How Do You Maximize the Benefits of Cryptocurrency While Avoiding Near-Term Tax? Consider a Self-Directed IRA 0 561

A recent entrant, iTrustCapital, provides free guidelines.

There’s no doubt cryptocurrency is beginning to look a bit like “kryptonite” when it comes to the IRS. For a number of years, digital currency was a bit of the Wild, Wild West in that most transactions happened outside the U.S. and beyond the purview of the Internal Revenue Service.

But no more. For several years, the IRS has sent strong warnings about the need to report the revenue from crypto trades on your U.S. tax turns. But managing these records is no easy feat. Simply ignoring the IRS on cryptocurrency trades is no longer an option as the agency has cracked down hard on offenders. So what do you do to ensure your reporting is accurate, and to be sure your participation in crypto isn’t causing you more in fees and taxes than the gains you may be getting are worth?

Thankfully, several software options have emerged to make virtual currency investments easier by managing and ensuring accurate reporting to the IRS.

But another option quickly gaining popularity is perhaps the easiest alternative of all:  making cryptocurrency investments within a self-directed IRA.

While it’s technically feasible to use a standard self-directed IRA to invest in whatever you wish, but creating a fund specifically geared for the characteristics of digital currency is the best of all worlds – an investment vehicle that mirrors the best of what has been happening in the traditional financial markets for years. By setting up an IRA that is specifically designed for cryptocurrency purchase and sales, you can invest in any cryptocurrency you wish, or in multiple, but as long as the funds stay inside of the IRA, no taxes are owed.

The central location (and the provider you choose) can help you be certain your taxes are property reported when the day for withdrawals eventually comes. Also, just like the traditional financial markets, having the funds reside in an IRA helps to keep your head in the right space of discipline when it comes to viewing and holding your investments as long term vehicles as opposed to feeling the need to “churn” your account and jump to new investment choices upon each piece of news, thereby losing an undue portion of your digital currency earnings to ongoing capital gains taxes.

One of the early and leading providers in this relatively new space is iTrustCapital, a proprietary online trading platform with a focus on educating investors throughout the investing process, along with providing them with the benefits of trading cryptocurrency within an IRA. This can be an exciting way to move forward on benefits such as the chance to jump in early on high growth offerings, as well as the obvious benefit of postponing, or even eliminating, tax obligations until the eventual point after retirement age the funds are withdrawn.

“We are regularly amazed at the number of people who are unaware of the benefits of IRAs,” said CEO Todd Southwick. “It’s not just those in their 20’s and 30’s but across all age groups when it comes to the lack of knowledge of the incredible tax benefits offered by investing through IRAs.”

“Our mission is to not only help those with existing retirement accounts but to educate the many thousands of people who don’t yet have retirement accounts about the tax-deferred and tax-free benefits of IRAs.”

For starters, Southwick points to the following four questions as important background to research carefully before moving your cryptocurrency into a self-directed IRA from iTrustCapital or elsewhere.

The Four Red Flags – proceed with caution:

  1. Is all pricing and fee information posted upfront? In the case of iTrust all information is posted on the website and easy to find.
  2. Is the representative you are working with a commissioned salesperson?
    • To find out, ask them directly and also read their client agreement, Southwick says. If the individual is not a licensed Financial Advisor are they giving you financial advice? According to regulatory requirements, they should not dispense this advice without having a proper certification and license for this.
  3. Did you find them on TV or through a high-profile spokesperson? Bear in mind that it is very expensive for an agent to advertise this way. Be sure it isn’t you who is bearing the cost of these fees.
  4. How liquid is the investment – Can you buy/sell 24/7?
    • Do you have to speak to someone to do so?
    • What is the settlement time? 

In all, self-directed IRAs may be one of the best advances to emerge in the cryptocurrency space. But before you move your assets over, be sure to investigate the organizations you are considering as the IRA with care.

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Tina Mulqueen is the CEO of Kindred PR. She consults with reputable ICOs on marketing and public relations strategy, helping clients to secure more than $10M in funding. She was named one of the top young communications professionals by INC Magazine, and her campaigns have been featured in Adweek, Entrepreneur, INC and Forbes, in addition to multiple other niche and television outlets. She's an advocate for women in technology, and often speaks about the intersection of technology and retail marketing. She writes regularly for Forbes, and has written for Huffington Post, Today, Thrive Global, Elite Daily, New York Lifestyles Magazine, and more.

