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Investment Risks 2021

Investors have grown accustomed to putting money in the stock market and seeing it grow. But, there are investment risks 2021 poses that may change that. Low interest rates have a market driver for a dozen years. When the economy gets back on track, rates may go up and end up driving stocks down. And, the recent Covid-19 mutation in the UK reminds us that nothing is secure in the world of infectious diseases and their effects on the economy. After taking into consideration investment risks 2021 may still be a good year but as bit of foresight might be a good idea.

Vaccine-induced Market Euphoria

As the miracle of modern medicine brings out vaccines to fight the pandemic, stocks have rallied. Unfortunately, it will be half a year or more before the virus is under control providing that more vaccines come on line and the vaccines work as promised. Assuming that all goes well with the vaccines, there are still a couple of risks that investors need to consider. One is that policy gridlock will continue on Capitol Hill and the other is that economic recovery will bring on higher interest rates.

Economic Recovery, Inflation, and Higher Interest Rates

Investment Risks 2021
There Will Be Investment Risks in 2021

In a recent interview on Wall Street Week, Lawrence Summers said he expected to see inflation edge up above 2% by the end of 2021 or early in 2022. The Fed can be expected to rotate from preventing an economic disaster to controlling inflation again. And, higher interest rates will drive stock prices down. The other issue is that the tech sector is relatively overbought, even considering low interest rates. We can expect to see a minor tech correction on top of that caused by higher rates. Other stocks in the travel and hospitality sectors will probably see a boost because they have been driven so low. But, government policy is a sticking point here.

Control of the U.S. Senate and Governmental Policy

The Democrats will have the Presidency and have retained control of the House of Representatives. However, the U.S. Senate is still up for grabs. Republicans currently have 50 seats and Democrats have 48. And, there are runoff elections in Georgia for the two remaining seats. If the Democrats take both seats it will be a 50-50 tie and Vice President Harris will have the deciding vote. If the Republicans keep one or two of the seats, we can expect to see Mitch McConnell who runs the Senate return to his policy of obstructing anything that the White House and Democratic House want.
We wrote about the potential for a Biden bull market but all of that depends on congress and the White House working together and the not being continual obstructionism.

Vaccine Rollout Success

The middle of 2021 is a realistic time to see about half of the US population vaccinated. That will let us see some degree of normality return to our lives and the economy. For the poorer countries of the world, it will take longer. Thus the global economy is going to be sluggish for longer than the USA, Europe, Japan, China, and places like New Zealand which is now Covid-19-free.

Geopolitical Tensions

As Trump exits the White House the troubles with China will not go away. The general consensus is that the US, Europe, and other democracies need to stand up to China’s ambitions for global cultural, economic, and military dominance. And, after the Russian hacking of historic proportions, we can expect to see tension on that front for the foreseeable future. The re-strengthening of traditional US alliances is sure to happen and there will likely be an acceleration of the “anywhere but China” movement. Some of these will be helpful to investments in the long term but may cause problems in 2021.

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How Can a Stimulus Help the Economy?

The Covid-19 pandemic sent the US economy into the worse fall since the Great Depression. Things have still not recovered and whole sectors of the economy suffer substantial, lasting unemployment. Congress is haggling over stimulus measures. How can a stimulus help the economy? Although there is a legitimate concern about borrowing more money on top of an already-huge Federal deficit it did not seem to bother anyone when they passed the Trump tax cuts. And those did not result in a substantial increase in hiring or wages. We look at the issue of stimulus payment in its various parts. The first distinction to be made is the difference between relief and stimulus.

Relief vs Stimulus Payments

The pandemic has caused many businesses to close and workers to lose their jobs both short and long term. People who need to stay at home to help reduce the spread of the virus often need financial help as their life goes paycheck to paycheck. Short term payments in terms of cash, unemployment payments, rent relief, and protection from foreclosure are all relief measures and are important to help get us through the crisis. But, these measures are generally not designed to stimulate the economy. The prospect of a “K-shaped” economic recovery is real. Internet-related work has not suffered so much as person to person contact work. Computer programmers can work from home but waitresses get laid off. Both may be helped by relief measures but only control of the virus will get the waitress back to work, buying groceries, and paying rent. Over the long haul, other stimulus measures will be those that create jobs and opportunity. Think infrastructure improvement. This encompasses roads, bridges, ports, mass transit, and airports. It also includes things like moving to a nation-wide 5G network.

