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Trump Won’t Accept Corporate Tax Rate of More Than 20%: Mnuchin

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U.S. President Donald Trump has drawn a line in the sand on corporate taxes, according to Treasury Secretary Steven Mnuchin. In an interview with The Wall Street Journal, Mnuchin said 20% as the absolute highest the Trump administration was willing to go on corporate taxes.

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“It’s not going up,” he told the WSJ CEO Council event on Monday. “I can tell you this is one of the things the president feels very strongly about.”

Tax Debate Rages On

The Republican party remains at odds over how to overhaul the tax code, with key Senate members diverging from the previous plan advanced through a House committee earlier. Although both plans call for a reduction of the corporate tax rate to 20% from 35%, the Senate proposal would delay the reduction until 2019. It would also remove the entire state and local deduction and do away with a repeal of the estate tax, WSJ reports.

Analysts say the Senate bill would free up hundreds of billions of dollars, thereby softening the blow of a major funding shortfall. Mnuchin maintains that any lost revenue would be made up through stronger economic growth. Tax experts are divided as to whether growth alone could make up for a multi-trillion-dollar shortfall.

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When asked about bitcoin, Mnuchin said digital currencies need to be evaluated “more carefully” before warning that this medium is being used for illegal transactions. The Treasury Secretary said last week he was looking “very carefully” at cryptocurrency, although no timeline for issuing an official position was given.

U.S. Economy

The world’s largest economy appears to have turned a corner in the last six months, with GDP expanding at its fastest rate in more than two years. Recent economic indicators ranging from employment to retail sales have been largely positive, signaling continued momentum in the final stretch of 2017.

President Trump has vowed to grow the economy at least 3% annually, and is using corporate tax cuts as a way to make it happen. The president has yet to unveil other pro-growth initiatives, such as infrastructure spending and deregulation, but analysts say these are likely to materialize next year.

Investors can anticipate a steady stream of economic data throughout the week to shed light on the health of the U.S. economy. On Tuesday, the Labor Department will issue its latest producer inflation report. The latest prints on consumer inflation and retail sales will be issued on Wednesday, followed by industrial production and housing data in the latter half of the week.

Featured image courtesy of Shutterstock. 

 

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Shares of Hong Kong-Based UBI Blockchain Suspended by SEC

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The Securities and Exchange Commission (SEC) has halted trading in UBI Blockchain Internet Ltd. (UBIA) over “unexplained market activity,” a sign that regulators were continuing to clamp down on assets tied to cryptocurrency.

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Trading Halted

The U.S. securities regulator announced Monday that it was suspending UBI Blockchain shares from being traded until the company answers questions about the accuracy of its financial statements.

UBI Blockchain surged more than 900% last year, bringing its total market value north of $800 million. All this, and the company has yet post any revenue. It also failed to give regulators a working phone number during public filing.

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Company chief Tony Liu said the SEC’s decision is “understandable  due to the recent frenzy of buying stock related to the bitcoin phenomena.” However, Liu reminded that his company was not involved in cryptocurrency.

“We believe the general public is confusing our blockchain technology with bitcoin companies,” Liu said in a statement that was quoted by Bloomberg. UBI was “involved in blockchain technology for well over two years before the bitcoin buying frenzy took place and we plan to be in business for years after the bitcoin buying anomaly ends.”

Blockchain is the pioneering technology that underlies bitcoin and other cryptocurrencies, but can exist independently of those systems. Its vast use case has attracted attention from banks, governments and businesses in pursuit of more transparent audit trails.

The Rise of Crypto Stocks

So-called ‘crypto stocks’ have benefited from the euphoria surrounding digital currencies. Their popularity has grown in lockstep with bitcoin among investors who want to capitalize on the crypto revolution without the added volatility of owning the underlying assets.

There’s a long list of companies that can offer indirect exposure to cryptocurrency. Some of the more popular include AMD (AMD) and Nvidia (NVDA), whose chips are used for mining virtual currency.

Digital Power (DPW) is a manufacturer of power-supply products that is venturing into cryptocurrency-specific equipment. Meanwhile, Overstock.com is an online retailer that not only accepts bitcoin, but is launching a mega ICO through its subsidiary tZero.

In addition to stocks, traditional investors can choose from Grayscale’s Bitcoin Investment Trust (GBTC), which holds BTC tokens in a fund that is similar to an ETF, as well as futures contracts offered by CME and CBOE. Efforts to bring bitcoin to the ETF market are also ongoing.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Notable Market Prognosticator Jeremy Grantham Considers Bitcoin to Be a “Bubble”

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The investor who accurately predicted two major market crashes has described bitcoin a “bubble” that is waiting to burst. Although bitcoin enthusiasts have heard this song before, it carries a little more weight coming from from Jeremy Grantham, the co-founder of GMO.

