This week’s Crypto Biz delves into Bitcoin’s landmark year, the launch of Crypto.com’s new custody service, a significant ban on crypto mining in Russia, and the latest tax regulations on staking rewards in the US.
Bitcoin has experienced an incredible transformation in the past year. Nearly 16 years after its network debuted, the cryptocurrency has firmly established itself as a bona fide financial asset. The momentum kicked off in January when 11 exchange-traded funds (ETFs) were approved, marking one of the most successful financial product launches ever. By the year’s end, Bitcoin-focused funds attracted over $113.5 billion, a testament to strong institutional demand that helped propel BTC to record highs of $100,000 in December.
The surge in Bitcoin’s price had ripple effects throughout the wider cryptocurrency market. For instance, the Kraken exchange noted a remarkable 220% increase in over-the-counter transactions this year, highlighting just how robust the institutional investment landscape has become. Tim Ogilvie, head of institutional at Kraken, affirmed, “Long story short, OTC is going gangbusters right now.”
By the end of 2024, it became apparent that institutional adoption was not limited to ETFs alone. Publicly traded companies began embracing Bitcoin as a legitimate addition to their balance sheets. MicroStrategy has been at the forefront of this trend, amassing over 444,000 BTC since 2020. Recently, the company announced plans to expand its Bitcoin purchases further, signaling confidence in Bitcoin against market volatility.
- MicroStrategy: Calls special shareholders’ meeting to approve more Bitcoin purchase plans.
- Crypto.com: Launches institutional custody service to enhance security and compliance.
- Russia: Introduces a partial ban on cryptocurrency mining in multiple regions to manage energy consumption.
- IRS Taxation: Confirms staking rewards are taxable upon receipt, raising questions about the implications for investors.
In a notable industry move, Crypto.com has launched a new custodial service in the US, aimed at institutional clients and high-net-worth individuals. This service, known as the Crypto.com Custody Trust Company, aligns with the company’s strategy to solidify its foothold in North America. By transitioning digital assets held by US and Canadian customers to this overseer, Crypto.com intends to bolster its compliance and security measures.
On the international front, Russia has implemented a six-year ban on cryptocurrency mining in ten regions. This regulation, effective from January 1, 2025, aims to tackle energy shortages that have arisen due to the growing demand for mining operations. Areas such as Dagestan and Chechnya will experience full prohibitions, while other regions will face seasonal restrictions, reflecting a balancing act between energy resource management and the burgeoning crypto industry.
Add to this the renewed focus of the IRS on the taxation of staking rewards, asserting that these rewards are considered taxable income at their market value upon receipt—regardless of when they are sold. This move could have significant repercussions for cryptocurrency investors and could set a notable precedent in the ongoing debate about staking in the US.
As we reflect on this remarkable year for Bitcoin and the cryptocurrency space as a whole, it’s clear that the momentum is only escalating. With institutional investor interest at an all-time high, critical regulatory developments on the horizon, and the continuing evolution of cryptocurrency custody services, the trajectory of crypto remains dynamic and full of potential. Stay informed as we continue to track these influential trends.