How Can a Stimulus Help the Economy?

How Can a Stimulus Help the Economy?

The Covid-19 pandemic has sucked trillions out of the US economy and threatens to send millions into life-long poverty before vaccination measures take hold by the middle to end of 2021. While short term relief is critical for many, stimulus measures to recreate jobs, create new industries, and provide for better pay with greater security are essential. Stimulus measures need to be designed to reward people for working more and spending more. Such measures will drive the economy higher and create new jobs.

Specific stimulus measures that would help include aid to state and local governments, support for businesses, further unemployment insurance, rebates to households, and specific aid to affected industries. At about $2 trillion these measures would get us through until vaccines create herd immunity. The Congressional Budget Office estimates that measures in this range would allow the economy to get back to its pre-pandemic level by the middle of 2021.

How Can a Stimulus Help the Economy - Economic Growth

Over the longer term, Buy American measures, infrastructure projects using American labor, tools, and materials, and wholesale retraining to adapt the American workforce to the rest of the 21st century are needed to move the economy forward and protect America’s economic, political, and security position in the world. Because interest rates are currently at or near zero, this is the best time to borrow and stimulate the American economy. While we can sympathize with lawmakers who worry about borrowing more money, we are currently more concerned about millions of Americans whose only recourse for getting food are the dwindling resources of food shelves and for whom Christmas presents for the kids are a distant memory. A greater concern right now than fussing about the budget is to stimulate the American economy to create jobs that pay well, create strong consumer spending, and energize the country.

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IRS Bitcoin Trap

The IRS tax form for 2020 will ask if you bought, sold, or had any financial interest in any virtual currency. You will need to answer yes or no. This IRS bitcoin trap is another step in the Internal Revenue Service tracking down those who did not report money gained from buying and selling cryptocurrencies. The question will be near the top of Form 1040 and hard to miss. It appears that the IRS is going to be treating hiding cryptocurrency gains like they have hidden offshore bank accounts.

IRS Bitcoin Trap

The precise language on Form 1040 will be this:

At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?

You can only mark yes or no as answers. The obvious concern here is that if you say no and are later found to have had cryptocurrency gains, you will be in trouble for tax evasion for not having paid and for perjury for denying any gains on your Form 1040. Any problems might not come right away but now that the IRS gets reports from cryptocurrency dealers, they will probably find out in the long term.

Cryptocurrencies as Capital Assets

Although the details of cryptocurrency investment regulation are still being worked out, the IRS has considered cryptocurrencies to be capital assets since 2014. This puts your Bitcoin investments in the same category as stocks and bonds. As such, gains are taxed as short term capital gains or long term capital gains depending on how long you held the asset before selling. Incidentally, money you make mining cryptocurrencies is also subject to taxation.

IRS Bitcoin Trap
IRS Bitcoin Trap

IRS Access to Cryptocurrency Info

Coinbase is the largest virtual currency custodian in the world. In 2018 the IRS forced them to turn over information about thirteen thousand account holders. We can expect the IRS to continue to pursue this course of action with the goal of eventually having access to all cryptocurrency accounts. That will especially be the case as Bitcoin and others move into the mainstream and are subject to regulation similar to regular currencies. For the 2019 tax return, the IRS listed the same question on Schedule 1 for reporting adjustments to income and additional income. Because many people do not file a schedule 1 form the question was not answered. It will be now that it is on the first page of Form 1040.

Should you choose to report cryptocurrency transactions, holdings, and gains, Form 1040 will provide instructions. The tricky bit is that people who use cryptocurrencies as they were originally intended, as a currency for day to day transactions, will have a good many transactions to figure out and decide if they had a capital gain or loss and if the gain or loss was short term or long term! Then you will be reporting on Schedule D of the 1040 form.

