Blue Chip Crypto’s Mark Smith and his journey from FOREX to Cryptocurrency

Mark Smith, Co-Founder of Blue ChipCrypto, talks about his successful journey from traditional finance to partnering in one of the nation’s fastest-growing Crypto Portfolio Builders / Education and Consultant companies.

With his Finance Degree from Michigan State in 1988, Mark set out to prove himself.  Mark started out in Engineering School at MSU but always had an affinity to business.  A truly diverse course load included, finance, accounting, economics but his favorite class was investments.  Mark started with The Equitable right out of college.  Selling insurance and mutual funds.  But after purchasing the workbook “Trading Commodities”, charting and trading really piqued his interest.  He loved this book learned all about technical analysis.  Since this was before the internet, Mark needed to purchase a weekly chart book that arrived on Mondays and update manually.  There were also some smaller charts too in Investors Business Daily. 

After 6 years Mark set out for new challenges.  He went on to get 5 more securities licenses and became Chartered Financial Consultant and Chartered Life Underwriter.  He specialized in active money management strategies.  After significant research, Flexible Plan Investments rose to the top.  Out of thousands of representatives, Mark became a Golden Eagle (20 million dollars under management) in 2000.  The company had great success for his clients, so Mark decided to go work with the company as a Regional Vice President to recruit, train and support other advisors.  This is where he met David Torres.     

The like-minded individuals decided that they would build a securities branch of other reps.  Mark brought his licenses and trading ability and Dave his attention to detail.  Dave could design a plan like no other. They are a formidable team that has brought great success. During this time Mark also was heavily invested in learning to trade the Forex market.  Mark worked with a software company and began to travel (no zoom back then) to do presentations for other trading groups.  Recruiting, training, and trading was Mark passion.  This eventually led to Mark leaving the branch and David. Mark said, "The great thing about the Forex market was that you could trade 24 hours a day 5 days a week, but staying up all night in trades leads to burnout; and so, I was fried."

In college, Mark was an intern for the largest health insurance companying in Michigan. I took my recruiting and training skills to this market and built a group of Agents that sold the brand new ObamaCare product.  Although challenging, it was another successful endeavor.  Even though Dave and Mark went in different directions, they never lost touch.  During this time is when Dave ventured into cryptocurrencies.  Each lunch and conversation brought more crypto talk and Mark wanted nothing of it.  In the rally into the winter of 2018, Mark was watching prices skyrocket and was getting an itch to check it out.  Following the downturn in 2018-19, crypto returns came back to earth, but the seed was planted and Blue Chip Crypto was born.

The more Mark studied the market and learned, the more fascinating it became. The beginning of institutional adoption and maturing of the market created a perfect storm to get involved in this new asset class. Although he has only been in the market for 18 months, Mark has the trading and technical skills to tackle this arena, and now, combined with Dave Torres, the sky is the limit for Blue Chip Crypto.  “Buy Low – Sell High.  Prices will never be lower than they are now, and mass adoption will create a tsunami of institutional money like we have never seen before.  The greatest transfer of wealth is upon us.”

Dave Torres and Blue Chip Crypto launch bold new strategy in cryptocurrency and blockchain on a mission to create the new era of millionaires

With his mechanical engineering degree in hand, Dave Torres started his working years as a manufacturing engineer at the Ford Motor Company.  While working at Ford, Dave earned a master’s degree in engineering from the University of Michigan.  Although his career was progressing quite well, he had the urge to work for himself and decided to leave engineering in 1994 to start his own financial planning practice.

For 26 years, Dave has served as a financial consultant helping individuals and businesses develop sound financial strategies for their retirement.  He used his engineering problem-solving skills to help his clients build bridges, just now with a much different set of tools than he had originally had in his toolbox.

In 1999, feeling that the equity market was near the top, Dave started searching for a system that could provide indicators to his clients that would signal when to take profits and move to the sidelines with their investments.  That search brought Mark Smith into his life.  Mark was working as a wholesaler for a company that marketed such systems. They soon joined forces and became partners in a branch office for several years and over the last 20 years; Dave and Mark have joined forces on many endeavors, which have allowed them to refine their skills in finance.  Dave usually managed the design process while Mark typically handled the technical analysis. 

