Tag Archives: assets

Crypto Philanthropy: How Digital Assets Are Driving Charitable Giving

Crypto Philanthropy: How Digital Assets Are Driving Charitable Giving

In 2021, crypto philanthropy saw a massive surge, with cryptocurrency donations rising by 16 times and reaching $500 million in the United States alone, the Web3 tech company that specializes in crypto philanthropy, Givepact, told Technopedia.

While platforms that specialize in crypto donations are yet to see another repeat of the 2021 bull run, the chief operating officer of Endaoment, Zach Bronstein, noted that crypto investors continue to drain their Donor Advisor Funds (DAFs) and give their remaining dollars to charities.

“Folks are excited to get the contributed dollars to the charitable recipients, and are using this slower period of blockchain activity to focus on making impactful and meaningful gifts.”

What is Crypto Philanthropy?

Crypto philanthropy is very similar to other forms of charitable giving, with the only major exception being the type of asset donated.

“The recipient has to understand all of the mechanics of holding a wallet, knowing how to transfer the token to and from an off-ramp or exchange, as well as keeping it secure and safe,” the co-founder of Bracket Labs, Pelli Wang, explained.

Givepact’s Maule added that in many instances, one of the most exciting parts of crypto donations is that, on average, crypto donors tend to give 82 times more money than “cash” donors, which could amount to $10,500 per donation.

In addition, crypto philanthropy is driven by one of the biggest names in the industry – Vitalik Buterin, the founder of ethereum (ETH), who, over the years, has donated vast amounts of crypto for a number of charitable causes.

“We have noticed a trend that schools, universities, and other research and higher learning institutions typically find themselves at the top of this list. I would argue that donors here are not just excited to give back to their college or university but rather are interested in supporting interesting and potentially greatly impactful research that’s being carried out. This is very much in line with the ethos of the Web3 space, to find funding opportunities that can translate not just to doing some good, but to being able to do some good that was previously unattainable,” Endaoment’s Bronstein said.

In 2022 alone, the company saw $22.8 million in crypto donations, with the average donation size being $43,000.

Crypto Philanthropy Pros and Cons

Crypto donations are processed at a much faster rate than traditional donations, the author of NFT: From Zero to Hero, Anndy Lian, told Technopedia, which could come in handy in times of emergencies.

In addition, the fact that crypto is borderless allows individuals to make crypto donations to charities worldwide, regardless of their location.

Lian said:

“The transaction costs for receiving crypto donations are lower than those for credit cards, debit cards, and wire transfers. This means that more of the donation goes directly to the cause.”

Bracket Labs’ Wang added that because cryptocurrency transactions are transparent, donors can openly see how much funds were collected for a certain cause.

On the other hand, cryptocurrencies remain a niche. Digital assets are highly volatile, which could also push many individuals against opting for crypto donations.

“The greatest challenges with crypto donations are fluctuations and regulations. The price of cryptocurrencies is highly volatile, which affects the value of donations. So, nonprofits need to be strategic about converting their bitcoin payments. When it comes to regulations, different regulations depend on the jurisdiction, which makes it complicated because the organizations need to navigate the procedures and comply with the laws,” a founder at Coin Data Flow, Alexandr Sharilov, told Technopedia.

What About Tax Implications?

One of the biggest advantages of crypto philanthropy is the tax breaks the donors get and the tax credit, Sharilov explained. This means that in many cases, donors are eligible to get a charitable contribution deduction when filing their tax returns at the full fair market value of the cryptocurrency that they donated at the time of the donation.

Wang noted that while tax deductions are one of the biggest reasons why many donors would opt for a crypto donation as opposed to cash, each county recognizes the value of cryptocurrencies differently.

In the US, for example, the Internal Revenue Service (IRS) treats digital assets as property for tax purposes meaning that donating digital assets is not a taxable event, and donors can claim a charitable deduction for the fair market value of their donation, Lian explained.

Companies specializing in crypto philanthropy are also keen to educate the public on how easy it is to contribute to charitable causes using digital assets.

“What is key here is explaining to folks that donations of crypto are treated just like donations or stock or property – if you have held the asset for over a year, you can deduct the current market value of the asset (if you have held less than one year, you can only deduct the cost basis of that asset). While of course, this is not tax advice, clearly donations of appreciated assets can create additional deductions for donors, and the non-profits reap the rewards of the appreciation by receiving additional funding!”

The Future of Crypto Philanthropy

Companies specializing in crypto philanthropy are bullish, betting that the field will continue to prosper in the years to come. Maule compared the current rate at which crypto adoption is growing to how the internet was in 1998.

“The interest in crypto is expanding, and we’re just at the beginning of seeing this take off. If $500 million in crypto was donated in 2021 with limited pathways to give, we are betting on a future that projects crypto donations will exceed $10 billion within a decade.”