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Bitcoin has No Fundamental Value

Grantham, who famously called the dot-com and sub-prime mortgage crashes, said the bitcoin bubble is likely to burst within the next six months to two years.

In his regular report on market trends, he said bitcoin has “no clear fundamental value” and operates in “largely unregulated markets.” This is combined with “a storyline conducive to delusions of grandeur” that makes bitcoin the very thing that investors fear.

In his analysis, Grantham compares bitcoin’s meteoric rise to the the dot-com era around 1999 and early 2000. This is exemplified in the following graph, which charts bitcoin’s meteoric climb against several of history’s biggest bubbles.

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In fact, bitcoin’s rise is so steep that it dwarfs the South Sea Company of the 1700s. In Grantham’s view, the extent of the asset’s growth means the bubble could burst long before the broader market peaks. Based on recent price trends, that peak could be a long ways out.

Bitcoin’s Bull Run

We’ve all read about bitcoin’s meteoric rise over the last 12 months, but much less has been written about its prior performance. The digital asset was actually the world’s best performing currency in six of seven years between 2010 and 2016 before being overtaken by Ripple in 2017.

Bitcoin’s epic rally helped trigger a broader cryptocurrency explosion, resulting in a market now worth more than $750 billion. The total value of all cryptocurrencies peaked around $833 billion on Sunday before correcting lower over the past 20 hours.

As Grantham’s prediction clearly demonstrates, cryptocurrencies have divided market participants and investors about the true nature of its rally. Privacy advocates, technology companies and those weary of big government have described cryptocurrency as a major evolution in how we conceive and transmit monetary value. Government agencies, institutional investors and Wall Street have been much more critical, going as far as describing bitcoin as the tool of cyber criminals.

Though disagreements over cryptocurrency will continue, all these actors more or less share one thing in common: they all support the development of blockchain technology. The immutable ledger has demonstrated utility that extends far beyond the crypto sphere, with banks and even governments experimenting with it.

Whether or not bitcoin is a bubble has less bearing on the argument that cryptocurrencies have revolutionized the financial system. There are more than 1,400 coins in circulation, and many agree that the vast majority will fail. Though a bitcoin crash would have a devastating impact on investors and the market at large, it would not negate the project of decentralized currency. Alas, the viability of bitcoin and other crypto assets does not depend on whether they are in a bubble state or not.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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U.S. Government to Sell Bitcoin, Bitcoin Cash Seized from Cyber Criminal

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A U.S. federal judge in Utah has approved the auction of hundreds of units of bitcoin and bitcoin cash seized from a dark web dealer, CCN has learned. The sale will be part of a larger liquidation of assets belonging to convicted criminal Aaron Michael Shamo.

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Bitcoin Auction

There were 513 units of bitcoin and 512 bitcoin cash tokens in Shamo’s possession at the time of his conviction. All of them will be auctioned off, along with two automobiles. At current prices, the sale will amount to roughly $8.5 million.

Shamo was convicted on May 31, 2017 along with fellow dark web operators for several drug-related offences, including trafficking and conspiracy to commit money laundering.

The official court document released by Utah district judge Dale Kimball indicated that it was too costly to store the seized cryptocurrencies for a prolonged period. Based on the court documents, storing the coins cost taxpayers $465 per month.

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The decision to liquidate the coins comes amid growing concerns over price volatility, with government officials seeking an imminent sale of the cryptocurrencies before they lose their value.  In October it was disclosed that the U.S. government lost nearly $2.4 billion on the sale of 144,336 bitcoins when the cryptocurrency was priced at just $336 a unit.

According to the official court document:

“The vehicles [bitcoin and Bitcoin Cash] have been seized and are in the custody and control of the United States Marshals Service. Every month, the USMS is accruing $465/month in storage fees for these vehicles. The total expenses for these two vehicles currently is $5,010.70. The BTC and BCH have been transferred to a Government wallet. Due to the volatile market for cryptocurrencies, the BTC and BCH risk losing value during the pendency of the forfeiture proceedings.”

Once considered the exclusive domain of dark web criminality, bitcoin has catapulted into the mainstream over the last 12 months. The price explosion has drawn the attention of various levels of government, from the Securities and Exchange Commission (SEC) to the District Court system.

Although bitcoin remains a popular cryptocurrency in the criminal underworld, altcoins with stronger privacy features are gaining prominence. Coins such as Monero, Zcash and Ethereum are becoming more popular among cyber criminals. Zcash appears to have the best privacy protection among the three, which analysts say could generate higher adoption among criminals in the future.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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