Many in the crypto and digital assets markets have been claiming that institutions are moving into this space and are now banging down the digital door to get access to this asset class. They may finally be onto something.

By many measures, the market for digital assets is growing at a pace that appears primed for broader adoption by more sophisticated players in the markets like private capital, pensions funds, endowments, traditional hedge funds, and banks.

The crypto derivatives market is a leading example of this. It has been growing faster than the spot market over the past three years and is now estimated to be 40% of the top global exchange volume according to CryptoCompare in their July Exchange Review Report.

"In the last two years we have seen traditional pension funds likeFairfax Countys Virginias Police Officers Retirement System, traditional banks like JP Morgan, Signature Bank, and multiple billion dollar family offices across the country holding and investing in Bitcoin and other crypto currencies," says Kavita Gupta, visiting scholar at Stanford University.

Institutions often cite regulatory uncertainty as one of the main reasons for not allocating to crypto and digital assets, and they have a point. Most tokens and coins fall under a legal grey area that has yet to be clarified by most major securities authorities. Derivatives are a different breed.

The US Commodities Futures Trading Commission (CFTC) is considered one of the planets toughest regulators, and they have approved several crypto futures contracts for trading like CME's Bitcoin Options, NYSEs Bakkt, and LedgerX. This approval comes despite their refusal to approve a Bitcoin ETF as they judge the spot market as unreliable and manipulated to a much higher degree than most people realize.

The widespread availability of these derivatives has led to private capital and institutions allocating to them, seemingly setting or matching new records with each passing month. Open interest in Bitcoin contracts hit an all time high of $2.1 billion on July 31st and then nearly matched that mark with the August expiry that passed just last week.

In the U.S. alone, anyone with a TD Ameritrade or Robinhood account can invest in crypto options just as easily as buying a share of Apple AAPL or Tesla TSLA , and this has likely contributed to the explosive growth seen in options trading volumes this year. The rumour in the professional COVID-19 work at home community in the global financial services sector is that the vast numbers of new homeworkers has contributed to the retail volume of derivative trading.

It helps to have traditional heavyweights like the CME and NYSE behind these contracts, and while growth started slowly and intermittently, it is now moving at a steady pace. According to a recent research report by Tokeninsight, derivatives trading volume is rising steeply, up 100 percent from the same period one year ago as spot volumes have seen a drop, down 18% in Q2 but still have yet to pass spot trading volumes.

There are also venues like Huobi, Bitmex, and Deribit, and investors are flocking to them not only because they are seen as safer by some, but also because of the flexibility and creativity found in derivatives markets.

Denis Vinokourov, head of research for digital assets prime broker Bequant, recently commented in CoinTelegraph, Options are a very efficient way to hedge exposure to the underlying product, be that Bitcoin or Ethereum spot or even futures/perpetuals. In addition, it is easier to structure products that would offer yield, and it is this that has been particularly appealing to market participants, especially in the wake of sideways market price action.

Crypto assets are growing and the markets are maturing at a remarkably fast pace given their relative infancy. Bitcoin is increasingly gaining mainstream awareness as public companies and central bankers discuss it with stablecoins, central bank digital currencies (CBDCs), and the Digital Yuan, increasingly as a prolonged economic downturn caused by the COVID-19 pandemic looks increasingly likely.

Last month a publicly traded company MicroStrategy MSTR became one of the single biggest individual holders of Bitcoin when it bought about $250 million worth of BTC because it is a reasonable hedge against inflation that is superior to cash.

This led to a short-lived rally, but this was less important than the initial indications that larger firms are now starting to seek out alternatives to the US Dollar, and in this case, one was confident enough in Bitcoin to convert nearly all of its cash reserves into the cryptocurrency.

This phenomenon is global with Asian companies not to be outdone. This weeks announcement by the Singapore Exchange about its entry into digital asset products is a telling barometer for institutional interests globally.

