In this Coinsquare review we will take a look at one of the biggest cryptocurrency exchange in Canada.
They have grown considerbly in the past two years and are one of the go-to Canadian exchanges. However, they are also not free of controversy. 2020 not only saw the exchange suffer a personal data breach but the CEO was also accused of wash trading on Coinsquare’s order books.
So, is Coinsquare still safe?
In this Coinsquare review we will attempt to answer that. We will take a deep dive into the security and trading functionality. We will also give you some top tips that you need to consider before trading here.
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As mentioned, Coinsquare is a large exchange that is based in Toronto Canada. They started out as Coinsquare.io as a pure retail cryptocurrency exchange but have since moved to Coinsquare.com and have expanded the business.
They have opened up a mining venture arm as well as a capital markets division that will focus on high net worth individual investors and institutions.
The company was founded in 2014 and has grown substantially since then. They have raised over $47.3m in the past few years with the most recent funding round seeing them bringing in $30m. Today, there are over 90 employees in their office and they hope to employ over 200 by the end of the year.
This has helped Coinsquare to become the dominant cryptocurrency exchange in Canada and they have grown to have over 100,000 user accounts on the exchange.
Coinsquare has also been lucky in that they were one of the exchanges that stood to gain from the collapse of QuadrigaCX. For those that do not know, Quadriga was the exchange that went under when the CEO died with the private keys.
However, there have been a number of other Canadian cryptocurrency exchanges that have expanded their operations. These include the likes of BitBuy, Coinsmart and Coinberry. This means that the market is becoming increasinly.
Is Coinsquare Safe?
Security and exchange safety is one of the most important considerations for any centralised exchange.
This is especially true for Canadian cryptocurrency traders given the recent collapse of QuadrigaCX. Thousands of users lost millions of dollars because of the poor operational practices of the CEO and management team.
Luckily for Coinsquare, they have not had a single incident in their 4 year history – so that is a plus. This could probably come down to their exchange and user side security protocols. Below are some of these systems and tools that the exchange implements.
Coinsquare employs well known security protocols when it comes to coin management and server testing. For example, they operate a system of 95% cold storage of coins in their control. Cold storage means that they store the private keys to the coins offline and air gapped away from the internet. These are some of the most secure ways of keeping hackers far away from the coins.
Another concern for an exchange is losing track of ledger management and account balances. This is something that happened at the Bitgrail exchange for example. Coinsquare manages their ledgers “about 2346” times a day so they are able to keep track of all that which is owed.
Lastly, they claim that they have stress tested their servers to make sure that they do not fall victim to DDoS (Dedicated Denial of Service Attacks). For anyone who has traded on exchanges such as Bitfinex they will know how stressful DDoS attacks can be as they bring down the exchange and restrict you from getting access to your coins.
Coinsquare also has measures in place on the user side to protect you from phishing attacks and hackers that attempt to get into your account. For example, they have two factor authentication that will help secure your account in the case that someone gets hold of your passwords.
This is not activated by default so we would recommend that you activate it the moment that you start using Coinsquare in order to protect yourself from the get-go.
SSL, Go for Green
They have also implemented secure SSL communications in order to avoid the risk of any man-in-the-middle attacks that could try to intercept your internet traffic. Hence, you should always look for the secure green padlock when logging into Coinsquare to make sure that you are not on a phishing site.
Of course, it goes without saying that you should never leave a great deal of coins on any exchange. As the saying goes…
If you don’t hold the keys, you don’t own the coins
Despite all of these supposed security procedures, Coinsquare suffered a data breach in early June of 2020. The breach was not a hack but data theft from a previous employee. This information then ended up on the darkweb.
The hackers that were able to get hold of the data had access to cellphone numbers, emails and ID documents. This is particularly risky as this information can be used to conduct a sim swap attack. For those that do not know, these sim swap attacks have been quite destructive for those who their coins on the exchange.