Do I Get Taxed for Holding a Cryptocurrency?

If you were fortunate to have purchased Bitcoin years ago and still have several, you have an “unrealized” gain and are not subject to taxation. However, you will be subject to IRS reporting requirements on Form 1040. The sticking point is if you cashed out Bitcoin that you purchased for $100 for $19,000 and did not report a taxable gain, you probably should consult a tax accountant or tax lawyer and decide how to deal with the issue.

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Earning Potential of an Investment

The point of investing is to make money on your money. Judging the earning potential of an investment is basic to making this work. This is the case for both long term investors who buy and hold for years and for stock traders who attempt to time the market in search of short term profits. The earning potential of any investment depends on appreciation in value, realized earnings in the short term (dividends), and the value of the currency in which the investment is denominated. The last factor is affected by inflation and the volatility of the Forex market.

Judging the Earning Potential of an Investment

Your investment time horizon is a major factor in how you judge the earning potential of an investment. Stock traders use technical analysis tools to read the sentiment of the stock market but also use market sentiment data from other sources. This is because they are only concerned with how the price of a stock will perform in the near term when they decide to buy, sell, or trade options. On the other hand, long term investors look for intrinsic value. This is potential of an investment to make money over the long term. Using tools like the CAPE ratio a long term investor will purchase a stock during a market downturn because the company has long term potential that is not reflected by the current price.

Profit Potential in Business and Long Term Investing

Investopedia discusses whether profit or growth is more important for a business.

To be successful and remain in business, both profitability and growth are important and necessary for a company to survive and remain attractive to investors and analysts. Profitability is, of course, critical to a company’s existence, but growth is crucial to long-term survival.

Profit in terms of money in the bank is important for keeping a business afloat during good times and bad. But, without assets being plowed back into R&D, expansion, and new products, a company will not grow. The goal of a long term investor is to choose investments that have both qualities namely a margin of safety in terms of cash and potential for steady growth over the years.

Market Timing and Profit

The market loves a stock that shows increases in its quarterly earnings. Thus, quarterly profits are a major driver for short term stock prices. The key to making this work for short term investors and traders is to correctly anticipate quarterly earnings in comparison to estimates. The stock price going into the release of financial a report will have determined the prevailing stock price. That price will jump up or fall down based upon the released earnings.

How Long Will Profits Last?

Warren Buffett was famous for avoiding tech stocks until he became a huge investor in Apple. His concern was always that companies whose profits were based on advanced technology could not guarantee that their proprietary technology would stay in the forefront. He finally invested in Apple because he believed that Apple had a strong brand name and following. This puts it into the same category as Coca Cola and some of Buffett’s other favorites. These stocks tend to be good long term investments. When looking at the earning potential of an investment, investors are wise to follow Buffett’s lead and beware of investments that depend on a momentary lead in technology or companies without a strong brand name and following.

Another concern for offshore investors is the value of the currency in which a stock is denominated. The stock may go way up but if the currency takes a nose dive, that does not help. Sticking with ADRs is a useful way to avoid this problem as American Depositary Receipts are priced in US dollars.

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How to Make Safe Investments

In the midst of a global pandemic, the stock market crashed and then recovered to reach record highs. This has happened despite a grim economic picture. The disconnect between the market and the economy has many investors worried about how to make safe investments going forward. What are the safest investments today? Are there any safe investments with high returns? Are there any safe investments for seniors? And, what are some quick return investments for those willing to jump into and out of the market? What is the safest way to invest money today?

Safest Way to Invest Money

The safest way to invest money is to put it in a bank account in the USA. The Federal Deposit Insurance Corporation insures each and every account up to $100,000. This applies to checking and savings accounts as well as certificates of deposit. The next best choice for safety is to purchases US Treasuries. They are backed by the US Government. In each case, you are accepting low interest rates in return for safety of your investment capital. If you are looking for AAA corporate bonds, Johnson & Johnson and Microsoft are rated AAA. These are not insured but safe investments.

