Singapore Reveals Draft to Remove Tax on Cryptocurrencies

The Singapore government’s taxation agency has put forward a proposal to remove goods and services tax (GST) from cryptocurrency transactions that function or are aimed to function as a medium of exchange.

The news was published in a draft e-tax guide by the Inland Revenue Authority of Singapore (IRAS) stating that the supply of digital payment tokens in exchange for fiat currency or other digital payment tokens will be exempt from GST. Therefore, the supply of such tokens will not contribute to annual taxable turnover for the determination of liability for GST registration.

The agency has stated that the effort to end GST liabilities on cryptocurrencies follows worldwide development and growth within the crypto space, which has in turn led various jurisdictions to have reviewed their stance. Similarly, the IRAS has decided to review its GST stance to keep up to date with these developments.

Under the current legal framework, the supply of digital payment tokens is still seen as a taxable supply of services.

“Therefore, the sale, issue or transfer of such tokens for consideration by a GST-registered business is subject to GST. When the tokens are used as payment for the purchase of goods or services, a barter trade resulting in two separate supplies arises — a taxable supply of the tokens and a supply of the goods or services.”

The proposed exemption, if approved, will come into effect on January 1, 2020. The IRAS is currently receiving public comments from crypto-related businesses, which need to be submitted by July 26th.

According to the proposal, the following changes to taxation rules will take effect once it is approved:

  • (i) The use of digital payment tokens as payment for goods or services will not give rise to a supply of those tokens
  • (ii) The exchange of digital payment tokens for fiat currency or other digital payment tokens will be exempt from GST.

The draft further defines digital payment tokens as having the following characteristics:

“(a) it is expressed as a unit; (b) it is fungible; (c) it is not denominated in any currency, and is not pegged by its issuer to any currency; and (d) it is, or is intended to be, a medium of exchange accepted by the public, without any substantial restrictions on its uses as consideration.”

The agency cites Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), Dash, Monero (XMR), XRP and Zcash (ZEC) as examples of digital payment tokens. Notably, IRAS excludes fiat-pegged crypto assets such as stablecoins from its definition of a digital payment token and will continue to be taxed under GST after January 2020.

Meanwhile, Singapore is not the only country considering exempting cryptocurrencies from GST taxes. In October 2017, lawmakers in Australia passed a piece of legislation to end what was called double taxation, exempting the liability for paying goods and services tax (GST) on cryptocurrency purchases.

Fujitsu Announces Digital Identity Tech with Scoring for Trustworthiness

Fujitsu Laboratories has announced a newly developed technology – the “digital identity exchange technology.” The new technology aims to enhance the security of online transactions and according to the company it is based on blockchain.

The new technology will enable individuals as well as businesses to make online transactions, which will confirm the identity of other parties involved. In addition to that, the identification system assesses the trustworthiness of the other party’s credentials.

The decentralized identification tool analyses the risk of falsification, and effectively establishes a reputation and rating for each party involved depending on how other trustworthy users have scored them. They each contribute and store the data on a shared unfalsifiable distributed ledger.

The Japanese tech firm has stated:

 “A trustworthiness score is attached to each user by weighting factors including how many trusted users evaluate them highly. Even if a user colludes with a third party to improperly raise their evaluation, the graph-structured relationships will reveal information such as the weakness of their relationships with other users, giving the system the potential to identify misrepresentations.”

It is further mentioned that the technology will support more secure online services, operating with an added advantage of user-friendly features such as graphics that offer visualizations of the relationships between users.

As the number of online transactions has been increasing and cases of fraud and misrepresentation has motivated the company to work on the decentralized identification tool.

“The rapid advance of digitalization in recent years has been accompanied by a dramatic rise in the number of online transactions in which users cannot see one another face to face, making it difficult to judge the credibility of the other party and leading to heightened concerns around trust. With reports of fraud and instances of people falsifying personal credentials like work history and professional qualifications growing increasingly prevalent, ensuring the circulation of high-quality, reliable identification data poses an urgent challenge to users and businesses alike.”

Meanwhile, it is not Fujitsu’s first venture into the blockchain space, as the firm has been working on varied blockchain projects in recent years, such as providing the underlying tech for inter-bank settlement, to launching a ready-to-go blockchain service that it said could provide a minimum viable product in just five days, as well as developing tech aimed to spot problems with smart contracts on Ethereum platforms.

Real Estate Deal via Blockchain Platform by TechCrunch Founder Michael Arrington

Propy, a blockchain based real estate platform, has completed the sale of a $1.6 million San Francisco property entirely on its platform. The property was owned by the venture capital fund CrunchFund, co-founded by Michael Arrington.

This follows news of Propy’s most recent sale of a $2.4 million duplex in San Francisco, which is the platform’s highest cost transaction to date.

Propy is a real-estate blockchain-based platform that allows buyers, sellers, their agents, and escrow agents to close a traditional real estate deal entirely online. All purchase offers, payments and deeds are uploaded to an immutable blockchain.

The real estate platform closed its first deal in 2017, and its first US transaction in Vermont 12 months ago. In addition to that, they have globally assisted in some form in over 60 real estate transfers, including the auctioning of a 17th century Italian mansion and UNESCO site on its blockchain platform.

Respectively, the median price of a house sold on the platform is around $1.5 million, however the value of the houses is steadily increasing. In addition to that, approximately 20 realtors have closed deals on the platform, although 3,000 have signed up.

