April 11, 2022
Illustration: Christopher T. Fong/Protocol
Good morning, and welcome to Protocol Fintech. This Monday: Burning questions about crypto earnings, Kraken’s SF exit and Robinhood’s crypto wallet bust.
Are we endangered by a “finance gerontocracy,” as Peter Thiel suggested at Bitcoin 2022 last week? He particularly fingered Warren Buffett, Jamie Dimon and Larry Fink as members of this dangerous group. I don’t know about all that, but when you search for Thiel’s age — he’s 54 to Dimon’s 66 — Google suggests that you instead ask the question “Is Peter Thiel a child?”
Almost no crypto investors know all the situations in which their token-trading activities are taxable, a survey conducted by Wakefield Research for tax-prep assistance firm CoinTracker says.
While the Internal Revenue Service issued specific guidance in 2014, and updated it once again in 2019, the fast emergence of new crypto products and services has left the U.S. government a few steps behind. But a large number of crypto investors aren’t even aware of the existing guidelines.
Crypto tax ignorance is widespread, and that’s a problem both for taxpayers and the government. In the survey, when presented with a number of possible situations where crypto could be taxed, 97% of respondents got at least one answer wrong.
People think that they know what they’re in for, but chances are they don’t. Despite the obvious gaps the survey revealed, 54% of survey respondents felt confident in their knowledge of crypto taxes.
Washington has a crypto tax agenda. As part of Biden’s 2021 infrastructure bill, IRS crypto reporting requirements in 2023 are going to be easier for crypto investors and harder for crypto firms.
Since crypto is growing, crypto tax advice and compliance are growth fields, too. As a relatively new sector, cryptocurrencies are likely to be met with waves of new regulation and legislation, as the government tries to figure out how — or even whether — digital assets fit into the existing tax system. It’s a good idea to get a handle on what you’re on the hook for now, before it changes once again.
There’s been a rapid rise in interest in using crypto for buying goods and services. But can the crypto industry win the trust of the wider population? Get insights from over 30,000 consumers and 3,000 businesses on the crypto payments trends and expectations that are shaping the future of commerce.
Blockchain analytics led to the takedown of “Welcome to Video.” Crypto-tracing techniques proved crucial in the sexual exploitation case, where law enforcement traced currency flows on the blockchain to unravel a web of criminal ties.
Kraken shut down its San Francisco headquarters. CEO Jesse Powell said in a statement that “numerous employees were attacked, harassed and robbed on their way to and from the office,” and called the city unsafe.
The EU hit Russia with a fifth round of sanctions, including “high-value” crypto transactions. In addition to a full transaction ban and freeze on four more Russian banks, the EU has moved to ban any “high-value crypto-asset services” to Russia.
Blockstream and Block are partnering for a bitcoin-mining facility. The two companies are reportedly planning to use Tesla’s Megapack tech to build a new solar- and battery-powered mining operation.
The Clearing House is increasing its general transaction value limit to $1 million. Users can now transfer up to $1 million on the RTP network, an increase from $100,000 previously.
Robinhood said it’s given a crypto wallet to every user who wants one, with millions on a waitlist. But its stock dropped Friday after Goldman Sachs said the online brokerage faces a rough road ahead. Shares were down about 8% in late morning trades and have lost 39% of their value this year. The stock is 87% below the all-time high of $85 it reached in August shortly after its IPO, propelled by its growth in crypto trading revenue.
“We believe this lack of clarity around the path to profitability will prevent the stock from re-rating higher,” Goldman analysts wrote. The analysts said recent data pointed to user growth that “remained depressed” and pointed to worries of a crypto slump, which could have a negative impact on Robinhood.
JPMorgan Chase and BlackRock’s earnings calls are set for Wednesday. JPM’s average estimated EPS is at $2.71, down 19% from last quarter. BLK’s average estimated EPS is at $9.22, down 12% from last quarter.
Morgan Stanley and Goldman Sachs’ earnings calls are on Thursday. MS’ average estimated EPS is at $1.80, down 13% from last quarter. GS’ average estimated EPS is at $8.79, down 19% from last quarter.
Citigroup’s earnings call is also set for Thursday. C’s average estimated EPS is at $1.98, down one percent from last quarter.
New York Fintech Week 2022 starts next Monday, April 18. The five-day conference will feature industry keynote speakers, including BlockFi co-founder Flori Marquez and NovoPayment co-founder Anabel Pérez.How is the infrastructure rollout going — and what does it mean for tech? Join Protocol’s Issie Lapowsky and a panel of experts on April 21 at 9 a.m. PT/12 p.m. ET to explore how the infrastructure bill rollout is going and what it means for you.
The cryptocurrency world is maturing and is increasingly being driven by utility, pragmatism and empowerment. Checkout.com sees the potential for cryptocurrency to not only transform the way people transact, but also reinvent the dynamics of the entire digital economy.
Thanks for reading — see you tomorrow!