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Swede Receives “Unreasonable” $1 Million Crypto Tax Bill from Government

Swede Receives

Tax concerns are always a worry, as some crypto enthusiasts under certain jurisdictions must now include a cryptocurrency element in their annual calculations, but spare a thought for Swede Linus Dunker who has been hit with a hefty USD 1 million tax bill.

The beleaguered crypto trader has just received his annual tax bill from the Swedish Tax Agency (STA) and is now trying to appeal against calculations on back tax due dating back to 2014 when Swedish tax law regarding cryptocurrency was anything but clear.

Dunker claims the “unreasonable” tax demand hasn’t taken into account some basic history and have included some staggering percentages: a huge 300% of his total profits. The state explains the high rate of taxation was incurred due him not deducting the price of his initial Bitcoin purchase paid in cash.

In 2014, claims Dunker, Bitcoin was regarded as a “hobby activity” and the country’s tax laws had at that time not established any clear way of dealing with the growing phenomenon. In 2016, he was eventually contacted by the STA telling him he should include his cryptocurrency earnings in his returns as capital income.

Dunker, perhaps naively, instructed STA to adjust his figures as necessary when he finally sent in a return in 2016. He expected to receive a tax bill of 30%. After no communication from the tax office until 2018, the bill suddenly arrived showing that he had a tax debt just short of USD 1 million.

The trader has suggested that those submitting returns need to be aware that the STA considers earnings through cryptocurrency transacting as a business rather than personal, and should expect their own unpleasant surprises now the ground rules are there to see.

The STA is currently busy investigating 400 crypto traders, due to what control coordinator Henrik Kisterud calls unrecognized activities”. Meanwhile, Dunker now has a week left to pay off his tax debt.


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Sweden Hopes to Benefit from Norwegian Mining Exodus

Swedish media have reported that the country is expecting a wave of interest from crypto mining companies currently conducting business in Norway, due to the Norwegian government cutting tax subsidies from January 2019.

Norway’s government is putting more pressure on cryptocurrency mining by following through with the threat that it was considering removing electricity tax subsidies on Bitcoin mining. Currently, Norwegian Bitcoin data centers are discounted in the same ways as other industries with high energy costs paying NOK 0.48 (USD 0.056) per kilowatt. This will now rise to NOK 16.58 (USD 1.94) per kilowatt from January 2019.

The effect of this could be a shift to the nearest Scandinavian location with a similar climate and Sweden would be the obvious choice. With Swedish data centers paying significantly less in power costs than the new tariffs being imposed next year in Norway, Sweden is preparing for an exodus of crypto mining outfits.

The Swedish municipality of Boden in Norrbotten County, the northernmost county or län, has a mining community of about ten companies at present. Erik Svenson, director of the Boden Business Agency, maintains that these numbers are now sure to swell, and suggested that companies in Norway were already contacting his agency regarding mining in the area. He said:

“It is clear we’re becoming more attractive… This about big money… and its definitely going to make it cheaper here.”

Svenson said that they had already started building a business park in Boden in anticipation of the growing interest in cryptocurrency mining and other business and hundreds of jobs were likely to be created. Currently, there are a few hundred people employed in crypto mining.

The Norwegian government has lost one of its biggest players in the market due to its punitive tariffs. Bitmain has announced that it will be moving to Sweden or Denmark as a result of the 2019 change in electricity tariffs. Julie Hvideburg, head of Bitmain’s Norwegian operations, commented:

“Government policy is pushing the industry in pushing the industry out of Norway. We are a global company and can move to Sweden or Denmark, but our Norwegian partner loses a big contract.”


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Swiss Stock Exchange to List World’s First Multi-Crypto Based ETP

Swiss stock exchange SIX, the fourth largest stock exchange in Europe with a market capitalization of $1.6 trillion, has followed up on its commitment made back in June of this year to open its doors to cryptocurrencies. With this announcement, it is about to list the world’s first crypto-based exchange-traded product (ETP).