Arrington, founder of TechCrunch, whose most recent venture is into blockchain capital investments and management with his $100m firm – Arrington XRP Capital – believes that the traditional real estate process is arduous, outdated and unnecessarily lengthy process, full of risks such as wire fraud, and all sellers and buyers struggle with overly complex interactions. Therefore, it is implied that the digitization of the transactions would facilitate the entire process and in the long run, blockchain would help significantly increase market transparency and solve principal-agent issues.

Prior to this, Arrington purchased a $60,000 apartment in Kiev through Propy, using Ethereum and smart contracts to settle the deal.

Propy CEO Natalia Karayaneva has stated that “when it comes to expensive property or other expensive goods, these normally already have digital presentation of ownership, that’s why blockchain is applicable to space.”

Karayaneva believes that in 2-3 years time the majority of real estate transactions will be entirely digitized. Currently, the company is working with county governments in order to provide technology that automatically and immediately reports the transfer of title deeds.

“We don’t want to work against them. Either we help them or will eliminate them,” she said.

Meanwhile, the venture capital arm of the U.S. National Association of Realtors (NAR) has recently invested an undisclosed amount in Propy through its REACH accelerator program. Previously, the platform raised $15.5 million via an initial coin offering (ICO) in 2017.

Ethfinex Launches Decentralized OTC Service

Ethfinex, the hybrid cryptocurrency exchange that was launched by Bitfinex has announced its decentralized OTC service.

Over-the-counter (OTC) trading desks are widespread in cryptocurrency markets, facilitating large trades between parties so as to prevent the wider market from being affected by the price fluctuation. Traditionally this incurs high costs to participants and trust in an escrow.

Almost every major cryptocurrency exchange has an OTC desk, but a decentralized approach to trading is relatively novel in the space. The key distinction is that large trades are brokered off of the exchange’s main order book, and there is no 3rd party escrow – meaning it’s exclusively peer-to-peer sales.

Ethfinex Trustless, as the service is named, executes trades by using the blockchain to enforce the deal in an atomic transaction. Traders on the platform find each other, or are connected by agents, then express an intention to buy or sell, before transactions are closed via smart contracts.

This market first removes the need for escrow, and opens up OTC to anyone at significantly lower fees of 0.02% (vs 2-5% on more traditional OTC desks).

Will Harborne, Founder of Ethfinex Trustless states:

“Extending the capabilities of Ethfinex Trustless to include an OTC service is an important step in fulfilling the potential of decentralisation in the cryptocurrency market. It opens the doors to those previously prohibited by expensive OTC desks, and provides security in blockchain enforced atomic deals. Customers no longer have to place trust in a third party, or take the risk of trades directly with the counterparty themselves.”

The exchange further noted that trades could be completed for any ERC-20 token, not just the ones currently listed on the exchange. With no sign-up process or KYC, customers can get started by connecting their wallet to Ethfinex. There are however certain restricted jurisdictions, whose citizens are not permitted to participate in Ethfinex Trustless OTC.

Bitfinex launched its Etheruem-token trading platform, Ethfinex, in September last year, facilitating trading of over 50 ERC-20 tokens. The two companies share the same leadership, with Bitfinex owning a major share of the exchange.

JP Morgan Reveals Development of Blockchain Privacy Feature

The New-York based JPMorgan Chase’s blockchain division has developed a new privacy feature that will enhance security of payment on ethereum-based blockchains, according to a press release on May 28th.

Respectively, the new privacy feature has been designed as an extension to the Zether protocol, which is a confidential payment mechanism that’s compatible with Ethereum as well as other smart contract platforms.

The protocol Zether, which was designed by researchers from Stanford University uses zero-knowledge proof (ZKP) technology to add the layer of anonymity to transactions.

JPM has stated that it will release its extension as an open-source, and will most likely implement the tool on Quorum, the bank’s own private blockchain platform built on the Ethereum protocol.

JPM’s head of Quorum and crypto-assets strategy Oli Harris has outlined what the new extension does in an exclusive interview with CoinDesk:

In the basic Zether, the account balances and the transfer amounts are concealed but the participants’ identities are not necessarily concealed. So we have solved that. In our implementation, we provide a proof protocol for the anonymous extension in which the sender may hide herself and the transactions recipients in a larger group of parties.”

He further explained that the Zether protocol uses an accounts-based approach consistent with Ethereum, as opposed to the unspent transaction output approach employed by both Bitcoin (BTC) and privacy-focused altcoins like Zcash (ZEC).

Harris believes this new privacy feature to be an efficient trustless mechanism for trustless and anonymous payments, which will benefit privacy protection within enterprise consortia as well as further JPM’s interests to develop Quorum for wider use.

When we think about the community building on top of Quorum,” said Harris, “if anyone is looking to get an efficient trustless mechanism for trustless and anonymous payments in a consortium then that’s when it’s relevant. That’s why we wanted to open-source it back to the community so anyone can build on it further and continue enhancing it and potentially put it into their use cases as needed.”

Notably, the bank has attracted some 220 banks to its Quorum-based Interbank Information Network and has been working to change the privacy architecture of Quorum with the help of Microsoft Azure, in an effort to make the platform easier to be implemented by a broader spectrum of firms.

Apart from its Quorum innovations, JP Morgan has been in the industry limelight for its recently unveiled blockchain-powered stablecoin dubbed JPMCoin.