This is no surprise as Asian institutions make up the lions share of trading volumes in spot, futures and derivative products, said James Harris, at CryptoCompare, expect more to come, especially in the Asia Pacific region, and soon.

A number of larger exchanges around the world are also long on digital assets including the London Stock Exchange Group, Nasdaq and the Swiss Stock Exchange (SIX-Group) who is building a full digital exchange, SDX, in partnership with R3 and are also exploring platforming the Swiss National Banks (SNB) digital currency.

Spot markets have since rallied sporadically but are struggling to stay above $12,000, trading mostly in a narrow range between $11,300 and $11,800 while DeFi coins like YFI have surged in unprecedented parabolic runs that have made instant millionaires overnight only to see some of those lose all their gains almost as quickly, as in the case of YAM.

A likely contributor to this tentative price action is the weariness traders have that another storm cloud is often on the horizon. Ethereum Classic (ETC) had three 51 percent attacks last month alone. This week saw South Korean regulators raiding the offices of BitThumb, one of the worlds largest crypto exchanges, over allegations of fraud related to an IEO and a potential buyout offer.

Bitcoin fell nearly five percent and other digital assets were dragged down with it. In an orderly market, circuit breakers would be triggered. Trading would be suspended, and investors would have been protected.

These measures dont exist in digital asset spot markets and flash crashes lead investors of all types to incur losses they otherwise wouldnt in traditional, fully regulated markets. Until the risk of this unpredictability can be better managed, it might be a while before more sophisticated investors look too far beyond traditional derivatives markets which are, after all, notionally the largest market in the world.

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Private Capital And Institutions Are Piling Into Bitcoin And Other Digital Assets But You Need To Know Where To Look - Forbes

Bitcoin and ether can be used to pay taxes in the Swiss Canton of Zug starting next tax season. Zugs crypto valley is home to many cryptocurrency businesses, and by accepting bitcoin and ether for tax payments, the canton aims to promote and simplify the use of cryptocurrencies in everyday life.

Switzerlands Canton of Zug announced Thursday that it will start accepting cryptocurrency for tax payments. The Zug Department of Finance is collaborating with local company Bitcoin Suisse to offer tax settlement with cryptocurrencies, starting in the upcoming tax season which begins in February next year. The announcement details:

Beginning in 2021, taxes in the Canton of Zug can be paid using the cryptocurrencies bitcoin and ether.

Companies and private individuals can use BTC or ETH to pay their tax bills of up to CHF 100,000 ($109,900). Partial payments are not accepted. A pilot will take place in the coming weeks to ensure that everything is ready for the upcoming tax season.

Anyone wanting to pay their tax bills with cryptocurrencies may contact the cantonal tax office. They will be provided with the QR code for payment. Zugs Finance Director Heinz Tnnler clarified: We do not take any risk with this new payment method, as we always receive the amount in Swiss francs, even if payment is made in bitcoin or ether.

Founded in 2013, Bitcoin Suisse is a regulated Swiss financial intermediary that offers prime brokerage, custody, crypto payments, collateralized loans, staking, and other crypto-financial services for private and institutional clients. The company is currently in the licensing phase for the Swiss and Liechtenstein banking licenses.

Director Tnnler opined:

As the home of the Crypto Valley, it is important to us to further promote and simplify the use of cryptocurrencies in everyday life. By enabling the payment of taxes with bitcoin or ether, we are taking a big step in this direction.

In January, Zermatt, a Swiss municipality known for its ski resort, announced that it started accepting bitcoin for government services, including payment for local taxes. Meanwhile, the Chiasso municipality started accepting bitcoin for tax payments since January 2018.

Do you think all governments should accept bitcoin for taxes? Let us know in the comments section below.

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Bitcoin Will Be Accepted for Tax Payments in Swiss Canton Zug Next Year | Taxes - Bitcoin News

WAN CHAI, HONG KONG, HONG KONG ISLAND - 2018/04/07: A Bitcoin ATM machine in Wan Chai, Hong Kong. ... [+] (Photo by Miguel Candela/SOPA Images/LightRocket via Getty Images)

Popular virtual currency Bitcoin has been a news fixture since its introduction in 2009. If fact, Bitcoin is the worlds leading virtual currency, with a market capitalization over $175 billion. This explosive growth has led donors and their advisors to explore various charitable giving opportunities using virtual currencies.