The hacker shared some of the data with the Motherboard publication in order to verify that they have indeed had access to it. They have over 5,000 user contact details. Not only was this a security threat to those users on Coinsquare but it also exposed them to potential exploits on other exchanges and services that they used.
Coinsquare said that the data breach was disclosed to all the users, the authorities and the data regulators. This is still not great to hear for those traders who have had their data exfiltrated.
Coinsquare started off as a Bitcoin exchange but has recently expanded their cryptocurrency asset coverage to include Ethereum, Litecoin, Bitcoin Cash, Dogecoin, Dash, Ripple XRP as well as Stellar Lumens (XLM).
Coinsquare is what is called a “Fiat Gateway” primarily for use by Canadian traders who want to use their CAD to buy cryptocurrencies. While many users would be comfortable with the coins that Coinsquare has on offer, there is always the option to move these coins onto another cryptocurrency exchange and pick up other altcoins.
Currency Converter at Coinsquare
Hence, Canadian cryptocurrency investors can buy their Bitcoin with their Canadian dollars on Coinsquare and then move them to another exchange such as Kraken or Binance in order to buy the smaller altcoins. If you wanted to get an idea how much crypto you could buy on their platform with your dollars right now you can use their currency converter.
Trading fees at Coinsquare are relatively simple to understand and are really attractive. In fact, compared to other Fiat exchanges, the trading fees at Coinsquare are at least half of them.
They have two types of orders being market order “Bit markets” or a Quicktrade.
Bit Markets Fees
For the BitMarkets trades, they operate a maker / taker model where those who make a market have a slightly lower fee than those who take the market price. When you are trading on the Bit Markets exchange you will pay 0.1% as a “Maker” and 0.2% as a “taker”.
So, what do we mean by a “maker” and “taker”?
Quite simply, a taker is an individual who is taking liquidity away from the exchange by meeting another order that is already on the books. You are charged a slightly higher fee because you are “thinning” the Coinsquare order books.
On the other hand, if you are a maker then you are placing an order that is away from the current price and hence you are adding liquidity to the markets. This is why you will receive a slightly lower fee.
Quick Trade Fees
If, on the other hand, you would like to buy cryptocurrencies quickly without having to place your orders on the book then you can purchase using a Quicktrade. Here, your counterparty to the trade is Coinsquare and you will pay a flat fee for the trade.
If you are swapping Bitcoin for some other coin then you will be charged the single rate fee of 0.2%. Alternatively, if you trading one altcoin for another altcoin (no Bitcoin at all) then you will pay a double fee of 0.4%.
Just as a comparison, if you were to get charges the highest fee for the trade at 0.4% this is still quite small compared to the 1.49% fee that is applied at Coinbase for example.
Coinsquare Payment Methods
There are a number of ways for you to fund / withdraw from your account at Coinsquare. They have relationships with quite a few Canadian banks which means that CAD funding options are relatively straight forward. Below are the funding options together with fees and processing times.
It is important to note before you decide to fund your account that you should be verified and have completed their required KYC steps. We will cover all of this below.
|Payment Method||Min||Max||Fee||Processing Time||Withholding|
|Interac e-Transfer (r)||$100||$3,000||0%||1-5+ Days||3|
|Credit Card||$100||$5,000||10%||Instant||7 Days|
|Bank draft||$1,000||$9,000||0%||1-3+ Days||14 Days|
|Money order||$100||$999||0%||1-3+ Days||5 Days|
|Wire transfer||$10,000||$300,000||0%||0-3+ Days||Instant|
In the above, the “withholding” is the time that Coinsquare will take to allocate your funds to your account. This can be waived for those traders are recurring customers. The “days” listed above are business days as well. The “max” is defined by the sum total of all the funds that have come into the account in a 24 hour period.
Something that many people seem to have an issue with is the cost for crypto credit card purchases. This is pretty exorbitant at 10% (compared to 3.9% at Coinbase). However, many banks in Canada are trying to outlaw crypto credit card purchases so it seems pretty reasonable.
