Commencing a challenging year for digital assets
Title: The Future of Digital Assets: A Bull Market Beckons in 2024
Disclaimer: The opinions expressed in this article are solely those of the author and do not reflect the views of crypto.news’ editorial team.
A promising future awaits digital asset investors as a bull market is anticipated for 2024. However, amidst the plethora of investment opportunities, it is crucial for investors to be mindful of the IRS’s focus on compliance initiatives related to digital assets, FBAR, and high-income and high-wealth taxpayers in the same year.
The enigmatic identity of Satoshi Nakamoto, the creator of Bitcoin, remains shrouded in mystery. The ongoing legal battle in the United Kingdom, supported by Bitcoin Legal Defense Fund established by Block CEO Jack Dorsey, seeks to determine whether Dr. Craig Wright is the pseudonymous Satoshi Nakamoto. As explained by Jack, Dr. Craig Wright is just one of many individuals claiming to be Satoshi Nakamoto, as highlighted in Arthur van Pelt’s article “The Faketoshi.”
Adding intrigue to Satoshi’s identity mystery is the transfer of approximately $1.2 million worth of Bitcoin (BTC) from a Binance wallet to Satoshi’s Genesis wallet on January 5, 2024. This coincided with Judge Mellor’s order for Dr. Craig Wright to pay over $1 million to the court and occurred two days after BTC’s 15th birthday.
Judge Mellor expects the fog surrounding Dr. Craig’s ‘identity issue’ to dissipate, stating, “By 4 pm on January 18, 2024, Dr. Wright and COPA shall exchange and serve expert reports on forensic document analysis and LaTeX software regarding the Additional Documents stored on the Samsung Drive and the BDO Drive, dating back to 2007.”
Once Satoshi’s identity is revealed, it is anticipated that if this person is a US citizen with an estimated BTC wealth of $40 billion, they will be required to file Form 8300 with the IRS by January 20, 2024, for the $1.2 million in BTC received since January 1, 2024. Any crypto transaction exceeding $10,000 must now be reported electronically, alongside certain other information returns. Failure to comply with Form 8300 can lead to severe civil and criminal penalties.
While the true authorship of the Bitcoin White Paper remains a subject of debate, the US digital asset industry witnessed a cleanse of bad actors in 2023. Binance, the world’s largest crypto exchange, and its CEO pleaded guilty to federal charges, resulting in a settlement of over $4 billion to resolve the Justice Department’s investigation. Additionally, Binance, Coinbase, Terraform Labs, and others faced action from the SEC for operating unregistered securities exchanges, with ongoing proceedings.
North American investors, money managers, and CBOE Digital President John Palmer are optimistic that the approval of spot Bitcoin ETFs will lead to a new wave of institutional and pension fund investments. Several applicants, including Vaneck, Valkyrie, Grayscale Investments, Fidelity, BlackRock, and Bitwise, have filed to register their funds as securities with the SEC, with an approval deadline of January 10, 2024.
After a bear market in 2022, Bitcoin’s value surged by 160% in 2023 and continues to rise. Notably, crypto-focused investment funds now possess substantial reserves of investable cash, a significant factor driving the current crypto bull market, according to William Quigley, co-founder of Tether and WAX Blockchain.
The BRICS alliance, consisting of Russia, Saudi Arabia, the United Arab Emirates (with their joint coin initiative Aber), Iran, Egypt, and Ethiopia, plans to launch a multinational digital currency backed by a basket of assets or gold. BricsTether has already introduced a stablecoin supported by a basket of assets, offering greater stability compared to traditional cryptocurrencies.
However, China’s top legal watchdog recently cracked down on the use of Tether, declaring certain transactions unlawful. Furthermore, a US court ruling classified stablecoins LUNA, UST, and MIR as securities, implying that BricsTether or a BRICS-issued multinational stablecoin could fall under SEC oversight. US holders of BricsTether or BRICS stablecoins may be subject to FBAR and FATCA reporting requirements.
As the digital asset market presents abundant investment opportunities, it is crucial for investors to heed the IRS’s focus on compliance initiatives regarding digital assets, FBAR, and high-income and high-wealth taxpayers in 2024. Failure to comply with FBAR FinCen Form 114 and Form 8938 can result in severe civil and criminal penalties, potentially exceeding the value of unreported foreign assets. Noncompliance can also lead to exclusion from accessing US markets for institutions.
Read more: In 2023, the US government attempted to suppress the crypto industry | Opinion
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