The Internal Revenue Service (IRS) describes virtual currency as a digital representation of value that functions as a medium of exchange, a unit of account, and / or a store of value. Its creators designed it to operate like legal tender, and as a medium of exchange, although very few governments currently recognize it as legal tender anywhere in the world.

Currently, Bitcoin and other virtual currencies, such as Ethereum and Ripple, represent a total market capitalization of over $250 billion. Many large charities, including large donor-advised funds and community foundations, are eager to tap into this market or have already received virtual donations. For example, United Way, American Red Cross, and the American Cancer Society accept donations of Bitcoins. Most major donor-advised funds accept Bitcoin, and some accept other cryptocurrencies as well.

Smaller nonprofits have begun accepting the currency as well. Technology and financial strategies involving the asset have only grown more complex with time, as concepts like proof-of-stake, forks, and decentralized finance (DeFi) all have become more prominent in the cryptocurrency world.

Ryan Raffin

With this explosion in value, many owners of Bitcoin and other virtual currencies have significant appreciation in these assets. This makes cryptocurrency a very appealing candidate for charitable giving. This article discusses the tax treatment of Bitcoin and other cryptocurrencies under current IRS rules. It has a particular emphasis on the tax results for donations of virtual currency.

2014 Bloomberg Finance LP

IRS Positions on Bitcoin The Internal Revenue Service was quicker than many organizations when it came to consideration of the financial and tax implications of virtual currency. In March of 2014, the IRS issued a Notice on the tax treatment of transactions involving virtual currency. This was its first official statement on cryptocurrency, although its published guidance since then has confirmed that treatment. Most importantly, the IRS stated that, for tax purposes, virtual currencies are property and not currency.

This property treatment means that traditional gain and loss principles will apply therefore treating these assets as securities or business property. A party selling, spending, or otherwise disposing of virtual currency may be subject to capital gains or ordinary income tax. Although the charity will be selling the currency, exempt organizations are not generally taxed on income, even from the sale of appreciated property.

The major tax implications for donations of virtual currency, therefore, involve the donor rather than the charity. The main consideration for donors is the charitable income tax deduction received. As a preliminary matter, note that in answering questions on donated cryptocurrency, the IRS refers multiple times to its general publication on charitable contributions. This supports the assumption that the standard noncash charitable deduction rules will apply.

The gain can be ordinary, or capital, depending on the source of the virtual currency to the donor. The determination on the type of gain or loss the taxpayer recognizes depends on whether that person held the virtual currency as a capital asset for investment purposes. If the donor did not hold the property as an investment, it would be subject to ordinary gain or loss treatment. This is more likely to be the case if the donor is a so-called miner or where the virtual currency is otherwise income paid for services rendered.

Results for Bitcoin and Cryptocurrency Donors These possibilities lead to three potential tax results for donors of virtual currency. First, a donor giving virtual currency held short-term (i.e., less than one year) as a capital asset will be able to deduct the lesser of cost basis or fair market value up to 50 percent of adjusted gross income. However, if the donor held the Bitcoin or other currency for more than a year as a capital asset, the deduction would be the fair market value of the gift up to 30 percent of adjusted gross income. Finally, if the currency is subject to ordinary gain or loss treatment in the hands of the donor, the donor may deduct the cost basis of the gift up to 50 percent of her adjusted gross income.

If the donor received Bitcoin as ordinary income as payment for services rendered or property sold, the donor may only deduct the cost basis under the ordinary income reduction rules. The IRS defines the cost basis of the virtual currency as its fair market value when the owner receives it. So if a third-party pays the donor Bitcoin worth $500 for professional services, and that Bitcoin later appreciated to $1,000 USD, the donors charitable income tax deduction would be limited to $500, or cost basis.