Of course, you can also fund your account with cryptocurrency. In this case, the time that it takes for your transaction to propagate will determine how long it will take to be placed in your account. They will not charge a fee in order to credit your account with crypto.
If you wanted to withdraw your funds in Canadian dollars then the following are your options to do so.
|Payment Method||Min||Max||Fee||Processing Time|
|Direct Bank Deposit||$100||$10,000||2%||1-9 Days|
|Wire transfer||$10,000||$100,000||2%||1-9 Days|
|Wealth Wire||$10,000||$100,000||1%||1-9 Days|
|Rushed Wire||$50,000||Unlimited||2%||1 Day|
The “wealth wire” is the payment option for those traders who run Coinsquare wealth accounts (more below). Rushed wire is the same as a simple wire expect you will pay a premium in order for Coinsquare to process your payment with haste.
Similarly, you can always withdraw just the coins off of the exchange. Coinsquare will not charge a fee for this but they will have to charge the going rate for the network (mining) fee.
Coinsquare Login and Registration
If you wanted to start buying coins on Coinsquare then you would need to register an account. You can click the “getting started” button on the homepage and this will take you to the main registration page. This is pretty straightforward and is presented below.
Main Registration Page at Coinsquare
You will need to confirm your email address before you can move onto the next steps. Once complete, you have officially signed up and created an account at Coinsquare. However, this account is an unverified account which means that you have not completed the KYC required at Coinsquare.
This is an important step and can be quite cumbersome.
Coinsquare is required by law to confirm the identity of those people who trade on their platform. This is why they require you to handover information about yourself including your proof of identity and address. These are given in the below image.
Verification Requirements at Coinsquare
You will need to confirm your telephone number with a valid mobile number. They will then ask you to upload your identity document as well as your proof of address on the platform.
An acceptable identity document can be a drivers licence, passport, National Identity card, Permanent residency card or Health Card (assuming Quebec province). The proof of address can be a bank statement or utility bill.
Once you have submitted your verification documents, Coinsquare will have to take the time to read through them and make sure that they are well presented. They claim that they try to get this done ASAP but you should budget about 1 full day for the verifications to be complete.
When we registered our account and sent through the documents it took slightly over 1 day which is still quite impressive. If you were to compare this to the weeks that it took on an exchange such as Bitstamp or Kraken in December / January then one can appreciate.
Depending on what sort of cryptocurrency buyer you are, the trading platform can make / break your experience. Some people would like to merely buy and “hodl”. Others would like to trade the crypto markets more regularly as a day trader. The latter will therefore be really interested in the type of trading technology an exchange has.
For those who are interested in merely buying a cryptocurrency quickly with a simple buy order, they will use the “Quick Trade” option that is available right on the dashboard. Here, you can get a simple quote for the cryptocurrency that you want to buy and then place your order. It will be executed immediately and added to your wallet.
QuickTrade on Coinsquare
Your holdings to the left of the order form will then be updated to reflect the coins that you have just bought. You also have a basic overview of the price movements over the past 24 hours for the coins that have moved the most.
Below that you will also have a summary of the live markets with the updated prices of all the coins available for purchase on the Coinsquare platform.
For those day traders among you that would like to have a few more tools at your disposal, you can head on over to the Advanced Trade tab on the platform. This will give the trader greater functionality when it comes order types and of course slightly lower fees (maker / taker).
It will also give you more information on the order books, current pricing as well as the most recent orders. Below is a screenshot of the advanced trading platform with the order form to the left of that.
Advanced Trade at Coinsquare
The first thing to point out is that Coinsquare allows you to change the theme of the advanced trading platform. This is ideal for those traders who love that space grey dark theme. This is also a relatively new feature on the platform and it is a welcome change.
If you take a look at the chart on the left, it will be quite familiar to most traders. This is because the chart is a Tradingview chart. Coinsquare is using the software from this well known charting package provider. It is also used by a number of other exchanges as their charting software of choice.