Exchange-traded products (ETP) are a type of security that is derivatively priced and trades intra-day on a national securities exchange. ETPs are priced so the value is derived from other investment instruments, such as a commodity, a currency, a share price or an interest rate. Generally, ETPs are benchmarked to stocks, commodities or indices. They can also be actively managed funds. ETPs include exchange-traded funds (ETFs), exchange-traded vehicles (ETVs), exchange-traded notes (ETNs) and certificates. The ETP that is the most popular is the ETF,  securities that track an index, commodity or basket of assets.

SIX, backed by Swiss startup Amun AG, will track Bitcoin, Ripple, Ethereum. Bitcoin Cash and Litecoin with Bitcoin representing about a half of the ETP’s assets. The break down is XRP 25.4 at percent 16.7 percent in Ethereum, with Bitcoin Cash and Litecoin acquiring 5.2 and 3 percent of the market.

Amun’s co-founder and chief executive Hany Rashwan is certain that as an ETF, the security complies with the same rigorous requirements of traditional ETPs.

Amun AG’s ETP is a branch of the UK based fintech company Amun Technologies who hinted at a crypto ETP last month. Thomas Zeeb, head of securities and exchanges at SIX, sees blockchain-based digital exchanges becoming the status quo within a decade citing cost-effectiveness as a game changer within brokerage, banks, and insurance.

In the US, ETFs have hit a brick wall after the US Securities and Exchange Commission (SEC) rejected at least eight proposals in August of this year. The hope is that at least one successful approval on ETF by the SEC would bring a tidal wave of institutional buyers to the market, picking up prices and moving Bitcoin in a long-awaited upward trajectory. For the hopefuls in the market, the track record so far isn’t good.

In August, XBT Provider AB, a subsidiary of CoinShares Holdings Ltd released an exchange-traded note (ETN) called Bitcoin Tracker One in Sweden. Ryan Radloff, CEO of CoinShares Holdings commented at the time:

“Everyone that’s investing in dollars can now get exposure to these products, whereas before now, they were only available in Euros or Swedish Krona. Given the current climate on the regulatory front in the U.S., this is a big win for Bitcoin.”

Experts are now suggesting that Bitcoin ETFs will be a “way bigger deal” than cash settlement Bitcoin futures contracts and a boon to the Bitcoin market moving forward. This move out of Switzerland’s “crypto valley” is seen as another step forward towards this end.


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VeChain Blockchain Is Stamping Its Mark on Fashion, Trains Sight on China

VeChain, the blockchain-enabled platform designed to enhance product management in the supply chain, has a new potential client in Swedish multinational clothing-retail company H&M.

H&M’s in-house clothing brand Arket has been using VeChain for product testing its supply chain tracking solutions, with a company spokesman reporting that the test “is ongoing,” but as yet not evaluated.

With far more sophisticated tracking methods now being afforded by DLT, farmers are being brought into the accountability loop, with many products now being tracked from farm to table. From Queensland cane growers tracking the movement of sugar around Australia, to growing and tracking organic rice in Cambodia, and cocoa in  Ghana, blockchain is providing farmers with a way of tracking their products from growth to table.

Walmart and French giant Carrefour have already ‘blockchain- tracked’ items on their shelves. Whether Arket’s test is tracking its products from farm to clothing-rack, in the same way, is unclear. However, it should be possible in this case as the product in question is a woolen beanie.

The H&M POC test run allows shoppers to scan a product’s NFC chip and retrieve data on the VeChain app about an item, including the material that has been used. This includes the artist’s ID, colo, supplier, factory name and more relevant information, although what farm the wool originated from might be stretching the customer’s interests just a little, and as for the individual sheep, that might be taking things too far.

VeChain is proving to be popular with the fashion industry at the moment, as this is the second of such collaborations in just a matter of weeks. Recently, another partnership was formed with high-profile shoe artist SBTG in order to release an Adidas shoe containing NFC chips. Ingeniously, customers will be able to watch a video of their shoes being manufactured by scanning the embedded chip; all information which is stored on the VeChainThor blockchain.

