Deloitte published an operating manual for investing in Bitcoin and cryptocurrencies. Other topics under discussion were taxes, auditing, and risk management.

On the first day of the Bitcoin for Corporations conference that MicroStrategy organized, Deloitte consultants placed under discussion various essential topics, including some financial aspects of investing in Bitcoin as an institution or corporate entity.

During the Bitcoin Finance Considerations conference, accounting, tax, auditing, and risk management considerations on corporate investments in Bitcoin went under discussion.

Consultants for Deloitte, Amy Park, a specialist in blockchain and audits, and Andrew Massey, a specialist in accounting and taxation in cryptocurrencies, answered a set of questions from Phong Le, President Chief Financial Officer of MicroStrategy, who moderated the session on Tuesday.

In the first instance, Park clarified that investor sentiment has shifted from getting rich as fast as possible to save their Bitcoin savings and hodl. The consultancy noted that the trend would serve to consolidate the integration of Bitcoin into existing business services as a safeguard of value from now on. Solutions regarding blockchain networks could be under development.

Park also stated that the declaration of savings or positions in cryptocurrencies growth in terms of tax reports. This topic made the subject of taxes on Bitcoin and cryptocurrencies one of the most significant matters under discussion, “the elephant in the room.” Massey, an expert in taxation and accounting in cryptocurrencies, stated that it is essential to record BTC amounts and transactions.

A particular emphasis highlighted the importance of basic knowledge in companies that choose to set investment in Bitcoin. Park also noted that they must proceed with caution regarding the number and experience of consultants available.

Regarding the teams’ rapport, Phong Lee, who moderated the conversation, stated that group engagement is crucial and part of the Bitcoin ethic. This ethos would involve sharing the idea that technology can solve problems, “like a software company,” Lee said, referring to MicroStrategy.

Bitcoin and Risk Management: Is the Cryptocurrency an Ally or an Enemy?

There were questions about Bitcoin’s inclusion in institutional reserves to counteract the US dollar depreciation (USD). Lee answered that Corporations have realized that it is the best way to minimize risks.

To make this risk manageable, Amy Park, a specialist in the area, suggests not making decisions in the market under psychological pressures of any kind or nature. Third parties opinions would lead users to misunderstand the market and make bad choices.

Risk management must first consider the proper way and method of investing in Bitcoin. But also they must be aware of resources and their availability.

 Whether through an index fund, the bond of a company with reserves in Bitcoin, or an investment firm, it must be determined what role each participant plays, internal or external to the investment entity.

“If you have others to invest, you are subject to their decisions and policies. Make sure your risk is proportionate and ensure that others take care of your investment,” Massey said.

By: Jenson Nuñez

The Bank of Spain has maintained the discourse on the risks of investing in Bitcoin since 2018. South African authorities announced that they are working on laws to regulate the use of crypto assets.

In recent days, the central banks of Spain and South Africa have insisted on warning about the risks of investing in Bitcoin (BTC). This has occurred despite the institutional support and growing adoption that the pioneering cryptocurrency has had.

On January 28^th, the Bank of Spain (BDE) warned Spanish citizens about Bitcoin and other cryptocurrencies. The financial institution said that “no central bank or public authority supports them even though they bill themselves as alternatives to money.”

They claimed that there are “extreme volatility and liquidity problems” with digital assets. They further stated that price changes are not “always transparent”, so anyone could be “manipulate them”.

In the same way, they consider that cryptocurrencies have a speculative character since those who acquire them could have difficulties selling them. Furthermore, they say that they do not have the guarantees that “banking or investment products” can offer.

The Bank of Spain has already issued warnings of the same type on previous occasions. In 2018, they dedicated themselves to making the same remarks about cryptocurrencies in general.

For its part, the South African Financial Sector Conduct Authority (FSCA) reported receiving many complaints from investors. They claimed that “they have lost their savings by making cryptocurrency-related investments.”

Other users stated that they had been victims of “scams” with investments in digital assets that “promised a high level of returns.”