Safe Investments for Seniors

The best investment advice for seniors is to rotate out of risky, growth investments as retirement nears. This means moving into value stocks, bonds, CDs, and US Treasuries. You are giving up the chance for faster gains but ensuring that your investment capital does not disappear during a market crash just when you need it to survive. The chief worry with this approach in an era of extremely low interest rates is that you will outlive your savings. Thus, many experts suggest that you keep part of your portfolio in value dividend stocks with the possibility of continued growth over the years. You can take the dividends as income or use a dividend reinvestment plan to keep growing that part of your portfolio.

How to Make Safe Investments
How to Make Save Investments

Quick Return Investments

If you are looking for a quick return on your investments, you are trying to time the market. This rarely works over the long term but there are times when quick returns are possible. One of these happened early in 2020 when the Covid-19 pandemic caused the stock market to crash. Using the CAPE ratio as a guide, investors could see that the crash had taken value stocks down too far considering their long term value. This is the essence of intrinsic value investing, discovering stocks that have long term potential that outshines their current market prices. This approach can be very profitable over the long term or provide good short term profits as well. However, the conditions need to be exactly right for it to work in your favor.

Investment Calculator

If you want to know how much an investment will return, you can use an investment calculator such as the one at This tool helps you by calculating compound interest or appreciation for predictable investments. It can be applied to long term CDS, a savings account, US Treasuries, AA and AAA bonds, and dividend stocks that have stood the test of time. It is of no worth if you are investing in penny stocks during a pump and dump scheme in which you are led to believe that last year’s 20% gain will be repeated every year into the distant future.

Safe Investments with High Returns

The safest investments rarely offer high returns. But, dividend stocks that have paid dividends for decades or even more than a century are safe and often provide growth opportunities. Despite the use of the terms growth stock and value stock, these are not exclusive categories. Over the long term value stocks as a group tend to outperform growth stocks as a group. This is because so many growth stocks fizzle out or only provide short term growth.

Choosing Your Investment Wisely

Apply what you know in life and in business to your investments. Peter Lynch who ran Magellan Fund decades ago gave a good example. In the late 1970s a popular investment was to buy and lease railway boxcars. When this was done correctly the investor could depreciate the value of the boxcar and gain income as well. This sort of investment was sold to professionals like doctors who made lots of money but had little time to study investments. The problem with the investment was that too many investors never found anyone to lease their boxcars.

During the same time, the drug Tagamet (Cimetidine) was discovered. This acid-blocker absolutely changed how doctors treated stomach and duodenal ulcers. The drug sold like hotcakes and Smith, Kline & French stock went up like a rocket. But, doctors who saw this happening in their professional lives were still buying boxcars and losing money while not buying stock where their expertise should have given them insight.

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Your Investments and the Weakening Dollar

The dollar has fallen by an eighth against a basket of currencies since its high point in March. How will a weakening dollar affect your investments? The last point of comparison was in 2017. Why is the dollar falling? Will the current trend continue? And, how should you position your investment portfolio to account for a weakening dollar?

Why Is the Dollar Falling?

The dollar is a safe haven currency for people all over the world. When times are difficult, investment tends to flow into the USA and strengthen the dollar. Now that vaccines are expected to help stop the pandemic global optimism is on the rise and this strengthens investment options other than the USA.
In addition, the US Federal Reserve has promised to go “all in” on keeping interest rates low, buying bonds, and printing money to keep credit flowing and the economy from going into free fall. The prospect of interest rates being low for the long term weakens the dollar. And, the Biden administration will most-likely push for more financial support across the board and for low interest rates into the long term future. Investors looking for high returns will end up looking to Europe or Asia for investment opportunities.

Will the Weakening of the Dollar Continue?

A hallmark of the Trump administration has been the trade war with China and high tariffs. This has tended to strengthen the dollar. Because Biden is more likely to rely on other means of dealing with China, consumers will be paying less for imported products, global growth will be positive and the dollar will continue to fall.

As we have frequently noted, a weak dollar is not a bad thing for American industry and tends to support exports. Thus the dollar will fall until it hits a level where it helps American industry and then it will stabilize. Meanwhile the price of oil will be cheaper in foreign currencies as will other commodities that are routinely denominated in dollars.