VeChain is also setting its sights on China’s growing manufacturing market, hence its showcasing of the company and its blockchain solutions at China’s first International Import Expo (CIIE) which took place in Shanghai this month.

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Cash Disappearing in Sweden, Native Crypto Needed

Cash is rapidly disappearing in Sweden, with the supply of the Swedish krona (SEK) declining to 1% of Sweden’s gross domestic product (GDP). Businesses are now allowed to refuse cash, since it is used so little in society, giving private payment apps like Swish a monopoly over the payment market in Sweden.

It has been speculated that to prevent the complete privatization of money in Sweden, a cryptocurrency is needed, which would probably be called the e-Krona.

According to data from 2010-2018, the circulating supply of cash in Sweden has declined from SEK 95 billion to SEK 55 billion. This suggests that the government has turned off the printing press and is burning physical cash out of circulation. Further, the legislator of Sweden has allowed banks and businesses to simply refuse cash, moving the entire society away from cash and towards digital currency.

If cash completely disappears in Sweden, then it would no longer be possible for people to buy goods or services without going through a third-party payment network. This subjects the citizens of Sweden to payment reverses, payment freezes, and fees for using their own money. Further, Swedish citizens will be forced to go through know your customer (KYC) policies, threatening privacy when paying in Sweden. Perhaps the most important downside is tat Swedish citizens will no longer have total control of their own money.

This can be solved in two ways. Firstly, the citizens of Sweden who still want to use cash can simply adopt USD or EUR, but this would not work well for going to restaurants or other local businesses. The more optimal solution is a native cryptocurrency of Sweden, the e-Krona. Any businesses that accept digital payments of SEK in Sweden can easily be equipped to accept e-Krona.

The difference between the e-Krona and a typical digital SEK payment is that citizens would have full control of their e-Krona via the private key, and do not have to worry about payment reversals, freezes, or fees. An e-Krona would be particularly useful for merchants in Sweden, since at this point, as cash disappears, they are at risk of receiving chargebacks on any sale they make.


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Norway Introduces New Rules for Crypto Service Providers

Norway’s financial regulator has announced new regulations specifically aimed at cryptocurrency providers which will take effect on October 15.

The Norwegian Financial Supervisory Authority (FSA) is enforcing the regulations as part of a government push to ensure that Norwegian cryptocurrency exchanges and those overseas operating in the country observe domestic money laundering rules.

The laws won’t affect individuals trading in cryptocurrencies in Norway as the FSA has specifically stated that the new legislation will only affect, “Norwegian providers of virtual currency exchange and storage services.”

Thus, those storing private keys on behalf of customers are considered to be involved in “the transfer, storage or purchase of virtual currency” and come under the new guidelines. However, “Storage solutions that do not store private cryptographic keys (often referred to as non-custodial wallets) are not covered by the regulations,” such as “Individuals who buy or sell their own virtual currencies for private purposes” and those who “assist friends and acquaintances with the purchase and sale of virtual currencies” won’t be subject to the FSA’s new reporting requirements.

Norway is one of a growing number of nations exploring the viability of a central bank cryptocurrency. There is no specific law telling Scandinavian banks how to view cryptocurrency, there is, however, anti-money laundering legislation already in place. These laws demand that those offering financial services must follow KYC practices. Another Scandinavian central bank, Sweden’s Riksbank, has considered its own cryptocurrency e-krona, with the same motivations as its Norwegian neighbor, having observed cash use on the decline across the country.

The focus has fallen on Norway recently with more cryptocurrency miners reportedly looking to move their operations to Norway and its Swedish neighbor. Hydroelectricity and other renewables from more developed European countries allow for cheaper electricity tariff’s beneficial to profits, as electricity is the main overhead in the crypto mining process.

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Icelandic Crypto Mining: Nucleus of New Technological Age?