Their diversified skills is what they feel has prepared them for the coming shift in the financial systems which will include a mass adoption of blockchain assets.  Blue Chip Crypto is their latest collaboration and what they believe will be their pinnacle achievement.

In 2002, Dave and Mark had the pleasure of meeting a Mutual Fund manager from a prominent Wall Street firm in New York.  This manager explained to be successful in the financial markets you need to follow the money.  They learned that there are only two types of investors in the financial markets.  They are composed of Institutions and Individuals.  Institutions are the big players such as pension funds, large money managers like a Fidelity or Blackrock, insurance companies as well as our Federal Reserve.  These institutions control trillions of dollars and make up 90% or more of the financial markets.  The other 10% is made up of individuals such as us who control absolutely nothing. Some of these individuals may have a million or two in the market but they don’t have any control of the market’s direction. 

Individuals are just along for the ride, similar to a pilot fish swimming next to a shark. The Mutual Fund manager said that if you want to be successful in the financial markets you have to follow the institutions and put your money where they put their money.  That totally made sense to Dave in 2000 and it makes even more sense today in 2021when he looks at digital assets and blockchain technology.  After nine years of studying cryptocurrency, it has become clear that we are experiencing a wealth transfer from traditional markets to digital markets. We believe that this wealth transfer is a transition from one system to the next and will be more of an integration between systems rather than a replacement of one to the other.

In 2013, Dave bought his first bitcoin at $100.  Then in 2017, Dave bought his first Ethereum for $17. Dave has experience in purchasing crypto on multiple exchanges, Dexes,  soft wallets, and swap sites. He has used several hard wallets for storage such as keepkey, trezor, ledger nano, and bitfi.  

Dave credits his success in the cryptocurrency space to his engineering approach to building a cryptocurrency portfolio.  When solving an engineering problem every engineer knows each problem is unique but will then follow the same process. To solve the problem one must first approach it from an understanding of what is currently known about the problem, and more importantly, what is also unknown about it.  Engineers understand that the risks will come from what they don’t know about the problem rather than from what they do know about it.

Therefore, if the problem we are trying to solve is to build a cryptocurrency portfolio that survives mass adoption of this new asset class, then we must have a process for building that portfolio.  The portfolio we build must be based on the information we currently know about the cryptocurrency space at that moment in time but must include strategies to navigate through changes that will happen during the adoption process.

This approach to investing in cryptocurrency is not about a “get rich quick strategy”.  However, by understanding the space and implementing a process to build a sound portfolio, we as Blue Chip Crypto believe, that one can ultimately get rich in the process.

Dave also credits his success in the crypto space thus far to his understanding that change is constant. He believes, wholeheartedly, that the universe always favors a prepared mind.  As a result, he has learned to embrace change rather than fight it.  Having a never-quit attitude, 25 years experience in finance, a wife of 33 years, and an understanding that all successful technologies will follow the same s-shaped adoption curve has helped Dave be patient and stay on course throughout what has been and will continue to be a volatile adoption process. 

Dave has made mistakes along this crypto journey and offers his "failing forward" experience and especially his mindset as a gift to those looking to start or continue their journey into this new asset class with Blue Chip Crypto. 

CryptoCoinReport.Net The IRS Just Issued Its First Cryptocurrency Tax Guidance in 5 Years

The U.S. Internal Revenue Service (IRS) has published its first guidance in five years for calculating taxes owed on cryptocurrency holdings.

Industry members have been eagerly awaiting the update since May 2019, when IRS Commissioner Charles Rettig said the agency was working on providing fresh guidance. The agency’s 2014 guidance left many questions unanswered, and the crypto market has grown more complex in the years since.

As expected, the guidance notice released Wednesday addresses: the tax liabilities created by cryptocurrency forks; the acceptable methods for valuing cryptocurrency received as income; and how to calculate taxable gains when selling cryptocurrencies.
Drew Hinkes, a lawyer with Carlton Fields and the general counsel to Athena Blockchain, told CoinDesk that “from the tax collector’s standpoint, this is the right answer,” though Certified Public Accountant Kirk Phillips said he was surprised that the guidance basically only addressed forks.