Edaoment’s Bronstein added that even in the bear market currently faced by the cryptocurrency space, the company has seen over $52 million donated on its platform, with the metrics continuing to grow.

“Put this together with the fact that new folks are onboarding into web3 daily, and large organizations like Coinbase are working to tackle the crypto UX problem – we are sure to see many more folks join us in this space in the next few years, which will in turn lead to additional crypto donation activity, especially as folks learn how easy it can be, and the benefits that can be wrought.”

Making Crypto Philanthropy More Accessible

From UNICEF to the Rainforest Foundation, a number of charities have started to accept crypto donations showing just how easy it is for charities to “jump onto the trend”.

Lian and Sharilov both explained that organizations can start accepting crypto donations in two easy ways. Either through a hands-off approach by leveraging a crypto payment processor in the likes of Givepact or Endaoment to accept the donations on their behalf or through a hands-on approach by holding the crypto donations in a wallet controlled by the organization itself.

Bracket Labs’ Wang noted that before charities get involved in the Web3 space, they must make sure a member of their team is familiar with the crypto world.

“There are many benefits to tapping into the crypto/Web3 audience including higher average donations; younger, higher earning donors; potentially less fees to process. However, you need to make sure you have: a wallet provider or custodian; an off-ramp or exchange; tax/accountant; ID or KYC/AML provider and a security/compliance monitor.”

 

Source: https://www.techopedia.com/crypto-philanthropy-how-digital-assets-are-driving-charitable-giving

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

SEC removes digital assets from hedge fund rule: What does it mean for the future of digital asset regulation

SEC removes digital assets from hedge fund rule: What does it mean for the future of digital asset regulation

The U.S. Securities and Exchange Commission (SEC), which regulates the securities industry, has recently decided about digital assets. Digital assets are virtual or digital currencies that can be traded or exchanged. The SEC previously defined digital assets as securities in its hedge fund rule, subjecting them to additional regulations.

Hedge fund rule

The hedge fund rule, officially known as Rule 206(4)-8 under the Investment Advisers Act of 1940, is a rule created by the U.S. Securities and Exchange Commission (SEC) to prevent investment advisers from making false or misleading statements to investors in pooled investment vehicles such as hedge funds.

The rule imposes additional reporting and disclosure requirements on advisers to hedge funds and other private funds and requires them to implement specific compliance programs and risk management measures. The rule is designed to protect investors and maintain the integrity of the financial markets by ensuring that investment advisers act in their client’s best interests and provide accurate and complete information about their investment strategies and risks.

In the context of digital assets, the SEC included a definition of “digital assets” as securities in its hedge fund rule, subjecting them to additional regulations. However, the SEC recently removed this definition, indicating that it is still evaluating the term and has not yet decided whether digital assets should be classified as securities.

New asset class for “digital assets”?

Many people have been surprised by this move and have questioned the SEC’s approach to regulating digital assets. It’s worth noting that SEC Chair Gary Gensler gave a speech before the House Financial Services Committee on April 18, 2023, regarding the agency’s stance on digital assets. The hearing was not dedicated exclusively to the SEC’s crypto strategies, but the regulatory agency’s chairman faced criticism over perceived regulatory overreach and lack of clear crypto classification. During the hearing, Gensler refused to comment on whether Ether (ETH) was a security or a commodity, saying it depends on the facts and the law, despite being told he knows. It is worth noting that the U.S. House Financial Services Committee and House Agriculture Committee are set to put together legislation to oversee the crypto sector. The bill will be introduced within the next two months.

Having said so, I do see this in a more positive light. This suggests that the SEC is working on a regulatory framework for digital assets, and this decision may be part of a larger strategy. The SEC may have removed the definition of “digital assets” from the hedge fund rule to allow for further consideration and evaluation of the appropriate regulatory approach for this new asset class. The SEC could be taking a cautious approach to ensure that any regulatory framework it develops is appropriate for digital assets’ unique characteristics and addresses potential risks without hindering innovation.

Regulating digital assets is complex and contentious

Experts have commented on the SEC’s decision to remove its previous definition of digital assets as securities, which would have subjected them to additional regulations. Coinbase, a major player in the crypto industry, has publicly opposed the SEC’s stance on regulating digital assets. Some experts believe that the digital assets sector needs to focus more on risk management and operational due diligence, coupled with thoughtful regulation, to repair its reputation.

It’s essential to recognize that the SEC has had a changing stance on digital assets, and this recent decision isn’t the first time they’ve taken a position on their classification. Previously, the SEC confirmed that a 401(k) plan could be considered a single investor under section 3 (c) (1) and a qualified purchaser under section 3 (c) (7) if plan participants have investment discretion to allocate their accounts.

