Presented by Blockchain Terminal
Cryptocurrencies are more than just a new asset class; they are a new investment paradigm. In a few short years the trading of crypto has gone from rudimentary peer-to-peer trades to being supported by an entire industry of platforms, exchanges, and tools. However, the trading ecosystem for crypto is still light years behind conventional financial tools, especially around compliance and regulation. Crypto investors can look forward to having more advanced investment instruments, quicker exchanges with a deeper pool of traders, and more comprehensive supporting technology in the near future.
However, they can also expect much more comprehensive scrutiny of their trading activities from financial authorities. At the moment, crypto is like the Wild West: governments don’t seem to be fully capable of coming to grips with controlling the industry, there is very little security, and consumer protection is non-existent. This is slowly changing, as more and more mainstream investors get involved and regulation and authorities catch up. This is good for the industry: it provides extra credibility and reduces the risk from cowboy fraudsters that have siphoned a lot of wealth out of the crypto domain through fake ICOs, exit scams, pump-and-dumps, and hacks. The sheriff of regulation will soon tame the Wild West.
This will have a big impact on investors, institutional or individual. The recent tax return deadline in the U.S. sent many traders into a frenzy as they grappled with complex accounting rules around taxable trading events. Furthermore, in the past few months, some of the biggest names in conventional finance like Goldman Sachs and George Soros have declared their intention to trade in crypto, and these investors have high standards for compliance. This landscape is forcing serious traders to consider how to future-proof their trading setups.
The big two: Tax and compliance
The first thing on the agenda is taxation. It goes without saying that a meticulous record of all trades, buy and sell prices, and start-and end-of-year holdings must be recorded in detail. There is a lot of opacity in the tax code, especially around crypto, so hiring a decent accountant who can keep an eye on upcoming developments is well worth the money. A simple spreadsheet might suffice, but you’ll soon realize why conventional traders opt for more powerful software solutions that track and backup trades more securely.
Next will be compliance regulations that apply to all investors. These vary by jurisdiction, but an example of a concern would be insider information and pump-and-dump involvement. Traders with a day job in financial services are at particular risk of falling afoul of these regulations. There are myriad hidden compliance pitfalls, which can also be remedied with the right software tools.
A changing legal landscape
The fact that there were rumors of major crypto hubs like China and South Korea aiming to ban cryptocurrencies even recently says a lot about the nascent industry. Many market commentators are discussing the potential for another summer surge in prices, so it would be an opportune moment for investors to consider whether they are equipped to stay on the right side of the bean counters in the turbulent upcoming 12 months.
Some of the compliance and regulation challenges mentioned above are solved by trading terminals that are popular in the financial trading industry, which track transactions and enforce trading guidelines.
Blockchain Terminal (BCT) is the first solution that brings these capabilities to crypto traders. The BCT token sale is now live at tokensale.bct.io and you can visit the website for more information.
Everardo J Barojas is an advisor for Blockchain Terminal, the institutional grade cryptocurrency platform. He is also a product developer and founder of Prescrypto, a first generation blockchain-anchored medical prescription platform. Dedicated to crypto full time since 2013, he has an academic background in Mechatronics Engineering with an MSc in Astronomical Instrumentation and currently researching risk management in token investments for his PhD thesis.
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