Forks

Resolving a long-standing question, the guidance says new cryptocurrencies created from a fork of an existing blockchain should be treated as “an ordinary income equal to the fair market value of the new cryptocurrency when it is received.”
In other words, tax liabilities will apply when the new cryptocurrencies are recorded on a blockchain – if a taxpayer actually has control over the coins and can spend them.
The document reads:

“If your cryptocurrency went through a hard fork, but you did not receive any new cryptocurrency, whether through an airdrop (a distribution of cryptocurrency to multiple taxpayers’ distributed ledger addresses) or some other kind of transfer, you don’t have taxable income.”

James Mastracchio, a partner at Eversheds Sutherland, told CoinDesk that this applies when there is a distinctly different cryptocurrency as a result of the hard fork.
The IRS language might create more confusion, said Jerry Brito, executive director at Coin Center.
“While the new guidance offers some much-needed clarity on certain questions related to calculating basis, gains, and losses, it seems confused about the nature of hard forks and airdrops,” Brito told CoinDesk, adding:

“One unfortunate consequence of this guidance is that third parties can now create tax reporting obligations for you by simply forking a network whose coins you own, or foisting on you an unwanted airdrop.”

Individuals would be assessed income when they receive the asset, Hinkes said.
“Receipt is defined by ‘dominion and control’ … so it’s ability to transfer, sell, exchange or dispose of the asset according to this guidance,” he said. “The fear is that someone maliciously airdrops and tags you with a giant liability. But [this] fear is a bit oversold because you would only be liable for new income based on the fair market value of the asset when received, and most forks don’t start out with a high valuation.”

Phillips said it was possible that an individual with an ethereum wallet, for example, could receive an ERC-20 token from an airdrop without realizing it. Depending on how the token’s value fluctuates, this may result in them having to pay income tax on an asset that was worth more when they received it than when they sell the asset.

“This can happen when coins hit a high water mark of price discovery right after the airdrop event and the heavy selling could sink the price to a level from which is never recovers,” he said.

The issue has grown more salient in recent years, as fights over protocol changes caused rifts in various crypto communities, leading to splinter currencies like ethereum classic and bitcoin cash.

Holders of the original bitcoin and ethereum could automatically claim a like amount of the new coins, raising the question of whether and under what conditions they would owe taxes on the windfall.

Now crypto holders and their accountants have a roadmap.

Cost basis

The new IRS document also offers long-awaited clarification on how taxpayers can determine the cost basis, or fair market value of coins received as income, such as from mining or the sale of goods and services.

Cost basis should be calculated by summing up all the money spent to acquire the crypto, “including fees, commissions and other acquisition costs in U.S. dollars.”

A third key issue addressed by the new IRS guidance is how to determine the cost basis of each unit of cryptocurrency that is disposed of in a taxable transaction (such as a sale).
This is an issue because someone might buy bitcoin in multiple transactions over a span of years; when they sold some of it, it was unclear which purchase price to use for calculating taxable gains.

The value of the crypto purchased on an exchange is determined by the amount the exchange sold it for in U.S. dollars. The income basis, in this case, will include commissions, fees and other costs of the purchase.

If the crypto is bought on a peer-to-peer exchange or a DEX, it is possible to use a crypto price index to determine the fair market value. In the words of IRS, this can be “a cryptocurrency or blockchain explorer that analyzes worldwide indices of a cryptocurrency and calculates the value of the cryptocurrency at an exact date and time.”

When selling crypto, taxpayers can identify the coins they are disposing of, “either by documenting the specific unit’s unique digital identifier such as a private key, public key, and address, or by records showing the transaction information for all units” in a single account or address, the IRS wrote.

This information, the document states, must show:

“(1) the date and time each unit was acquired, (2) your basis and the fair market value of each unit at the time it was acquired, (3) the date and time each unit was sold, exchanged, or otherwise disposed of, and (4) the fair market value of each unit when sold, exchanged, or disposed of, and the amount of money or the value of property received for each unit.”

The new guidance allows for “first-in, first-out” accounting or specifically identifying when the cryptocurrencies being sold were acquired, Mastracchio said.
“Let’s say I bought my first unit at $5,000 and my second unit at $2,000 and then I sold one of my units. I can identify the unit or I can use ‘first-in, first-out,'” he said. “From a tax planning perspective, you may want to be specific about which unit you sold or you may want to use first-in, first-out because sometimes you want a capital gain and sometimes you might want a loss.”