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The First SEC Strikes Against Unregistered Crypto Firms Are Here 4 1027

And so it begins.

For the first time ever, the Securities and Exchange Commission has issued a violation to a hedge fund manager for its investments in digital assets. They found Crypto Asset Management, or CAM, a California based crypto portfolio manager, operating as an unregistered investment company while claiming to be SEC regulated. Further, the SEC says CAM was falsely marketing itself as the “first regulated crypto asset fund in the United States.”

Over a four month public offering last year, CAM’s Managing Director Timothy Enneking raised upwards of $3.6 million based on this claim, and invested 40 percent of the fund’s assets into cryptocurrencies, thus operating the fund as an unregistered investment company. CAM received a cease and desist order, with which they complied, and the SEC fined them $200,000. CAM agreed to pay the fine without admitting to or denying the SEC’s findings, and offered buy backs to investors.

The Fall of TokenLot, the SEC’s Second Target

Tuesday the SEC also charged Michigan LLC TokenLot, which closed down at the end of July, with operating as unregistered broker-dealers. TokenLot called themselves an “ICO Superstore,” which co-founders Lenny Kugel and Eli L. Lewitt promoted as a space to buy into ICOs and trade tokens on a secondary market. Through their platform, over 6 thousand retail investors traded more than 200 different tokens which, by the SEC’s standards, qualified as securities and therefore fell under SEC regulations.

It’s the first time the SEC has enforced last year’s DAO Report, which warned traders that digital assets like DAO tokens would be considered securities, and subject to regulations as such. After the SEC’s charges, TokenLot started refunding payments to investors for unfilled orders and began the process of closing down, also without admitting to or denying charges.

Lightened penalties include $471,000 for the company, plus interest, and $45,000 each in personal fines to Kugel and Lewitt.

“The penalties in this case reflect the prompt cooperation and remedial actions by TokenLot, Kugel, and Lewitt,” says SEC Co-Director of Enforcement Division Steven Peikin.  “TokenLot, Kugel, and Lewitt provided valuable information to Commission staff, stopped the conduct, and refunded money to investors.”

Making Examples, or Starting a Crackdown?

The SEC could be making examples of TokenLot and CAM, but there could be more of a crackdown coming.

The charges emerge after the SEC subpoenaed 80 cryptocurrency firms earlier this year, including the $100 million cryptofund of Michael Arrington, founder of TechCrunch. While not indicators of misdoings, the subpoenas were tells that the SEC was working out its terms for coming indictments.

Securities Investigations Extend Beyond US Borders

Also earlier this year, the North American Securities Administrators Association (NASAA), an international investor protection agency, initiated ‘Operation Cryptosweep’ to target fraudulent ICOs and crypto investment products across the US and Canada.

“While not every ICO or cryptocurrency-related investment is a fraud, it is important for individuals and firms selling these products to be mindful that they are not doing so in a vacuum,” says Joseph P. Borg, President of NASAA and Director of Alabama Securities Commission. “State and provincial laws or regulations may apply, especially securities laws. Sponsors of these products should seek the advice of knowledgeable legal counsel to ensure they do not run afoul of the law. Furthermore, a strong culture of compliance should be in place before, not after, these products are marketed to investors.”

The NASAA operation has already resulted in over 200 investigations and 45 enforcements, as of last month, to the applause of the SEC.

The SEC’s own first strikes arrive amidst a crypto slump, as several leading coins, including Bitcoin, Ethereum, and Ripple, are exploring new lows.

“U.S. securities laws protect investors by subjecting broker-dealers and other gatekeepers to SEC oversight, including those offering ICOs and secondary trading in digital tokens,” Stephanie Avakian, Co-Director of the SEC’s Enforcement Division says. She encourages developers of businesses in digital asset trading to contact the SEC “for assistance in analyzing registration and other securities law requirements.”

Any of the many crypto firms still operating unregistered would be wise, at this point, to square up.

ContentBox Launches on Chinese Exchange Huobi 3 1239

ContentBox is utilizing the blockchain in hopes of disrupting the digital content industry.

Relevant content should be easy to find in this technologically-enabled era. However, competition has created white noise that can be hard to penetrate for both creators and content-seekers.