Iceland’s Bitcoin mining industry may be cooling off if recent statistic regarding the uptake of blockchain-related products is any indicator, but the centers themselves may create a whole new impetus for new technology.

Iceland has become an iconic name in the industry due principally to the number of companies seeking both cool weather and a cheap power supply – two important factors in Bitcoin mining.

Cryptocurrency miners from warmer climes are reportedly looking to move their operations to Norway and Sweden, with hydroelectricity and other renewables from more developed European countries allowing for cheaper electricity tariffs beneficial to profits as electricity is the main overhead. Iceland has been a popular location due to the low temperatures which naturally dissipate the heat that is generated.

Until now, Iceland has been seen by many as the most profitable location for Bitcoin mining activities in the world but if recent reports are accurate, this might be changing, with blockchain ventures on the increase on the country. Halldor Jorgensson, chairman of Borealis Data Centre located outside the Keflavik International Airport claims that center was seeing huge volumes at the end of last year. He recently commented:

“So you could say that the Bitcoin wave, the big wave of Bitcoin demand, has helped us to build out really fast, because there were really aggressively interested investors who wanted to do things and we managed to do the build-out.”

Jorgensson maintains that, although the huge requirement for Bitcoin pushed the mining industry forward and that it is quite possible a new wave is around the corner, there has been a discernable shift of focus:

“The demand is… shifting more towards the pure blockchain business… We strongly believe that when the whole Bitcoin thing has settled down to some kind of a level that is not as crazy as it was a year ago.”

The data center chief asserts that Iceland is well placed for a further surge in Bitcoin mining due to the infrastructure put in place to cater for the huge impetus created by Bitcoin’s rising fortunes at the end of 2017. However, there are those in the country who feel that Iceland’s economic reliance on Bitcoin carries with it some element of risk.

Johann Snorri Sigurbergsson, business development manager at HS Orka power plant which provides power to crypto mining farms, sees the data centers having a bright future for use in the AI industry in years to come, suggesting that such centers could become the nucleus of future technology. Asgeir Margeirsson, the power plant’s CEO, agrees, arguing:

“The fourth revolution is starting. It would be terrible for us in Iceland not to follow that development. If we were not to take part in the next development into the future, we would slide back.”


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Nordic-Baltic Region Scoops up $6.3B of Europe’s Fintech Business

According to a MagnaCarta, Fintech Mundi and Mastercard report, fintech companies are continuing to thrive in Scandinavia and also in the Baltic regions, writes Fintech Schweiz Digital Finance News.

They are reported to have created half of the industries main players in Europe to date and those firms seeking fintech partnerships is far higher than the overall 2017 European average in these regions.

At the forefront of these successes are Swedish online payment platforms Klarna and iZettle and Estonian money transfer program TransferWise which has now relocated to the UK. These three companies are reputed to have a cumulative worth of USD 6.3 billion.

Susanne Hannestead CEO of Fintech Mundi and co-author of the research explains:

“The Nordic and Baltic markets already have an incredible track record of building fintech companies having created regional successes that have gone on to become global winners, like Spotify and Zwipe.”

Its reported that there are over 500 fintech companies across the Baltic and in Scandinavia and banks are showing increased interest seeing that costing and effectiveness can be a factor of collaboration in this financial sector.

Mastercard has been a major driver of fintech in the region having recently launched its Lighthouse Development Program in partnership with NFT Ventures in the region. The project has been set up in order to trawl the sector for prospective startups and develop new technologies.

Mats Taraldsson, the head of digital business development and fintech partnerships of Mastercard Nordics and Baltics, claims that collaboration is the key to success and finding the right fintech and startup mix to deliver customer needs:

“…working together with startups and fintech is essential to meet the future needs of consumers, merchants, and governments. We have been committed to fintechs for many years, fostering partnerships with pioneers who have grown into global brands.”