Other issues

In a disappointment to crypto users who like to spend their coins on everyday purchases like cups of coffee, the IRS specifically said it would not create an exemption for transactions below a certain threshold.

Paying somebody for service will result in a capital gain or loss, which should be calculated as “the difference between the fair market value of the services you received and your adjusted basis in the virtual currency exchanged.”

Purchases of goods and services were deemed taxable when the IRS issued its original guidance in 2014, which said that digital currencies were to be treated as property rather than currency for tax purposes. This discouraged casual spending and made tax season burdensome for users who wanted to diligently report their obligations.
Nikhilesh De contributed reporting.
IRS building image via Shutterstock

The Global Monetary Equality Foundation Releases its Crypto currency the "Gummie" Coin it's the 1st of its kind

GUMMEES: THE OFFICIAL DIGITAL TOKEN OF WSAIGO AND THE GME FOUNDATION The “GME Coin” or “Gummees” is the official digital token issued by World Sports Alliance in collaboration with The Global Monetary Equality Foundation (“GME Foundation”) whereby both can be referred to jointly and severally as “Issuer”. The GME Coin is additionally backed by the fullfaith and credit of World Sports Alliance Intergovernmental Organization (“WSAIGO”). WSAIGO has contractual entitlements to in ground commodities assets in excess of (USD) $100 Billion consisting of mining properties that have yet to be operated. WSAIGO has collateralized the GME Coin with a Nickel Mine with estimated reserves in excess of $28 Billion USD (over a 30 year period) in connection with this offering of the GME Coin. The GME Coin is to be used as a means of trade amongst individuals and commercial enterprise. As the official token of an Intergovernmental Organization with diplomatic treaties in 33 Member States, the GME Coin will be utilized in connection with an international bank, commodities exchange (including futures contracts, physical commodities and crypto-currency), as well as a property rights platform in the form of a title and escrow company. GME was established in collaboration with WSAIGO as a means to address the economic development issues inherent to the World Sports Alliance Mission. As WSAIGO was established to utilize the power of sports in furtherance of the United Nations Sustainable Development, (“UNSDG’s”) the GME Foundation was formed as a means to address UNSDG #1 of NO POVERTY. By charter WSAIGO gives 45% of any earnings back to its Member State countries in the form of amateur sports programs and/or sustainable projects in furtherance of the UNSDG’s. As the organization is self-funded these types of impact investments and private-public partnerships is how the organization derives its income. The organization has experienced that profits and social elevation can co-exist and it is in this belief that the GME Coin is being issued.

UK Startup Launches Crypto Insurance, 24/7 Bitcoin-Monitoring Service - The Crypto coin Report

Cardiff-based cryptocurrency insurance startup Coincover has launched an insurance policy

covering theft and loss.

Local news outlet Whales247 reported on Sept. 24 that this is “the first and only service to guarantee digital funds held online will not be lost or stolen.” 

Coincover’s service reportedly monitors the wallet at all times and issues warnings in case of suspected theft, recovers funds in case of private key loss, manages key backups, provides cash replacement value in case of theft, and checks for any suspicious activity.

Making crypto less risky

Furthermore, the startup covers over 100 different crypto assets and the company has been invited by the UK’s Department for International Trade as one of the eleven insurance technology companies to share expertise in the Silicon Valley market. Coincover co-founder David Janczewski commented on the development:

“Cryptocurrency ownership is growing fast and becoming more mainstream, but it can still feel like a risky investment. Virtual currencies, by their very nature, are a new concept for many.”

Janczewski also notes that cryptocurrencies have been attributed to crime and scandal since the start as well as hacks and thefts. These are the issues his company is trying to solve, he explained.

As Cointelegraph recently reported, according to industry experts the cryptocurrency insurance market is expected to grow at a faster rate if United States regulators provide more regulatory clarity.

Meanwhile, cryptocurrency insurance is becoming a more prevalent service in the industry, namely for custodial services. For instance, earlier this month Bitcoin (BTC) futures firm Bakkt announced that deposits held in its warehouse are protected by a $125 million insurance policy.

Germany’s Largest Bank Joins JPMorgan’s Blockchain Network

Germany’s largest bank, Deutsche Bank, has joined JPMorgan’s blockchain-based network, the Interbank Information Network (IIN).