Tradingview charts give you a whole range of tools that you can run technical analysis with. Not only can you chart out the patterns and trend lines but it also has a compendium of indicators that can serve the chartist well.
Moving back to the platform, you can also toggle between the price chart and the depth chart. The depth chart is a handy indicator which gives traders an idea of how the order books look. It allows one to ascertain the liquidity in the market and where sentiment is heading.
For example, if you were to take a look at the below charts depth charts you can see that there are substantial sell walls on BTC / CAD. This means that it could be harder for the bulls to regain the upper ground as there are large sell orders that need to be chewed through before prices can advance.
Coinsquare Advanced Depth Chart and Open orders
Below the charts you have an overview of the orders that you currently have in the market (both open and closed). To the right of that you have the full order books as well as the order forms where you will be placing your order.
In terms of the order types you can place, you can elect to take a “Market” or a “Limit” order. The latter is merely an order level that is chosen by you and placed on the books (getting you the maker fee). The Market order means that your order will be executed at the market rate and you will be charged the taker fee.
So is the trading platform advanced?
Well, it is definitely more advanced than the basic option and has more functions and tools than most other Canadian exchanges. The Tradingview charting means that it can be used to run most of the analysis that the technical analyst may need to do.
However, there are only a limited number of orders that you can place. For example, you cannot place bespoke stop losses when executing a trade. You also have no options when it comes to order life. Orders are good-till-filled which means that they will remain alive until the price is met.
Hence, if you are a day trader that needs the latest tools to trade effectively then I would suggest you use another platform such as Bitmex.
Despite the lack of order functionality, the trading engine is quite effective. We tested out some orders prior to completing this review and they went through smoothly.
For those traders and cryptocurrency users who cannot be in front of their PCs the whole day, then the Coinsquare mobile application will no doubt come in handy. This was developed for both Android and iOS and has some of the same functionality of the online trading platform.
Coinsquare Mobile App on iStore
We downloaded the app and started using it just to test the functionality. It is relatively well laid out and you can easily toggle between the different functions from trading to funding and withdrawals. It does, however, lack the advanced trade option so you cannot use the more advanced order types.
We also took a look into the reviews that people were leaving on the App store and Google play store. It seems as if the Android app had quite a few technical issues that some users mentioned. There were quite a few complaints about the latest release of the app that it was not properly tested before being rolled out.
There were also a number of other users who took issue with the credit card fees that we mentioned above. What we did find encouraging though was that the Coinsquare development team answered most of the concerns and asked those users with issues to send them more information about it.
Customer support is a very important consideration for a crypto trader. There is nothing more frustrating than having to wait days on a support ticket without getting any updates. Coinsquare appears to be pretty efficient in this respect.
For starters, if there is a general question that you had then you are probably best suited to try out the online FAQ section. In at least 90% of the cases, the question that you have can be resolved in the FAQ section.
If you have a more specific question that you need help with then you can make use of their chatbot / ticketing system. We are not massive fans of chatbots but they make up for it in terms of their response times to the tickets that you submit.
The support office hours at Coinsquare are form 9:00am to 5:00pm EST Monday to Friday. They say that the response time that you can expect is 1-3 days but when we reached out the support usually got back to us within 12 hours.
Unfortunately, there is no telephone support for those with standard accounts. Perhaps as the Coinsquare team grows and more support personal are brought on board they can begin offering this similar to what Coinbase has started offering now.
Coinsquare Referral Program
If you do decide to sign up and trade at the exchange and you have a pleasant experience then you should make use of the Coinsquare referral program. With this, you can refer your friends to the platform and you can earn $20 for each friend that you refer.
You can refer them through three different ways.
Firstly, you could simply send them your referral link and they can sign up on it. This will be tracked by Coinsquare and once they have funded their account with $100 you will earn $20. They will also earn $20 as a welcome fee for crypto purchases.
