Germany Removes Taxes on Crypto Sales as Markets Recover from Luna Chaos

Germany Removes Taxes on Crypto Sales as Markets Recover from Luna Chaos

Crypto prices are recovering after last week’s crash in the Terra ecosystem, while the release of the Consumer Price Index (CPI) has caused prices to fall rapidly.

Although there was an improvement since March, the idea that peak inflation has passed is not a sentiment shared by world markets, which continued to fall further.

Nonetheless, many investors were quick to grab bargains, with the price of Bitcoin surging 23% towards the weekend.

In another vein. Germany announced a new world-leading policy for digital asset holders, and Musk continued to show support for the future of Dogecoin.

  • Bitcoin Falls to 2-Year Lows as CPI Released
  • Terra ecosystem adds pressure to markets
  • Musk pauses his Twitter purchase but continues to support DOGE as a form of currency
  • Germany Confirms Tax-Free Crypto Sales
  • UAE Emirates Airlines Embrace Digital Assets

The chaos of the Terra ecosystem adds pressure to the markets

Digital asset markets took a tumble last week after chaos erupted in the Terra ecosystem leading to a panic sell-off that spread across the entire crypto market. Terra came under pressure when its native stablecoin, UST, began to lose its peg to the US dollar. Although there were attempts to recover the connection with new purchases of BTC for its reserves, UST continued to initially drop to a value of $0.63.

As a result of the mismatch, the algorithmic component of the coin stabilizing mechanism continued to mine native LUNA coins. According to the algorithm, for every UST removed from the market, the equivalent value of LUNA must be mined.

Unfortunately, over the next 3 days, the mechanism was not enough to re-bind UST, meaning the market was once again flooded with LUNA . As of today, UST is trading for $0.17, while LUNA has dropped to $0.00024.

Due to this crash, the Terra blockchain was paused by validators on Thursday. Many exchanges have also ceased trading the native assets. After several code modifications, the blockchain was reopened on Friday, however, the values ​​of UST and LUNA continued to decline.

With the collapse of UST and LUNA, some experts believe that $40 billion has been lost over a 48-hour period. Due to the liquidity collapse, years of work on decentralized projects like Lida and Anchor were also lost.

The effects of the Terra ecosystem rippled across the industry and exacerbated the negative sentiment that was already being felt due to the recently released CPI numbers.

Although Terra founder Do Kwon released plans to resurrect the project on Friday , these plans were met with mixed emotions and skepticism by most members of the Terra community.

Bitcoin falls to a 2-year low with higher-than-expected CPI figures

Downward pressure on the markets increased on Wednesday, after the US Consumer Price Index (CPI) figures were released higher than expected.

The CPI, which is a basket of goods and services, is often used as an indicator of the rise in the cost of living. The updated CPI figures showed that year-on-year inflation figures had risen to 8.3% in April 2022, 0.2% higher than many economists had been anticipating.

Most economists had estimated the CPI to be closer to 8.1% and highlighted the importance any divergence could have on market sentiment. Following the CPI release, bearish price movements accelerated on Wednesday and Thursday.

In a report published by Deutsche Bank, analysts explained that “this will be very important for the markets and the Fed, since although the politicians have clearly indicated that they are inclined to continue raising 50 basis points (bps) in the next couple of meetings, there are still 25/50/75 bps to play after those meetings. Today’s report will help shape the initial understanding of this, and has the ability to move markets greatly if it diverges too far from consensus.”

The CPI figures for April were not as low as desired but, more importantly, they were still 0.2% lower than in March. This has led some economists to predict that the peak of inflation could be behind us.

Although the markets initially reacted negatively, many cryptocurrencies managed to recover ground thanks to opportunistic investors happy to get a bargain. After dipping to a low of $25,500, Bitcoin quickly bounced back to recapture the $30,000 level before the weekend.

Musk pauses Twitter buyout but still supports DOGE as a form of payment

On Friday, Tesla and SpaceX CEO Elon Musk announced that Twitter’s $44 billion buyout process had been put on hold.

Musk had secured his proposal to buy the social media platform in early May and had begun discussing ways the app could be improved.

However, in a tweet posted on Friday, the entrepreneur explained: “Twitter deal temporarily paused pending details supporting calculation that fake/spam accounts actually represent less than 5% of users.” In a subsequent tweet, Musk described that he remained “committed to the acquisition.”

His tweet was linked to a Reuters story that was published on May 3 stating that Twitter had estimated that 5% of its users could be spam or fake accounts. As a result, many experts believe that Musk is now using that estimate as a way to get a better buy deal or even to abandon it if necessary.

However, the problem of spam accounts or bots is an issue that Musk has openly stated that he would like to address. Just last week, the entrepreneur came out in support of TV star Mark Cuban, who proposed that Dogecoin could be used as a method to stop spam accounts.

In a subsequent exchange of tweets with Dogecoin co-creator Billy Markus, Musk this week continued to support the idea that Dogecoin could be used as a currency. After Markus pointed out that the reason he likes Dogecoin was that he “knows it’s stupid”, Musk replied that it “has potential as a currency”.

The comments from the CEO of Tesla and SpaceX reconfirm his strong belief that Dogecoin should be one of the digital currencies of the future.

Germany Confirms Removal of Taxes on Crypto Sales

On Wednesday, the German finance minister confirmed that the sale of all cryptocurrency assets will be tax-free as long as the digital assets have been held for more than a year.

The details of this new policy were published in a 24-page letter outlining the taxes on cryptocurrencies. The document has finally been drafted after consultation with the 16 federal states that make up the country and various stakeholders from the German financial industry.

A bump in the road that had hindered a faster publication of the document was whether lending or blocking (staking) cryptocurrencies would result in an extension of the tax-free period to 10 years. This is a rule currently followed by owners of buy-to-let properties in Germany.

However, in a statement issued by Secretary of State Katja Hessel, “the deadline is not extended to 10 years if, for example, bitcoin was previously used for a loan or if the taxpayer offered ether as a bet for another to create his block”.

The news was welcomed by the crypto community in Germany and also by industry leaders around the world.

In an interview with Blockworks , EU policy expert Patrick Hansen said: “This is already a big win and makes Germany a very attractive country when it comes to crypto taxation.” He went on to explain that he considers Germany “definitely ahead of other countries in the world in terms of crypto regulation, taxes, [anti-money laundering] regulations, particularly the implementation of their travel regulations, and the crypto business license.”

According to reports, Germany currently hosts 14% of all Ethereum nodes and also 9% of all Bitcoin nodes.

Emirates, one of the world’s largest airlines, confirmed last week that it was willing to open up to blockchain technology, including cryptocurrencies, metaverse and NFTs.

The Dubai-based company covers vast areas of the world with its fleet. According to COO Adel Ahmed Al-Redha, the company plans to hire our workers to engage with this new technology and to move the organization even further.

In an interview for Arab News , Al-Redha explained that “NFTs and the metaverse are two different applications and approaches.” He went on to comment: “With the metaverse, you’ll be able to transform your entire process – whether it’s operation, training, web sales, or the entire experience – into a metaverse-type application, but above all by making it interactive.”

The executive also told reporters that the airline plans to introduce “bitcoin as a payment service”, however, the COO did not detail when these blockchain-related plans will be implemented.

This news comes a month after the airline published a note about the launch of an NFT collection that will include experiences in the metaverse.

Samuel Edwards
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