Two years in operation

Launched as a pilot in 2017, the JPMorgan-led blockchain initiative now has a network of 320 banks that have entered the platform to swap global payments data using the Ethereum network, the Financial Times reported on Sept. 15.

Takis Georgakopoulos, head of payments at JPMorgan, expressed hope that Deutsche Bank will be the first of several other large banks to join IIN. According to the report, Deutsche Bank is the world’s biggest clearer of euro-denominated payments.

IIN will enable Deutsche Bank to offer better client services, according to the bank’s global head of cash management Ole Matthiessen. Matthiessen, who occupied the position in March 2019, explained that the bank expects IIN to reduce the cost of processing difficult payments.

400-member target by year’s end

The IIN network is based on the JPMorgan-developed Quorum platform and intends to tackle the major challenges of sharing information between banks and speed up transactions to recipients. Quorum is based on the Ethereum blockchain, which was recently reported by co-founder Vitalik Buterin to be almost full as it is the most popular public blockchain network for decentralized apps. 

According to Georgakopoulos, JPMorgan aims to reach 400 agreements with banks by the end of 2019 and is also expecting to announce other large banks in the near future.

As reported in June, JPMorgan is expecting to pilot its own cryptocurrency JPM Coin by the end of 2019. Recently, JPMorgan CEO Jamie Dimon supported the much-discussed crypto project Libra, claiming that the stablecoin does not pose a threat to banks in the short term. Meanwhile, Deutsche Bank is one of the 26 global central banks that will meet with Libra founders to discuss its purported financial stability risks tomorrow in Switzerland.

Credit:  https://cointelegraph.com/news/germanys-largest-bank-joins-jpmorgans-blockchain-network

Thanks for reading, TheCryptoCoinReport.net

The IRS Is Blindly Coming After Cryptocurrency Traders — Here’s Why

Over the past month, we have seen the IRS, the tax-collecting agency of the United States, send out more than 10,000 warning and action letters to suspected cryptocurrency holders and traders who may have misreported digital assets on their tax returns. Letters like the 6174-A, 6173 and CP2000 have appeared in the mailboxes of cryptocurrency traders throughout the country, and the crypto tax software company that I run has seen an influx of frantic customers coming to us for tax help out of fear of penalties.

The problem here is that the IRS doesn’t have all of the necessary information. In fact, not only does it not have all the information but the information that it does have on the cryptocurrency holders that it is sending letters to is extremely misleading. This information, which was supplied to the IRS by cryptocurrency exchanges like Coinbase, is causing the agency to blindly and oftentimes inaccurately come after cryptocurrency traders.

Related: Internal Revenue Service Sends New Round of Letters to Crypto Holders 

Allow me to break this down further.

How is cryptocurrency taxed in the U.S.?

In many countries around the world — the U.S. included — cryptocurrencies like Bitcoin are treated as property from a tax perspective, rather than as a currency. Just like other forms of property — stocks, bonds, real-estate — you incur capital gains and capital losses that need to be reported on your tax return whenever you sell, trade or otherwise dispose of your cryptocurrency.

Related: How Crypto Is Taxes in the US: A Taxpayer’s Dilemma 

Pretty straightforward: If you make a bunch of money investing in Bitcoin (BTC), you have a capital gain and a tax liability that needs to be reported. If you lose a bunch of money, you have a capital loss, which will actually save you money on your tax bill — though it still needs to be reported.

It doesn’t come as a huge surprise that many enthusiasts have not been paying taxes on their cryptocurrency activity. Because of this, it actually makes a lot of sense why the IRS has started carrying out these enforcement campaigns. However, the agency is using information that is extremely misleading, and it is leading to problems. This misleading information starts with Form 1099-K.

Breaking down Form 1099-K

Cryptocurrency exchanges like Coinbase, Gemini and others issue 1099-K’s to users who meet certain thresholds of transaction volume on their platforms. The IRS states on its website that the 1099-K is an information return used to report third-party network transactions to improve voluntary tax compliance.

In plain English, the 1099-K is used to report your gross transactions on a third-party network — in this case, a cryptocurrency exchange. This means that all of your transactions, buys, sells, transfers, etc. are summed up and reported on a 1099-K. If you meet certain thresholds — gross payments that exceed $20,000 and more than 200 such transactions — you and the IRS are both sent a copy of this 1099-K from the cryptocurrency exchange. The IRS is using these documents to monitor who is and isn’t paying taxes correctly.