Coinsquare Referral Options
Secondly, you could give them your referral code and they could insert this when they are signing up. The last option is to send them an email directly from your account dashboard. With this they will receive an email from Coinsquare with the referral number. Their signup will be registered.
Note ✍️: Be sure to read the terms and conditions that are applicable to these bonuses as well as acceptable marketing practices.
CEO Wash Trading
June 2020 was not a great month for Coinsquare. On top of the data breach that occured because of the employee theft, there were also a number of reports that the CEO had encouraged employees to conduct wash trading on the exchange.
For those that do not know, Wash Trading is the practice of simultaneously buying and selling the same asset in order to make it look like there is more activity on the exchange than there really is.
These were based on leaked documents that were also shared with the Motherboard publication. They showed that the CEO directed his employee to turn on the wash trading algorithms after they were visited by the regulators.
So, it is important to know about these acqusations if you are going to trade there. Wash trading is actually illegal and is a form of market manipulation that has been outlawed by the securities and exchange commission (SEC).
Something that we have not seen being actively being promoted at other exchanges was separate services for the larger whales on their exchanges. Other exchanges will have different fees based on trading volume but they will not segment the traders into separate account groups.
Coinsquare is breaking from the pack by offering their premium cryptocurrency trading services through Coinsquare wealth. This has been described by Coinsquare as:
An exclusive service with lower fees, priority account support, and unrivalled security for elite customers
So what exact benefits to these Coinsquare wealth traders get?
They have three separate tiers of account in classic membership style. They have a Gold, Platinum and Diamond account levels. They differ based on the fees that apply to funding, withdrawals and support / VIP access. Below is a breakdown:
Coinsquare Wealth Account Levels
While these may seem attractive, its important to note that these minimum sizes are for orders. In order just to get gold standard you would have to place orders that are a minimum of $25,000. If you plan on such large volume then this will no doubt be beneficial.
Moreover, you will have access to the OTC desk which means that trades can be done at a lower rate than is available on the order books.
Coinsquare vs Coinbase
One of the biggest competitors that Coinsquare has is Coinbase which is based in California in the USA. While they are a USD Fiat gateway, they do offer credit card purchases which have a much lower fee than Coinsquare. Below are some of the factors you can consider when choosing between Coinbase and Coinsquare.
|Buy / Deposit Methods||Interac, Credit Card, Bank Draft, Wire Transfer, Money Order||Credit Card, Debit Card, Wire Transfer|
|Sell / Withdrawal Methods||Bank Deposit, Wire Transfer, Rushed Wire, Cryptocurrencies||PayPal, Wire Transfer, Cryptocurrency|
|Available Crypto Pairs||BTC, ETH, LTC, BCH, DOGE, DASH||BTC, ETH, ETC, LTC, BCH|
|Fiat Currencies Accepted||CAD||USD, EUR, GBP|
|Trading Platform||Basic||Advanced (Coinbase Pro)|
|Customer Support||Ticket Support System||Email, Contact Form, Support Number|
|Trading Fee||0.1% / 0.2% (maker / taker) 0.2% / 0.4% (Single / Double)||1.49%|
So, while Coinsquare offers Canadians an affordable way to buy cryptocurrencies with Canadian dollars, Coinbase has a much more advanced trading platform. Also, as mentioned Coinbase has a dedicated support telephone number so you have to determine how much this means to you.
What We Didn’t Like
While Coinsquare seems a reasonable alternative for most Canadians, there are a number of things that we think need to be addressed before the exchange can really expand.
Firstly, you have those questions that surround that data breach. By allowing an employee to steal 5,000 user accounts without any sort of protection mechanisms in place was unfortunate. Users should consider this before they hand their data over for KYC purposes.
Secondly, the wash trading allegations are no doubt serious ones and do raise a number of questions about the conduct of the exchange and the CEO. One cannot be entirely comfortable using an exchange where they know that the volume is not legitimate.
