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Goldman Sachs Slams Bitcoin And Gold On Investor Call, Crypto Community Reacts

goldman sachs slams bitcoin and gold on investor call, crypto community reacts

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A Goldman Sachs logo seen displayed on a smartphone. (Photo by Mateusz Slodkowski/SOPA … [+] Images/LightRocket via Getty Images)

SOPA Images/LightRocket via Getty Images

Goldman Sachs

GSBD
hosted an investment advisory call for its clients yesterday, which re-ignited a long running dispute between the cryptocurrency and the banking community.
The investor call, dryly entitled “US Economic Outlook & Implications of Current Policies for Inflation, Gold and Bitcoin”, was announced to Goldman Sachs’ clients last week.
While the invitation gave little away around the nature of the insights the bank was going to share, some in the cryptocurrency community read between the lines, concluding that the financial services giant was about to signal to the market that the recent unprecedented economic events may have finally persuaded the bank to endorse Bitcoin given its association with being a hedge against inflation.

Nothing, it transpired, could have been further than the truth, as the select few who attended the invitation-only call were to quickly learn. Rather than endorsing Bitcoin, the analysts instead presented a scathing analysis of the cryptocurrency. 
Bitcoin Is Not An Asset Class?
Almost immediately, the slides from the call were leaked to social media, causing the cryptocurrency community to erupt …

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Deciphering a tax code written before cryptocurrency

deciphering a tax code written before cryptocurrency

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The diversity of transactions that occur in the crypto ecosystem touch almost all parts of the U.S Internal Revenue Code. However, the Tax Code contains no reference to “virtual currency” or “crypto currency.” Instead, you will find myriad technical rules that can be hard to understand, or lead to the wrong answer when viewed in isolation or when applied generically. To better understand how the U.S. tax rules apply to virtual currency, one can view the many technical issues that arise as answering one of four questions.1. When am I taxable on income I receive? To answer this, one has to consider what income is, whether it was received, and whether an exception applies that does not require the taxpayer to include the item in the taxable income calculation.What Income is: Most people think of income as anything that increases wealth. However, not all accessions to wealth are considered income. For example, a miner who discovers gold has an accession to wealth but is not taxed at that time. With regard to crypto, the notion of an accession to wealth comes up in the context of mining and certain other transactions. However, the IRS has not agreed …

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How Goldman Sachs unintentionally sparked a war with cryptocurrency evangelists

how goldman sachs unintentionally sparked a war with cryptocurrency evangelists

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Goldman Sachs Group Inc. signage is displayed on a monitor on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Friday, Oct. 7, 2016.Michael Nagle | Bloomberg | Getty ImagesGoldman Sachs isn’t convinced there’s a case for investing in cryptocurrencies like bitcoin. Crypto evangelists — perhaps unsurprisingly — aren’t impressed with its assessment.The U.S. bank’s consumer and investment management division released a slide deck ahead of an investor call Wednesday, examining the impact of the coronavirus outbreak on the U.S. economy. A sizable chunk of the presentation focused on bitcoin and other virtual currencies.”Cryptocurrencies including bitcoin are not an asset class,” Goldman Chief Economist Jan Hatzius and Harvard Professor Jason Furman wrote in the opening of one slide. The deck detailed several reasons why cryptocurrencies couldn’t be considered an asset class in their own right, claiming they don’t generate cash flow likes bonds or earnings through exposure to global economic growth.”We believe that a security whose appreciation is primarily dependent on whether someone else is willing to pay a higher price for it is not a suitable investment for our clients,” Hatzius and Furman wrote.”We also believe that while hedge funds may find …

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Cryptocurrency Insurance: What Will It Take for the Market to Offer Coverage?

cryptocurrency insurance: what will it take for the market to offer coverage?

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One of the major challenges confronting the cryptocurrency sector is the difficulty in finding insurers willing to cover losses.

One of the major challenges confronting the cryptocurrency sector is the difficulty in finding insurers willing to cover losses.
Along with a generally hardening marketplace, entities in the space must also contend with a dearth of historical data, a wide range of business models and a dense and difficult-to-understand technical underpinning.
Combined, these factors are enough to convince most insurers to steer clear of covering cryptocurrency or to price in such uncertainty as to make them cost-prohibitive.
“The market is a bit broken,” said Raymond Zenkich, president and COO of Evertas, formerly known as BlockRe before it was rebranded in February 2020 as a cryptocurrency  insurance company.
A Big Need for Cryptocurrency Coverage
“Today, the cryptocurrency market is around $250 billion,” said Zenkich. “But there’s really only around $1-2 billion of insurance capacity in the market, which is a small, small fraction of what’s needed.”
Evertas hopes to ease that disparity in two ways: “We will basically be a crypto-asset MGA, and in parallel with that, we are creating an insurance company in Bermuda,” said Zenkich.
“So that is to provide …

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Study proposes a model to predict cryptocurrency defaults

study proposes a model to predict cryptocurrency defaults

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Cryptocurrency coins Credit: Flickr CC by alpari.org

University of Vaasa (Finland) researchers propose a model that is capable of explaining 87 percent of cryptocurrency bankruptcies after only one month of trading. It could potentially serve as a screening tool for investors keen to boost overall performance of cryptocurrency investment portfolios by avoiding investing in unreliable cryptocurrencies.