These “gross transaction” reports can quickly get extremely large for high volume cryptocurrency traders. Remember, every transaction you made is being summed together on this form. I purchased $1,000 worth of Bitcoin, and then traded that Bitcoin in and out for Ether (ETH) five times, and my gross proceeds are now over $6,000 — even though I only ever “put in” $1,000 cash! This is because all “buy” transactions are added together to report gross proceeds, and in this case, I technically had six different buy transactions and six different “sell” transactions — a Bitcoin trade into ETH is considered both a buy of ETH and a sell of BTC. 

You can see how this number can become extremely large for a high volume trader. At CryptoTrader.Tax, we’ve seen 1099-K’s from customers in the millions of dollars range when the trader only ever had a few thousand dollars worth of crypto.

Why this is so problematic

1099-K’s are reporting gross transaction amounts and are being sent to the government. Yet, the numbers reported are completely irrelevant when it comes to tax reporting, as you are only actually taxed on your capital gains and losses.

Again as an example, say you purchased $10,000 worth of Bitcoin in April and then sold it two months later for $9,500. You have a $500 capital loss that would be deducted from your taxable income. However, reported on 1099-K, nothing is said of your net loss; the form only tells the government that you have $19,500 of gross cryptocurrency transactions. 

Ultimately, 1099-K is not a form that should be used for tax reporting purposes, yet the IRS is relying on it for enforcement. Many people often mistake the 1099-K that they receive from cryptocurrency exchanges with the typical 1099-B that they might receive from their stockbroker or other investment platforms outside of crypto. The 1099-B is the correct form that reports all necessary information required to calculate and accurately report capital gains and losses — including cost basis and fair market value of your investments. It’s very easy to determine your total capital gain and loss with this form, contrary to 1099-K.

The fact that the IRS is relying on 1099-K to issue action letters is problematic. Unfortunately, cryptocurrency exchanges do not have the ability to give you an accurate Form 1099-B.

Related: IRS Expands Penalties: Which Tax Mistakes Are Better Not to Commit 

Why cryptocurrency exchanges can’t provide tax reports like a stock brokerage does

Because cryptocurrency users are constantly transferring crypto into and out of their exchanges, the exchange itself has no way of knowing how, when, where or at what cost (cost basis) you originally acquired your cryptocurrencies. It only sees that they appear in your wallet on their platform. 

The second you transfer crypto into or out of an exchange, that exchange loses the ability to give you an accurate report detailing the cost basis and fair market value of your cryptocurrencies, both of which are mandatory components for tax reporting. In other words, cryptocurrency exchanges do not have the ability to provide you with the necessary information to calculate your capital gains and losses. This also means that they also don’t have the ability to provide you with a 1099-B.

Coinbase itself explains to its users in its FAQs that their generated tax reports won’t be accurate if any of the following scenarios took place:

• You bought or sold digital assets on another exchange.
• You sent or received digital assets from a non-Coinbase wallet.
• You sent or received digital assets from another exchange, including Coinbase Pro.
• You stored digital assets on an external storage device.
• You participated in an initial coin offering.
• You previously used a method other than ”first in, first out“ to determine your gains/losses on digital asset investments

These scenarios affect millions of users.

In conclusion

The information that the IRS is receiving from cryptocurrency exchanges does not reflect your capital gains and losses whatsoever. This is problematic because these capital gains and losses are what you actually pay taxes on, not gross transaction amounts.

So, if you received a warning letter from the IRS, don’t panic. As long as you have been properly filing your cryptocurrency gains and losses on your taxes, you should be fine. The absurdly high numbers that you are seeing on these letters are oftentimes irrelevant. Nonetheless, it is a good idea to consult a tax professional who is familiar with cryptocurrency for further help and clarification — especially if it’s an action letter.

The views, thoughts, and opinions expressed here are the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph. 

Credit:  https://cointelegraph.com/news/the-irs-is-blindly-coming-after-cryptocurrency-traders-heres-why

David Kemmerer is the co-founder and CEO of CryptoTrader.Tax, a tax reporting platform for cryptocurrency investors.