Onto other improvements though, we also think that Coinsquare should integrate more cryptocurrencies. There are a number of large altcoin cryptocurrency exchanges that have begun accepting Fiat wire deposits. They will no doubt eat into Coinsquare’s market share unless they can offer a viable alternative with a range of other Altcoins.
Lastly, we also think that Coinsquare should find a more affordable credit card processor. Charging 10% for a credit card purchase is unpalatable to many people and reflects badly on the exchange.
Our Coinsquare review was relatively easy to complete. It’s a pretty large exchange that has been offering Canadians with an attractive trading alternative for a couple of years now.
Moreover, they are trying to expand vertically in the cryptocurrency industry as they are also investing in crypto mining ventures as well as a larger capital markets business.
However, despite this there are a number of concerns that surround the exchange. They have to take concrete steps to address their data breach and wash trading allegations. This is especially true given the competition they now face in Canada.
It will be interesting to see what course of action the exchange takes in light of this. However, if you were looking for a relatively quick and easy way to get your hands on crypto with CAD then this coul be a decent alternative.
Images via Coinsquare
- Low Trading Fees
- Strong Backing
- Effective Security
- Effective Customer Support
- Basic Trading Platform
- High Credit Card Fees
- Limited Coin Coverage
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Evolve or die: How smart contracts are shifting the crypto sector’s balance of power
One of the familiar themes seen in previous crypto market cycles is the shifting market caps, popularity and ranking of the top 10 projects that see significant gains during bull phases, only to fade into obscurity during the bear markets. For many of these projects, they follow a recognizable boom-to-bust cycle and never return to their previous glory.
During the 2017–2018 bull market and initial coin offering (ICO) boom, which was driven by Ethereum network-based projects, all manner of small smart contract-oriented projects rallied thousands of percentage to unexpected highs.
During this time, projects like Bitcoin Cash (BCH), Litecoin (LTC), Monero (XMR) and ZCash (ZEC) also rotated in and out of the top 10 ranking, but to this day, investors still argue about which project actually presents a “useful” use case.
While all of these tokens are still unicorn-level projects with billion-dollar valuations, these large-cap megaliths have fallen far from their previous glory and now struggle to stay relevant in the current ecosystem.
Let’s take a look at a few of the current projects that threaten to unseat these dinosaur tokens from their perch.
Dollar-pegged stablecoins take the stage as the most “transactable” currency
Bitcoin’s (BTC) original use case stipulated that it would simplify the process of conducting transactions, but the network’s “slow” transaction time and the cost associated with sending funds makes it a better store of value than a medium of exchange when the other blockchain networks are considered as options.
Terra (LUNA), a protocol focused on creating a global payment structure through the use of fiat-pegged stablecoins, has emerged as a possible solution to the issues faced when trying to use the top proof-of-work (PoW) projects as payment currencies.
The main token used for transacting value on Terra aside from LUNA is TerraUSD (UST), a U.S. dollar-pegged algorithmic stablecoin that forms the basis of Terra’s decentralized finance (DeFi) ecosystem. The market cap of UST has steadily been increasing throughout 2021 as activity and the number of users in the ecosystem increased.
The recent addition of Ether (ETH) as a collateral choice for minting UST on Anchor protocol has given token holders a way of accessing the value in their Ether without having to sell and create a taxable event.
This opens the possibility for other tokens such as BTC to be utilized as collateral to mint UST that can be used in everyday purchases.
As it stands, the borrowing APR for UST on Anchor stands at 25.85%, while the distribution APR is at 40.67%, meaning users who borrow UST against their LUNA or Ether actually earn a yield while borrowing against their tokens.
From privacy coins to privacy protocols
Privacy is also a cornerstone characteristic of the cryptocurrency sector and privacy-focused projects like XMR and ZEC offer obfuscation technologies that support covert or what, for a time, were thought to be untraceable transactions.
