naïve.”

This post credited to cryptoslate Image source: Cryptoslate

In December, traders’ investment in the cryptocurrency market has been comparatively better than what it was on Wall Street, as demonstrated by the relative performance of the Bitcoin price and S&P 500 index.

S&P 500 Slumps Below Bitcoin Price on 30-Day Chart

Bitcoin underwent an impressive bullish correction after falling almost 85% from its all-time high near $20,000. The price at the beginning of December established an interim bottom level at $3,127 before jumping towards its monthly high near $4,237. That totaled its correction to almost 35.5%.

Chart comparing the December trend of Bitcoin and S&P 500 Index | Source: TradingView.com

The S&P 500, on the other hand, was already undergoing a downside correction after establishing its 52-week high at 2,940.91. As December kicked in, the index noted ten back-to-back daily selling sessions during mid-term — causing a crash of almost 20% from the recent peak, its lowest since April 2017.

The S&P’s sister indexes, Dow Jones and Nasdaq, also plunged significantly within the same timeframe. The trio together came closer to record the worst monthly crash since October 2008, during the time of the financial crisis.

Overall, The S&P 500 slumped 19.8% by Tuesday from its September 20 record close. The Nasdaq and the Dow depreciated 23.3% and 18.8% from their record closes set August 29 and October 3, respectively.

Different Fundamentals

The fundamentals of both Bitcoin and S&P are quite distinctive from each other. While Bitcoin is a standalone asset, which is traded mainly via retail and OTC markets, S&P is a market capitalization index of the US’s biggest public-traded corporations by market value. Each market was responding to its specific catalysts, without establishing any definitive correlation with the other.

The Massive Fall and Minor Rise of the Bitcoin Price

Bitcoin, for instance, corrected all this year after overreaching its upside targets without confirming real demand. Along with Ethereum, it was used as a method to raise funds to many young blockchain startups that eventually failed without making the product they intended to make. Some of them even turned out to be vaporware or outright scams. This and other factors finally increased the selling pressure on the Bitcoin market and caused a huge plunge.

The cryptocurrency only recently found a temporary bottom, which influenced speculators to accumulate the asset at lower prices. The crypto market is eyeing 2019 to be the year of BTC’s institutional adoption, which influences the traders within it to “buy the dips” and hold the digital currency unless their respective upside target is established.

S&P 500 Faces Continued Bearish Indicators

Unlike Bitcoin, the S&P 500 is reacting to macroeconomic factors, ranging from Fed interest rate hikes to global political scenarios rooting from the Trump administration. A recent tweet from US Treasury Secretary Steven Mnuchin on Tuesday revealed that he was in talks with the CEOs of the Untied States’ six biggest banks. It led to a pessimistic market sentiment over the liquidity among these institutions.

The ongoing US-China trade war is also heading into a blank despite the assurance from both Washington and Beijing. A vice presidential-level meeting between the two powerful economies, as reported on Sundayby the South China Morning Post, hinted positive outcomes. But it wasn’t enough to reinject optimism into the US stock market.

The S&P is expected to consolidate until the new year kicks in. Most of the traders and stockbrokers are away from their desks during the holiday season, which is likely to reduce the volume in these markets.

Despite being the two distinctive asset classes altogether, Bitcoin has proven to be better in terms of return of investment this month.

This post credited to ccn Featured Image from Shutterstock. Charts from TradingView.

U.S. President Donald Trump has hired the prominent Bitcoin supporter Mick Mulvaney to be his new White House Chief of Staff.

Donald Trump is one of the most polarizing people on Planet Earth and whether you love him or hate him, it is beneficial for the crypto industry to have a major Bitcoin advocate whispering sweet nothings into the ear of the American President.

Donald Trump Makes Positive Appointment for Crypto Industry

Although Donald Trump might not top a list of the humblest people on the planet, he most definitely loves making money. Trump’s appointment of Mulvaney to the White House is a massive boon for crypto-fanatics.

Mick Mulvaney is a crypto supporter and fan. When he was working at the House of Representatives, Mulvaney, who is a South Carolina Republican, was one of the people who worked towards creating the Blockchain Caucus, which is a group of lawmakers that write and create new laws for emerging technologies such as cryptocurrency.

Donald Trump was upbeat when taking to his Twitter account to welcome Mulvaney and congratulate him on being named as Acting White House Chief of Staff:

Donald J. Trump

@realDonaldTrump

I am pleased to announce that Mick Mulvaney, Director of the Office of Management & Budget, will be named Acting White House Chief of Staff, replacing General John Kelly, who has served our Country with distinction. Mick has done an outstanding job while in the Administration….