The Nordic Fintech Disruptors Report 2018 does highlight some problems though, regardless of the regions capturing the larger chunk of Europe’s fintech business, suggesting that the region still lacks regulation and supervision, particularly at local levels. In fact, 45% of respondents agreed that Nordic and Baltic fintech companies needed greater support in this area. Hannestad, also co-author of the research explained:

“A more joined-up approach to fintech, and the factors that influence successful innovation between the markets governments and regulators, however, would create new opportunities for growth and productivity and ensure the region is the best place in Europe to build the next generation of fintech giants.”


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Seized Crypto Millions Auctioned by German Prosecutors

Bavarian prosecutors are to auction off seized cryptocurrency worth nearly USD 14 million, estimated to be the highest such sale in German history, reports Cointelegraph.

The sale, originally reported in local news source Der Tagesspeigel on 28 May, involves 1,312 Bitcoins (BTC) and other digital currencies including 1,399 Bitcoin Cash, 1312 Bitcoin Gold, and 220 Ethereum.

The funds were confiscated as part of an investigation into online platform It is estimated that at least 30,000 people had used the platform before the website was shut down and the site operators were arrested last June by officers from the Bayern Central Cybercrime Office, according to Der Tagesspeigel.

German prosecutors stated that “since all cryptocurrencies are exposed to the risk of high price fluctuations or even total loss, the Bayern Central Cybercrime Office ordered an emergency sale”.

The seized cryptocurrencies were reportedly sold over the course of two months in 1,600 separate transactions with the selloff beginning in late February when the price of Bitcoin had plummeted from almost USD 20,00 to around USD 11,400. During the sale, the price dipped again to below USD 7,000 and then rose back to USD 9,000. With Bitcoin currently at around USD 7,400 at time of press, it seems as though the Bavarian police have timed it well, unless Bitcoin rebounds again in the future, suggests Fortune.

The auctioning of crypto assets seized by enforcement authorities is not unusual. In January this year, the US Marshals Service raised over USD 40 mln from the auction of BTC 3,812 seized during the course of civil and criminal proceedings in January. Other countries such as Sweden and Ukraine began auctioning seized Bitcoin last year, and earlier this year about BTC 2,000 was confiscated by the Finnish government after assets were seized from blockchain market Valhalla.

One of the most notable in terms of size was a seizure by Bulgarian police last year estimated to be enough to pay off one-fifth of Bulgaria’s national debt; a sum that would be worth approximately USD 1.5 billion at today’s Bitcoin price.


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Bank of England Governor Openly Considers a Central Bank Digital Currency (CBDC)

Mark Carney, Governor of the Bank of England, spoke at the Riksbank Anniversary conference on Friday, putting forward an open-minded stance about the possibility of a central bank digital currency (CBDC).

Potential CBD for England

As reported by Bloomberg, while Carney appeared open to the idea, he also pointed to several issues that prevented him from offering his full support for a CBDC. Specifically, Carney stressed his view that cryptocurrencies are not a true equivalent of money, and that should a CBDC be adopted, it will not be capable of happening successfully in the near future.

During his speech, Carney went on to explain that the Bank of England is looking to boost diversity within the institution by engaging with people who not only come from a mainstream economic background. “The future of central banking may involve fewer central bankers, ” he said, indicating perhaps a future direction more compatible with the cryptocurrency field.

Sweden’s central bank Riksbank hosted the conference. Risbank is currently researching the practicality of implementing an e-krona, a CBDC for Sweden, with results from the inquiry scheduled to be published in 2019.

Carney and Crypto

The Bank of England issued a working paper earlier this month, detailing results of an extended inquiry into the possible financial risks and stability issues associated with CBDC. The report indicated that there was no probable cause to assume adopting a CBDC would create issues surrounding private credit, or total liquidity provision to the economy.

Carney has not held back on his personal, skeptical view of cryptocurrencies in the past. In February this year, he stated ”[cryptocurrency] has pretty much failed thus far on… the traditional aspects of money. It is not a store of value because it is all over the map. Nobody uses it as a medium of exchange.”

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