In the fourth quarter of 2017, financial services and technology news was dominated by the topic of cryptocurrency, with considerable attention given to Bitcoin. Large international investors, hedge funds, and small individual investors alike all watched as the value of Bitcoin skyrocketed, reaching nearly $20,000 in mid-December. The rapid increase in value was so dramatic that many individuals decided to either invest in or build their own cryptocurrency mining platforms in an attempt to cash in on the digital gold rush.

However, cybercriminals also started to pay more attention to cryptocurrencies and began looking for more sophisticated ways to profit from the increase in those currencies’ values. In fact, in 2017 there was a dramatic increase in ransomware activity, with criminals demanding payment in cryptocurrency.

Read the entire article.

Author: Michelle Chopper

If you are in the cryptocurrency space, many of you are either launching a new fund or preparing for the calendar year-end audit cycle now in full swing. We know you’re busy, yet we need to interrupt you for just a moment and draw your attention to one specific issue of immediate urgency to help ensure your crypto fund can be audited effectively: Making sure your investments and transactions are properly documented so they can be independently verified.

Why is this important? Let’s take a step back first. The fundamental purpose of a financial statement audit is to provide investors with independent verification that the financial statements report fairly the value and financial results of their investment. Auditing financial statements is a systematic process of objectively obtaining and evaluating evidence regarding that value and those results. Cryptocurrency funds have a variety of unique audit considerations due to the new and emerging technology surrounding digital assets. However, the objectives of a crypto fund audit are the same as any investment fund.

Read the entire article.

Contact: Saul Brenner; Berdon LLP (New York, New York, USA)

 The IRS recently ruled that transactions involving bitcoin and other virtual currencies may create a tax liability since digital currencies, like stocks, are treated as property for all U.S. tax purposes1. Generally, this means that capital gains rates, as opposed to higher regular tax rates, would apply as well as capital loss limitations. This has implications for transactions such as employee wages, payments to independent contractors, and reporting gain or loss on a sale or exchange.

Read more: IRS Says Bitcoin Is Property, Not Currency