31.4K people are talking about this

Employing a Bitcoin Supporter

“Blockchain technology has the potential to revolutionize the financial services industry, the U.S. economy and the delivery of government services, and I am proud to be involved with this initiative.” -Mick Mulvaney. Image from Flickr.

Mick Mulvaney has knowledge of the inner-workings of blockchain and crypto in general. He helped the Blockchain Caucus to draft two new legislative acts that support the growth and evolution of the blockchain industry. The proposals were drafted to help increase the growth and support of blockchain innovation.

The House Resolution 1108 was proposed to increase research in blockchain technology to show Congress how to take a sensible regulatory approach to the industry’s newest technological innovations.

House Resolution 7002 was a proposal to amend the E-SIGN Act that was to “confirm the applicability of blockchain to electronic records, electronic signatures and smart contracts.”

To give you an idea of Mulvaney’s feelings towards Bitcoin, here is a statement he made at the time of helping to create the Blockchain Caucus:

“Blockchain technology has the potential to revolutionize the financial services industry, the U.S. economy and the delivery of government services, and I am proud to be involved with this initiative.”

Although U.S. President Donald Trump rightfully gets criticism from all quarters for some of his decisions, especially in terms of immigration and foreign policy, when it comes to emerging blockchain technology, he seems quite open to its potential.

The appointment of Mick Mulvaney to the White House by Donald Trump is a positive move for crypto-fans and aficionados alike.

This post credited to ccn image from Flickr

American telecoms giant AT&T is seeking a patent for a blockchain-based social media history “map.” The patent application was published by the U.S. Patent and Trademark Office (USPTO) Dec. 13.

AT&T’s patent application describes a blockchain-powered system that may include a transaction history controller to store subscribers’ data, which may be used for various purposes. The file outlines a number of particular cases, such as creating and sharing information, ideas, and career interests through virtual communities and networks.

Broadly speaking, by deploying the system users could purportedly track “micro-culture transactions,” like tracing current trends at a particular time or place, or behavior of their friends. That ability, per the patent application, “may have enormous value in e-commerce, marketing, and targeted advertising.” The document further states:

“The social media history map platforms described herein may take advantage of the immutable and permanent nature of blockchain records to store, and provide access to, data representing online transactions that occur on multiple social media applications.”

Per the filing, content creators would keep ownership of their data on the “mapping” platform:

“However, instead of passing ownership of blocks or data between users, a social media account owner maintains primary ownership of his or her online transaction data. What passes from the social media account owner to other users of the social media history map service, such as followers of the social media account owner, is a notion of elevated visibility rights.”

In November, the USPTO awarded printing and digital copying appliances manufacturer Xerox a patent for a blockchain-driven auditing system for electronic files. The technology offered by Xerox can supposedly detect whether a file has been altered and tracks the history of changes to documents. Owing to the decentralized verification mechanism, the system thus becomes resistant to tampering, the filing states.

Also that month, financial services giant American Express (Amex) filed a patent for a blockchain-based system to capture and transmit the image of a receipt. The filing describes how the system lets a user with a mobile device capture the image of a receipt. The system then, via “optical character recognition,” deciphers the image and matches it with “related records,” namely transaction history.

This post credited to cointelegraph Image source: Cointelegraph

Coinbase customers in the U.S. can now make withdrawals into their PayPal accounts.

According to a blog post, U.S. customers can withdraw their Coinbase balances to PayPal immediately and without any fees. The new arrangement allows customers to quickly convert their cryptocurrency holdings to cash, wrote Allen Osgood, who works on product at the exchange.

Coinbase announced it was bringing back a PayPal integration last month, noting that customers will only be able to make withdrawals using PayPal. Users won’t be able to buy cryptocurrencies via PayPal.

The exchange previously had a PayPal integration, but the company ceased offering the service due to technical issues earlier this year.

A spokesperson for the exchange told CoinDesk that “there is new functionality that was improved from the prior one,” adding:

“There is new technical work to make this possible, and that was done in conjunction with PayPal.”

On Friday, Osgood wrote that the partnership provides Coinbase customers an alternative to the traditional federal wire or automated clearing house (ACH) network that they were previously required to use.

He added:

“These traditional finance networks can add up to two business days to a withdrawal. We’re always looking for ways to not only meet the bar set by traditional finance, but raise it. That’s why we rebuilt our integration to ensure that the speed and reliability of PayPal withdrawals does just that.”

The service is only available to U.S. customers for now, a Coinbase spokesperson confirmed to CoinDesk. Support for PayPal withdrawals in other nations will continue to be added across 2019, Osgood wrote on Friday.

This post credited to coindesk Image via Shutterstock