Unfortunately, regulatory concerns have made it more challenging for users to access these tokens, as many exchanges have delisted them for fear of drawing the ire of regulators and the overall demand among crypto users has declined alongside their availability.
Their lack of smart contract capabilities has also limited what these protocols are capable of and, so far, users do not appear to be too excited about utilizing Wrapped Monero (WXMR) for use in DeFi, as the token loses its privacy capabilities in the process.
These limitations have led to the development of privacy-focused protocols such as the Secret Network, which allows users to create and use decentralized applications (DApps) in a privacy-preserving environment.
Privacy features are not common among smart contract capable platforms in the crypto ecosystem, which makes Secret something of an experimental case in the ever-evolving Web 3.0 landscape.
Secret is also part of the Cosmos ecosystem which means it can utilize the Inter-blockchain Communication (IBC) protocol to seamlessly interact with other protocols in the ecosystem.
The network’s native SCRT can be used as the value transfer medium on the platform as well as to interact with protocols that operate on the network, including Secret DeFi applications and the network’s NFT offering, Secret Heroes.
New enterprise solutions aren’t better but they come without controversy
One of the ways cryptocurrency projects sought to differentiate themselves from the “medium of exchange” label was to offer enterprise solutions as a way to help corporations navigate the transition to a blockchain-based infrastructure.
XRP and Stellar (XLM) are two of the veteran protocols that fit this bill, but continual controversy and slow development has resulted in these early movers now playing catch up with newer networks that also don’t have the legal controversy that has followed Ripple for years.
Hedera Hashgraph has emerged as a competitor in this field and data shows that the network is capable of processing more than 10,000 transactions per second (TPS), with an average transaction fee of $0.0001 and a time to finality of 3-5 seconds.
These statistics are comparable to both XRP and XLM, which have indicated that their ledgers reach consensus on all outstanding transactions every 3-5 seconds with an average transaction cost of 0.00001 XRP/XLM.
Hedera is also smart contract capable, meaning users can create both fungible and nonfungible tokens, and developers can build decentralized applications to accompany the network’s decentralized file storage services.
For each sector (stablecoins, privacy and enterprise solutions), the main difference between the old-school and next-generation projects has been the introduction of smart contract capabilities and plans to develop within the side-chain and DeFi sectors where the top protocols exist. This gives newer projects additional utility, allowing them to meet the demand of investors and developers, thus increasing their token values and market caps as a result.
With smart contracts, the ability to interact with the growing DeFi landscape comes built-in, whereas the legacy tokens like LTC, XMR and BCH require special wrapping services which insert middlemen and thus insert additional fees, rigor and risk into the process.
Newer protocols have also embraced the more eco-friendly proof-of-stake consensus model that aligns with the larger global shift toward environmental awareness and sustainability. A plus is that holders can also stake their tokens directly on the network for a yield.
It remains to be seen if the slow march of time will eventually lead to a capital migration from older large cap projects to the newer generation protocols or if these legacy blue-chips will find a way to evolve and survive into the future.
Want more information about trading and investing in crypto markets?
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
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‘Overlooked’ Part of Senate Infrastructure Bill Renews Worries From Crypto Lobby
The $1 trillion infrastructure bill, which passed in the Senate in early August and is expected to be approved by the House, is the gift that keeps on giving.
At first, it was about roads, bridges, and clean water. Then a pay-for provision promised to give American crypto users new tax reporting requirements. And now there’s a new twist.
A report published today by the Proof of Stake Alliance (POSA), an advocacy group that counts Coinbase Custody and as members, details an “overlooked” amendment to the tax code within the 2,700-page bill that will make it a felony to incorrectly report receiving cryptocurrencies, , or other digital assets.
Writing in his role as an advisor to the POSA, law professor Abraham Sutherland details how the infrastructure bill amends Section 6050I of the tax code. The amended section 6045 that caused so much consternation when it made it through the Senate changed the definition of “broker” to cover those handling cryptocurrencies.