Nowadays there are thousands of cryptocurrencies available. Interestingly, only a small percentage are actively traded, whereas the vast majority appears to be either inactive or have already failed. Default risk is one of the risks associated with investing in digital assets like cryptocurrencies. The question arises which factors help to predict whether a cryptocurrency will eventually go bust.
A recently published research article from Klaus Grobys and Niranjan Sapkota from the University of Vaasa in the well-known journal Applied Economics addresses this question.
In their study, the researchers examined all available 146 Proof-of-Work-based cryptocurrencies that started trading prior to the end of 2014 and tracked their performance until December 2018. They found that about 60 percent of those cryptocurrencies were eventually in default. The model of their study reveals four interesting factors that could be precursors to whether or not a coin will succeed.
The first factor is …

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Cryptocurrency Custody Giant Bitgo Launches Institutional Trading Service

cryptocurrency custody giant bitgo launches institutional trading service

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BitGo’s Logo

Credit: Bitgo

BitGo, a leader in digital asset financial services, announced today that it is now offering institutional trading services through its new entity BitGo Prime.
The ability to seamlessly trade from secure, insured cold storage is being offered exclusively to BitGo Prime clients, whose assets are held with qualified custodian BitGo Trust.
The launch follows a lengthy private beta during which BitGo Prime worked closely with leading institutions to hone and refine its trading and lending offering. 
Institutional Grade Service For Trading Cryptocurrency
It’s an important development that has the potential to be impactful to cryptocurrency markets as institutional investors comprising hedge funds, fiduciaries, asset managers, fund managers and Registered Investment Advisors, will now have the same institutional grade trading services in the cryptocurrency world that exist in the traditional world of securities today.

Institutional grade trading services makes it easier for institutions to participate in cryptocurrency investing and that’s important as while institutional money has been the backbone of global equity and bond markets, the cryptocurrency market hasn’t yet seen large inflows of institutional money and that’s held the market back.
Part of the reticence on the part of institutional investors is …

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Coinbase to acquire Tagomi to improve institutional trading offering

coinbase to acquire tagomi to improve institutional trading offering

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Cryptocurrency exchange company Coinbase has announced plans to acquire Tagomi, an advanced cryptocurrency brokerage platform specifically targeted at professionals and institutional investors. Terms of the deal are undisclosed and the acquisition is still pending regulatory approval.
While Coinbase is a well-known name for retail investors who are just getting started in the cryptocurrency space and want to buy some bitcoins, the company has been ramping up its offering for professional investors.
The main Coinbase.com interface remains relatively simple to understand, but the company is adding more features to Coinbase Pro, its exchange platform for professionals and crypto enthusiasts. You can access more complicated orders on Coinbase Pro, such as margin trading.
A couple of years ago, Coinbase also added another tier with Coinbase Prime. In addition to market data and trading strategies, the company wants to add more features for institutional investors, such as algorithmic trading, API and third-party platform support. According to the site, those features “will be rolled out over the coming months.”
Tagomi will expand the offering for those institutional investors. Eventually, Coinbase wants to provide an experience that works more or less like Wall Street-level trading experience in equities and FX markets. In particular, Tagomi …

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PCAOB eyes audits involving cryptocurrency

pcaob eyes audits involving cryptocurrency

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The Public Company Accounting Oversight Board released a document Tuesday with information for auditors and audit committees about audits involving cryptoassets, such as Bitcoin and other digital currencies.The Spotlight document, Audits Involving Cryptoassets – Information for Auditors and Audit Committees, is part of the PCAOB’s Strategic Plan to monitor the development and implementation of emerging technologies to analyze their implications for the quality of audit services.The PCAOB’s staff has noticed that cryptocurrency such as Bitcoin has recently started to be recorded and disclosed in the financial statements of companies, broker-dealers and other issuers. When doing inspections of auditors of some smaller issuers, the PCAOB’s staff has seen situations where transactions involving cryptoassets were material to the financial statements.The document discusses some of the issues auditors should consider when handling their responsibilities under PCAOB standards for auditing issuers who are transacting in or who hold cryptoassets. Some of those issues may involve fraud. “In identifying fraud risks, the discussion among the key engagement team members about the potential for material misstatement due to fraud may include, for example: the risk of management override of controls over the private keys, which may result in misuse or misappropriation …

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