The question of how to regulate digital assets is complex and contentious. In addition to the points made, some argue that digital assets fundamentally differ from traditional securities and should be treated as a separate asset class. Because they operate on a decentralized network, digital assets aren’t subject to the same regulations and oversight as traditional securities. This lack of regulation has led to concerns about market manipulation, fraud, and other illicit activities.

Moreover, digital assets aren’t backed by physical assets or government guarantees, which makes them inherently risky. However, they also have the potential for high returns, which can entice investors who are willing to take on more risk in their investments. Due to these unique characteristics, some experts suggest that digital assets require a different approach to risk management, valuation, and investment strategies than traditional securities.

The evolving nature of the digital asset market may require clearer regulatory frameworks and standards as it matures. However, there is uncertainty surrounding how these assets will be classified and regulated and how this will affect the overall market. Digital assets have unique characteristics that differentiate them from traditional assets, including decentralization and the use of blockchain technology. This technology enables borderless transactions, smart contracts, and decentralized applications that offer new investment opportunities for retail and institutional investors.

Ending remarks

The growth of the digital asset market has attracted significant attention from regulators and investors, with some arguing that digital assets should be treated as securities to protect investors from fraud. The SEC’s decision to remove the definition of digital assets as securities from its hedge fund rule have fueled ongoing debate about the appropriate regulatory framework for this asset class. As the use of digital assets continues to expand, the SEC will likely continue to develop its regulatory approach.

In conclusion, the SEC’s recent decision is a significant development in regulating digital assets and raises questions about how these assets will be classified and regulated. As the digital asset market matures, there may be a need for clearer regulatory frameworks and standards to protect investors and prevent fraud while allowing for innovation and growth.

 

Source: https://www.financialexpress.com/business/blockchain-sec-removes-digital-assets-from-hedge-fund-rule-what-does-it-mean-for-the-future-of-digital-asset-regulation-3080830/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

Panel Discussion: How to survive and strive in Web3?

Panel Discussion: How to survive and strive in Web3?

Web3 refers to the third generation of the World Wide Web, which focuses on decentralized technologies such as blockchain and peer-to-peer networks. Web3 technologies have the potential to disrupt traditional centralized models and enable greater user control, privacy, and security.

There are a few reasons why Web3 is gaining popularity:

Decentralization: Web3 technologies are decentralized, meaning they are not controlled by a single entity or organization. This can give users greater control over their data and assets and reduce the risk of censorship or interference.

Security: Web3 technologies are designed to be more secure than their centralized counterparts. For example, blockchain networks are secured through cryptographic techniques, making them resistant to tampering and fraud.

Privacy: Web3 technologies can help preserve user privacy by allowing individuals to control their own data and assets rather than relying on a third party.

Interoperability: Web3 technologies are designed to be interoperable, meaning they can work together and exchange data seamlessly. This can enable the development of new and innovative applications and services.

The popularity of Web3 technologies is driven by the potential for greater control, security, privacy, and interoperability in the digital world.

But does the wider audience in the crypto space think the same? How do we survive and strive in the Web3 environment? This topic is covered by a panel of experts at Twitter Spaces on 30th Dec 2022 at 21:00 SGT.

Hosted by Blockcast (https://twitter.com/Blockcastcc) and
Co-Hosted: Bybit NFT (https://twitter.com/Bybit_NFT) and Bybit Web3 (https://twitter.com/Bybit_Web3).

It was moderated by Scott Tripp, Marketing Lead of Blockcast.cc.

With the following guests discussing the Web3 topic:
– Allan, Head of Operation, Moledao (https://moledao.io)
– Anndy Lian, Book Author, NFT: From Zero to Hero (https://anndy.com)
– Grace, CMO of TwitterScan
– Jenny Zheng, BD Lead of Bybit NFT (https://www.bybit.com)
– Yoka, Secretary General of ABGA

In conclusion, here are a few tips that might help you survive and thrive in the Web3 ecosystem:

Keep learning: The Web3 ecosystem is constantly evolving, so it’s important to stay up-to-date on the latest developments. This can be done through online courses, attending conferences, and following industry leaders on social media.

Network: The Web3 ecosystem is still small and tight-knit, so networking with other professionals can be incredibly valuable. Join online communities, attend meetups, and participate in hackathons to meet others in the industry.

Focus on a specific area: While it’s important to have a broad understanding of the Web3 ecosystem, it can also be helpful to focus on a specific area and become an expert in that field. This could be a particular protocol, platform, or application.

Experiment: The Web3 ecosystem is still in its early stages, so there is much room for experimentation and innovation. Don’t be afraid to try new ideas and approaches, and be open to learning from your failures.

Stay positive: The Web3 ecosystem is full of challenges and setbacks, so staying positive and maintaining a growth mindset is essential. Keep an open mind and remain resilient, and you’ll be well-equipped to handle whatever comes your way.

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j