Industry lobbyists and cryptocurrency advocates such as the think tank Coin Center argued that the bill as written would force miners and validators on other networks to file 1099 forms for the people whose transactions they were processing—even though they lacked the personal information needed to do so.
Section 6050I, on the other hand, deals with the tax reporting requirements of those who ultimately receive the cryptocurrencies. While Americans must already report their crypto gains to the IRS just as they would with other investments, Sutherland says the amended provision goes much further: They must tell the government who sent it, including reporting social security numbers, when the value of the digital assets is more than $10,000. Not doing so within 15 days constitutes a felony.
This raises at least two issues. First, as Sutherland notes, it’s just as unwieldy as the section 6045 amendment: “This provision demands the impossible because the digital assets might not be ‘received’ from a person whose personally identifiable information can be verified and reported—including cases where the digital assets are not ‘received’ from a person or entity with a tax ID number, period.”
Second, as Sutherland alludes to and as Coin Center Research Director Peter Van Valkenburgh hammered home in a blog post, it might just be unconstitutional. The tax code currently mandates that people report such information to the IRS when they receive $10,000 in cash. That passes Constitutional muster because the bank acts as a third party; otherwise, authorities would need a warrant under the Fourth Amendment. But in cryptocurrency, a peer-to-peer transaction doesn’t have a third party.
Writes Van Valkenburgh: “One person to a two person transaction is obligated to collect a load of sensitive information from her counterparty and hand that to government officials without any warrant or reasonable suspicion of wrongdoing.”
Though he writes that Coin Center usually doesn’t “object to equal treatment of cash and cryptocurrencies,” in this case the “provision is a draconian surveillance rule that should have been ruled unconstitutional long ago. Extending it to cryptocurrency transactions would further erode the privacy of law-abiding Americans.”
Sutherland also calls into question the process by which the amended IRS code will become law—via a bill on completely unrelated topics. “A statute creating felony crimes for users of digital assets should be debated openly, not quietly inserted into a spending bill,” he wrote.
Avalanche (AVAX) bumps to near $70 after reveal of $230 million fundraise
High-speed blockchain Avalanche jumped to highs of $68.30 today after several influential crypto investors revealed the close of a private funding round involving $230 million worth of AVAX tokens in June, CryptoSlate learned in a release.
The Avalanche Foundation, a non-profit that oversees the development of the Avalanche blockchain, disclosed participants in the multimillion-dollar funding round were led by PolyChain Capital and Three Arrows Capital, and included R/Crypto Fund, Dragonfly, CMS Holdings, Collab+Currency, and Lvna Capital.
What a day! Just one of the many major initiatives the @AvaLabsOfficial team has been working on.
— Jay Kurahashi-Sofue 🔺 (@jayks17) September 16, 2021
What happens to Avalanche now?
Proceeds from the private sale will be used to support the burgeoning Avalanche ecosystem—one that has been positioned as a top contender against Ethereum for its high speed and low fees.
Part of the funds will be funneled to support DeFi (decentralized finance) projects on Avalanche as well as enterprise applications through grants, token purchases, and other forms of investments.
Avalanche’s smart contract is able to execute Ethereum Virtual Machine (EVM) contracts, making it possible for developers to ‘reuse’ their codebase if they have a working/testnet product on the Ethereum blockchain.
Converting assets on-chain using a ‘bridge’—a way for two separate blockchain to communicate with and transfer value between each other—are also simple as applications querying the Ethereum network can be adapted to support Avalanche by changing API endpoints and adding support for a new network.
Meanwhile, the news caused a surge in AVAX prices last night. The token jumped 30% to over $68.30 to set a new all-time high, reaching a $14 billion marketcap and becoming the 12th-most-valuable cryptocurrency by that metric.
At press time, AVAX continues to trade above its 34-period exponential moving average, a metric used by traders that determines asset trends using historic prices. It has been been in a gradual uptrend since breaking the $15 mark in late-July, and has returned several multiples to investors in the past three months alone.
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