These rules are very favorable to donors holding appreciated virtual currency as capital assets, allowing them to avoid incurring a tax for capital gains on the Bitcoins or other currency. This is especially true following the Tax Cuts and Jobs Act of 2017, which limited Section 1031 exchanges to real estate only, meaning owners of virtual currency could not simply exchange them for other virtual currencies to avoid recognizing gain. Note that this donation would also allow the donor to avoid the potential 3.8 percent Medicare surcharge on investment income. The extreme appreciation in Bitcoin and other cryptocurrency makes the asset class a very strong candidate for charitable giving. Better still, IRS commentary has clearly laid out the tax results and requirements for substantiating such donations. Although there are some hoops to jump through to get a fair market value deduction, those difficulties can be minimal in comparison to the benefits of optimizing tax efficiency in giving. These tax items are of course not the only considerations for donations of Bitcoin or altcoins, but they can provide a powerful motivation for the right donor holding appreciated cryptocurrency.

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Tax Implications For Donations Of Bitcoin - Forbes

Bitcoin Association, the global industry organization which works to advance business with theBitcoin SV blockchain, has named three finalists in its 3rdBitcoin SV Hackathonto compete for a share of a USD$100,000prize pool paid in BSV. The announcement follows yesterdays release of ashortlist of ten semi-finalists, selected by a preliminary judging panel as the ten best entries from all projects submitted.

One of the premier events inBitcoin Associationsdeveloper education programme, Bitcoin SV Hackathons are global coding competitions designed to challenge developers to both learn about the technical power of Bitcoins original protocol and innovate on the fly. Organized by Bitcoin Association, run by leading blockchain research & development firmnChain, and sponsored byCoinGeek, Bitcoin SV Hackathons task entrants with developing an application or service within the parameters of a given theme that leverage the unique capabilities of the Bitcoin SV blockchain, all within a set period of time.

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The theme for the 3rdBitcoin SV Hackathon was Connecting the world to one global blockchain. A distinguishing feature of the Bitcoin SV blockchain is its ability to scale unbounded, enabling greater data capacity and high volumes of low-fee transactions sent instantly across the globe. These capabilities support the rise of a single digital currency (BSV) for micropayments, break down historical industry data silos, and facilitate technical interoperability in ways never before possible. Entrants were challenged to utilise these capabilities in their project, using the Bitcoin SV blockchain to establish new efficiencies and opportunities for interconnectivity.

This edition of the Bitcoin SV Hackathon was the most competitive to date. In all, 418 people from 75 countries took part over an eight-week coding phase, with 42 final projects submitted for consideration.

The three finalists will be invited to present their projects at the upcomingCoinGeek Live 2020conference,September 30 October 2. The Hackathon Final Round presentations will be on Day 1 (September 30) of the conference, with winners announced on Day 3 (October 2). The finalists will compete for a share of a USD$100,000BSV prize pool $50,000for 1st place,$30,000for 2nd, and$20,000for 3rd.

Final placings will be determined by a combination of a Final Round judging panel and audience voting through an augmented reality experience for online attendees of CoinGeek Live.

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KyrtKyrt integrates Bitcoin microtransactions with subscribable events available via Zapier a major platform enabling easy integration workflows across more than 2000 applications. Zapier is an incredibly powerful tool and by integrating a micropayment rail into any application interaction, the possibilities are endless.

RepZipIdentity on-chain is a fiercely discussed topic in Bitcoin SV and a key missing piece of infrastructure. RepZip not only provides a real solution to the problem, but also integrates with Paymail and existing Bitcoin data infrastructure in a way that can satisfy a plethora of use cases. Identity is powerful and is a core link between the digital and the physical world. When the solution integrates 3rdparty attestation, this will become a core and central part of day to day Bitcoin interactions.