The FSCA and the Spanish bank emphasize that no central bank issues crypto assets, and the agency do not regulate the related investments. They assert that “people are unlikely to recover their money if something goes wrong.

At this moment, the FSCA is creating a regulatory framework for investments in digital assets. They say that they are seeking to “help better understand and regulate the use of cryptocurrencies in the coming months.”

Massive Institutional Support for Bitcoin

In December, companies from the United States, Canada, Australia, Switzerland, and Germany invested USD 20 billion in the main cryptocurrency on the market.

According to the Bitcoin Treasuries website, around 28 publicly traded companies, private companies, and mixed funds hold multi-million-dollar positions in BTC. Grayscale Bitcoin Trust leads this category with savings of 649,130 BTC, behind the Mt.Gox service with 141,686 BTC and Block.One (EOS) with 140,000 BTC.

Spain, Bitcoin, and CBDCs

The monetary authority of Spain continues to call for caution with Bitcoin due to its volatility and risks. However, they are also open to discuss cryptocurrencies, especially central bank digital currencies (CBDC).

Last July, the BDE joined a debate on CBDCs to review the reasons for their issuance. Likewise, they sought to conduct a preliminary analysis of the main implications of the issuance of this type of currency.

They did not stop recognizing the role of Bitcoin and other cryptocurrencies, in addition to fiat-pegged cryptocurrencies or stablecoins. Also, they note that those crypto assets have contributed to the acceleration of research into CBDCs.

It is necessary to remember that the investor must do his research before buying cryptocurrencies or other assets. That will allow him to make better decisions, thus making the best use of his investment.

By Alexander Salazar

The entity will apply three types of actions to prevent fraud. Exchanges in Spain must report on balances and transactions of their users.

The State Tax Administration Agency of Spain published this February 1 the Annual Plan for Tax and Customs Control’s general guidelines. These guidelines’ goals are to minimize tax evasion, including actions for cryptocurrencies such as bitcoin (BTC).

The entity dependent on the Ministry of Finance will apply three types of actions to prevent potential fraud regarding cryptocurrencies. According to the document, the rise of virtual asset markets generates “fiscal risks” requiring particular efforts to grant access to delicate information.

The agency established that it might request information from various sources, including bitcoin exchanges with roots in Spain. The agency is taking these steps for users to voluntarily declare and pay taxes that hold a close relationship to operations with cryptocurrencies.

The agency claimed through the document about obtaining information from various sources about operations regarding cryptocurrencies. There are expectations for incorporating this plan into the model of goods and rights abroad; also, establishing an autonomous information obligation on cryptocurrencies.

The agency’s second action will be the application of a “systematization and analysis of the information obtained.” The purpose is to facilitate the control of the operations’ taxation and the origin of the funds used to acquire cryptocurrencies.

A third guideline promotes international cooperation and participation in forums to obtain information on operations with cryptocurrencies and other virtual assets. The agency clarified once more that cryptocurrencies, as a means of payment, represent a challenge and that their growth would reduce cash.

Bitcoin and other Cryptocurrencies Need more Control

To find out the implications of the agency’s plan, José Antonio Bravo, a Spanish economist who specialized in the tax and accounting area, indicated that the program is a breakdown of the actions that the agency plans to carry out to comply with its Strategic Plan in the 2020-2023 period. The plan’s design aims to take control over tax fraud, not only with cryptocurrencies but also in general.

The Government of Spain had approved a bill that would require the report of all operations with bitcoin. The so-called “Law of prevention measures to combat tax avoidance” would seek a “greater control of cryptocurrencies.”One of the provisions for those who do not declare their cryptocurrencies outside of Spain would be sanctions of at least 10,000 euros.

The agency plan appears to be a formalization of actions that occurred in the past. In 2021, the agency shows its desire to make it clear that there will be more attention on the payment of taxes among those who operate with bitcoin and other essential cryptocurrencies.

By: Jenson Nuñez