Take podcasts. When we go to Apple Podcasts, Spotify, Soundcloud or any other number of apps and search our favorite topics from a phone, tablet or laptop, we expect to find the most relevant results. But, due to convoluted distribution schemes and multiple different platforms, that’s not always the case. What happens, for example, when a podcast isn’t featured on your device’s native app store or podcast app? Or, perhaps it’s only available in the language of the non-English speaking foreign country you may be traveling in (which you might not happen to speak). At this point, it becomes a matter of scarcity: do you risk settling for a diminished digital experience, or worse, diminishing the quality of your trip?

Renee Wang was working in Japan when she realized there were no podcasting platforms that supported multiple languages on the market. She had to download podcasts to MP3 files and piecemeal them into one.  Recognizing the gap, she decided to build a solution.

CastBox was Born

Renee and her co-founder Alex He built CastBox, a discovery app hailed “the Netflix of podcasts,” and an all-in-one solution to the problem with having to hunt down disparate podcast channels, apps, and stations to find the podcasts you want. Replete with foreign language and multi-platform support, as well as personalized recommendation features, CastBox is essentially a blockchain-enabled podcast aggregator that not only allows individuals to discover new podcasts tailored to their interests, but also allows users to see what others are listening to on the app, and personalize their podcast recommendation and search preferences. One of the greatest ways CastBox adds value to users’ podcast experience is through its in-audio search feature: the app transcribes and indexes audio files and then allows users to search for them based off of just one sentence or body of text within it, after which CastBox then shows their search result, in addition to giving contextualized recommendations to similar podcasts.

On July 17, CastBox Launched ContentBox

As Wang and He discovered, the creative landscape for digital content creators is wide and deep, leading to significant and often insurmountable competition. Unfortunately, the profit potential for such creatives is bleak, as a result. In a market where distribution channels take the lion’s share of content creators’ revenues, the blockchain is poised to rebalance the model in the artist’s favor. And that’s where ContentBox comes in.

On July 17th, CastBox launched ContentBox on Huobi Global. The platform is an open-source blockchain infrastructure for creators, a token-based ecosystem comprised of a shared user and content pool along with a unified payment solution. As a decentralized content ecosystem, ContentBox gives users, creators, and companies alike the ability to integrate into it, opening up content channels, monetization, and multi-platform mobilization.

Boasting 18 million users, 3 billion BOX released, and 750 million BOX circulating as of July, ContentBox is now working on scaling its adoption of BOX Passport, a cross-platform identity and attribution gateway; BOX Payout, a borderless and secure payment transaction network; and BOX Unpack, a turn-key content management solution for publishers, to provide even more monetization opportunities for artists and creators.

ContentBox is allowing users to deposit and buy BOX both on its platform as well as on Huobi, which now also accepts BOX deposits, as well as BOX/ETH and BOX/BTC trades on its platform. ContentBox aims to decentralize the digital content industry and tackle its biggest pain points—creator monetization, user incentives, and content ownership—through a unified payout system, a shared content pool, and a shared user pool. ContentBox is the latest and most wide-ranging effort to combat abuses towards artists in the digital production industries, where platforms take the lion’s share of creators’ profits in exchange for distribution rights. ContentBox allows artists to bypass distribution platforms and access users directly, maximizing their profit potential. The release gives creators crypto-incentives for featuring their podcasts on the platform in the form of BOX tokens, which can be traded for ETH and BTC on Huobi Global.

With the release of ContentBox, CastBox further moves to disrupt the digital content production industry with an antagonistic business model that gives value back to creators instead of profiting off of them. There is major support for this: ContentBox is backed by Nirvana Capital, Node Capital, BlockVC, LinkVC, ICONIZ, JRR, and Fenbushi Capital founder Bo Shen. Further, that ContentBox was listed on Huobi at all is validation: only 0.0001% of all crypto projects are listed on this particular exchange. Yet, to definitively change the industry, CastBox will need to reach mass markets to scale platform adoption and reach mass profitability for podcasters using ContentBox, as well as attract key influencers away from top digital content distribution platforms and onto its own. If it can do this, ContentBox could allow CastBox to compete with the top market-dominating podcast apps globally. Keep your eyes open for more news on this continuing development.

Editorial note: this article was updated to correct a typographical error. We previously reported there were 750 billion BOX circulating as of July — that number was updated to reflect the accurate figure: 750 “million.”


What do you think about blockchain vs. tradition digital content distribution platforms? Could these really disrupt today’s digital content industry? Post in the comments below to tell us your opinions!

 

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