STOTASKSTOTASK is a new entrant in the gig economy that allows owners of datasets to leverage the idle time of anyone to apply human interpretation to tag data. This is a missing link between human classification and machine learning. Classification tasks that are easy for humans but hard for machines can become machine-learned with an initial human input. Bitcoin SV is used as the payment rail for STOTASK, enabling work to be paid out in very small increments. Coupling this with Metanet data structuring in the future has huge potential.

Speaking about the finalists, nChain CTOSteve Shadders, said:

With each iteration of the Hackathon, were seeing the quality and creativity of entries continue to improve. This time around, with the extended coding phase of the competition, its clear that the additional time has been put into really developing these ideas into high-quality, well-thought-out submissions. Im excited to see each of the three finalists present their project at CoinGeek Live, but its certainly not going to be easy determining a winner!

Also commenting on todays announcement, Bitcoin Association Founding PresidentJimmy Nguyen, said:

The standard of submissions for the 3rdBitcoin SV Hackathon has raised the bar once again and reflects the continued maturing of Bitcoin SV development. What impressed me the most is the diversity of projects entered business and consumer applications that each have a unique take on our theme of Connecting the world to one global blockchain but all with the common thread of leveraging the distinguishing powers of the Bitcoin SV blockchain. Id like to thank all of the more than 400 people who took part in the competition. While we select a champion in a few weeks time, all the participants win by building on BSV.

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3rd Bitcoin SV Hackathon Finalists Announced to Compete for USD $100,000 - AiThority

Bitcoin and cryptocurrency markets have been dominated by decentralized finance, often shortened to DiFi, over recent months.

The bitcoin price, up around 40% since the beginning of 2020, has been left in the dust by the gains made some DeFi project tokensincluding yearn.finance (YFI) that's up a staggering 3,500% in just a little over a month and has surged past bitcoin's late-2017 $20,000 all-time high.

Bitcoin remains the biggest cryptocurrency by total value with a market capitalization of over $200 ... [+] billion, however, individual yearn tokens are now worth far more than single bitcoins.

The price of yearn.finance tokens have soared from under $1,000 per YFI since it was created in mid-July to over $30,000 this weekend, passing the bitcoin price on Friday. The yearn.finance price came close to $40,000 on some bitcoin and cryptocurrency exchanges before falling back.

YFI is the governance token of DeFi protocol yEarn, designed to aggregate yields from other lending protocols. DeFi is the idea cryptocurrency technology can be used to recreate traditional financial instruments such as loans and insurance.

YFI holders can use their tokens to vote on proposals for network upgrades and it can be earned by putting cash into yEarn, a practice known as yield farming.

"The yearn.finance coin has become the altcoin star recently," Alex Kuptsikevich, FxPro senior financial analyst, said via email.

"In a month it has shown twentyfold growth, living proof that 'unicorns' still exist, at least in crypto. The rapid growth of the coin also reflects the popularity of the decentralized financial sector. The creators of the project decided to follow the bitcoin path, limiting the issue of only 30,000 YFI coins. Such limited supply spurs rapid price growth."

This price growth was not something planned by the YFI creator, however. Yearn.finance tokens were described as "completely valueless 0 supply token," by its creator Andre Cronje.

The yearn price has jumped by 26% in just the last 24 hours, adding to massive gains through August ... [+] and leaving the bitcoin price in the dust.

"We reiterate, it has 0 financial value," Cronje wrote in a Medium post last month outlining the project.

"There is no pre-mine, there is no sale, no you cannot buy it, no, it wont be on uniswap, no, there wont be an auction. We dont have any of it."

But this warning hasn't stopped some of the biggest personalities in bitcoin and crypto from making outlandish predictions about the YFI price.

"One YFI [equals] $100,000," Arthur Hayes, the chief executive of the Seychelles-based bitcoin and cryptocurrency exchange BitMEX, said via Twitter, forecasting the yearn.finance price would continue to climb and hit $100,000.

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A Radical New Crypto Just Blew Past The Bitcoin Price All-Time HighUp A Shocking 3,500% In Just One Month - Forbes