Daily Byte: Wednesday, December 19, 2018

Hong Kong waves warning flag on crypto IPOs, institutional investors may be leaving bitcoin, and France says no to crypto tax changes.

  • Hong Kong Pumps Brakes on Crypto IPOs

    Hong Kong’s regulators have indicated that it may be premature for a crypto trading platform to seek an initial public offering (IPO) in Hong Kong, the South China Morning Post reports.

    This may prove detrimental to Chinese crypto hardware manufacturer Bitmain, which has placed an application for a $3 billion IPO. The regulator, which offers advice to the Listing Committee of the Hong Kong Stock Exchange, argues that an IPO cannot be completed until Hong Kong finalizes its regulatory framework.

    Hong Kong is currently reforming its rules regarding cryptocurrencies, with new rules being approved last year regarding fundraising for tech companies and pre-revenue biotech research teams. The Securities & Futures Commission is creating a sandbox to test the new rules and to allow new platforms to operate as licensed entities in the absence of incomplete regulations. As such, an IPO before the sandbox ends would be premature, as the regulatory framework may change.

    JPMorgan: Pros Are Fleeing Bitcoin

    JPMorgan Chase & Co. is arguing that the move to “institutionalize” crypto may be waning as large institutional investors may have been scared off by the current bear market.

    “Participation by financial institutions in Bitcoin trading appears to be fading,” JPMorgan analysts wrote in a research note dated December 14, per Bloomberg. “Key flow metrics have downshifted dramatically.” This assessment includes the futures markets and average volume.

    Much like everyone else, professional investors developed their crypto plans during the bitcoin spike of 2017. For example, the debut of bitcoin futures by Cboe Global Markets corresponded to the apex of the spike. Today, however, interest is at a low point.

    A retreat by institutional investors may exacerbate the decline of crypto prices. However, it is not universally agreed that institutional investors are abandoning crypto.

    France’s National Assembly Rejects Reforms to Crypto Tax

    The French National Assembly has rejected a suite of proposals that would have lowered the tax assessed for crypto in the country.

    Among the bills rejected was one that would have increased the annual tax exemption from €305 to either €5,000 or €3,000. The National Assembly found that the €305 exemption was already favorable compared to how securities are taxed and claimed that an increase would be excessive and unnecessary.

    Additionally, the National Assembly rejected calls to only tax crypto when they are sold and converted to fiat, to tax crypto capital gains using the same basis used for other securities, and to differentiate occasional and professional crypto activities for the purposes of taxation.

    The amendment to change the flat tax rate for crypto from 36.2 percent to 30 percent was not in the proposals considered on Monday and is still before the National Assembly. The 30 percent tax would bring crypto into the same capital gains tax bracket as other securities.

    Be fast, be clever, be wise. Most importantly, be here tomorrow for your Daily Byte.

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