Opinion: The onset of a challenging year for digital assets

Title: A Promising Future for Digital Assets in 2024: What Investors Need to Know

Disclaimer: The opinions expressed in this article are solely those of the author and do not reflect the views and opinions of crypto.news’ editorial.

The anticipation of a bull market for digital assets in 2024 brings exciting investment opportunities. However, digital asset investors must be aware of the IRS’s recent announcement regarding compliance initiatives related to digital assets, FBAR, and high-income and high-wealth taxpayers in the same year.

The mystery surrounding Satoshi Nakamoto, the elusive author of Bitcoin’s White Paper, still remains unsolved. The ongoing litigation in the United Kingdom, supported by the Bitcoin Legal Defense Fund established by Block CEO Jack Dorsey, aims to determine whether Dr. Craig Wright is the true Satoshi Nakamoto. According to High Court Judge John Mellor, this “identity issue” is yet to be resolved. It is worth noting that many individuals, including Dr. Craig Wright, have claimed to be Satoshi Nakamoto, as highlighted in Arthur van Pelt’s article, “The Faketoshi.”

Adding to the intrigue, a Binance wallet recently transferred approximately $1.2 million worth of Bitcoin (BTC) to Satoshi’s Genesis wallet on January 5, 2024. This event coincided with Judge Mellor’s order for Dr. Craig Wright to pay over $1 million to the court, just two days after BTC’s 15th birthday.

Judge Mellor expects the fog surrounding Dr. Craig’s identity to dissipate soon. He stated that by January 18, 2024, Dr. Wright and COPA (Crypto Open Patent Alliance) must exchange and serve the Developer Defendants with expert reports on forensic document analysis and LaTeX software.

Once Satoshi’s identity is revealed, and if this person is a US citizen with an estimated BTC wealth of $40 billion, the US taxpayer must file Form 8300 with the IRS by January 20, 2024. As of January 1, 2024, any crypto transaction exceeding $10,000 must be reported electronically. Failure to comply with Form 8300 may result in civil and criminal penalties.

In 2023, the US digital asset industry underwent a cleansing process to remove bad actors. Binance, the world’s largest crypto exchange, and its CEO pleaded guilty to federal charges, agreeing to pay over $4 billion to resolve the Justice Department’s investigation into violations of the Bank Secrecy Act, failure to register as a money-transmitting business, and violations of the International Emergency Economic Powers Act (IEEPA). Additionally, Binance, Coinbase, Terraform Labs, and others faced action by the SEC for operating unregistered securities exchanges, with the cases still ongoing.

North American investors, money managers, and CBOE Digital president John Palmer anticipate a new wave of institutional and pension fund investments following the approval of spot Bitcoin ETFs. Several applicants, including Vaneck, Valkyrie, Grayscale Investments, Fidelity, BlackRock, and Bitwise, have filed to register their funds as securities with the US Securities and Exchange Commission, with an approval deadline of January 10, 2024. The first spot BTC ETF application was submitted by Cameron and Tyler Winklevoss to the SEC a decade ago on July 1, 2013.

After experiencing a bear market in 2022, Bitcoin’s value surged by 160% in 2023, and this upward trend continues. William Quigley, co-founder of Tether and WAX Blockchain, emphasized that crypto-focused investment funds now have significant reserves of investable cash, which contributes to a positive crypto bull market.

In 2018, Russia led the proposal for a multinational stablecoin backed by commodities within the Eurasian Economic Union and BRICS countries. At the start of 2024, five more countries joined BRICS, including Saudi Arabia, the United Arab Emirates (with the joint coin initiative, Aber), Iran, Egypt, and Ethiopia. Russia assumed the chairmanship of BRICS at the beginning of the year.

BRICS member countries plan to launch a common currency, potentially a multinational digital currency backed by a basket of assets or gold. BricsTether has already launched a stablecoin backed by a basket of assets, providing greater stability and predictability than traditional cryptocurrencies. However, China’s top legal watchdog recently prohibited the use of Tether by declaring it unlawful to exchange local currency for foreign ones using Tether-USDT stablecoin or provide technical support for such transactions.

Furthermore, Judge Jed Rakoff’s order in the US District Court for the Southern District of New York classified stablecoins LUNA, UST, and MIR as securities. Consequently, BricsTether or BRICS-issued multinational stablecoins may be subject to SEC oversight as securities. US holders of BricsTether or BRICS stablecoins may also be required to comply with FBAR and Form 8938 reporting requirements under the Foreign Account Tax Compliance Act (FATCA).

In conclusion, while the digital asset market holds great potential for investors in 2024, it is important to stay informed about the IRS’s compliance initiatives, the ongoing litigation surrounding Satoshi Nakamoto’s identity, and the regulatory developments in the cryptocurrency industry.