Because not all nations prefer a surge in their currency versus the dollar we can expect central banks to take action, which will modify the picture.

Because the pandemic is the root cause for effects on the global economy and currencies, we can expect all of this to continue for months as the disease worsens in the winter months, vaccines take months to be administered in sufficient quantity and people are convinced to abide by common sense precautions to drive down the incidence of Covid-19.

How Should You Invest with a Weakening Dollar?

The US economy is going to worsen before getting better. The longer Congress waits before passing more broad-based stimulus measures the worse it will be. To avoid having your investments hurt by a weakening dollar look offshore. You can purchase ETFs that track offshore stocks or bonds. You can increase your investments in US multinationals that have huge offshore footprints. And, you can move savings into foreign currencies or purchase commodities that will benefit from a falling dollar. For most folks, US multinationals or ETFs in the USA that track foreign stocks are easier to invest in and get out of and don’t require you to learn Forex or commodity trading!

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What Is the CAPE Ratio?

The CAPE ratio averages out the P/E ratio over a ten year period. This acts like important moving averages to reduce the influence of fluctuations in the economy and the market. CAPE is an acronym for cyclically-adjusted P/E ratio and was made popular by Robert Schiller, an economics professor at Yale University. We recently wrote about the dangers of a high P/E ratio. Using the CAPE instead of the standard P/E ratio reduces this risk. While the P/E ratio shows stock price divided by earnings per share the CAPE averages out the stock price and earnings over a decade. This measure is more commonly applied to market indices like the S&P 500, NASDAQ, or Dow Jones industrial average than to individual stocks. As such it is a useful indicator of an over-priced or underpriced market.

CAPE Ratio Formula and What It Tells You

Here is how to calculate the CAPE ratio.

CAPE Ratio = (Share price ten year average adjusted for inflation)
divided by ten-year inflation-adjusted earnings

This approach is useful for long term investors who use intrinsic stock value as a guide. The CAPE ratio for individual stocks gives you a better picture than the immediate P/E ratio of how good an investment will be over time.

Although Professor Shiller has popularized the CAPE in recent years, it was first suggested by Benjamin Graham and David Dodd in the 1930s in their book, Security Analysis. Shiller and John Campbell used the approach in the run up to the dot com crash and accurately predicted how badly the market would fall due to its being overpriced in the late 1990s.

The limitation of the CAPE, like the P/E ratio is that it is backward-looking and does not take into account new technology or trends.

CAPE Ratio 2021

Will the CAPE ratio be useful as we move into 2021 with the pandemic peaking and the economy tanking? The value of the CAPE ratio is that its value at any given time is closely correlated with the prospects of a security over the following 20 years. Thus, it may not give a lot of insight into if and when there will be a market crash in 2021 or a raging bull market. But, it does tell us what to expect from any given sector, stock, or market over the coming years. Since long term investing depends on holding stocks for seven to ten years or more, the CAPE is useful for long term planning. If you believe that stocks are hugely overpriced in relation to the current CAPE ratio you may be able to predict a correction or crash but not the exact timing.

NASDAQ Cape Ratio

Over the last few years the CAPE ratio for the NASDAQ 100 has consistently come in higher than the P/E ratio. P/E ratios the tech giants in NASDAQ have been high over the last few years. This indicates the potential for corrections. The higher-still CAPE ratios indicate the potential for long-term corrections. This would most-likely happen as interest rates rise, society comes out of the Covid-19 pandemic, and work-from-home becomes an option instead of a necessity.

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Biden Bull Market Investments

The new president takes charge on January 20, 2021. We expect to see the stock market respond with a rally for value stocks and those connected to infrastructure investments. A split Congress will likely delay any tax increases and interest rates are likely to remain low for a long time. The pandemic will subside with multiple vaccines available and the economy will improve which will drive value stocks higher, perhaps at the expense of tech stocks that have benefited from stay-at-home work.

Low Interest Rates

Low interest rates have been a major driver for the stock market. Bonds and bank CDs offer little return on investment capital making stocks the only investments that offer decent returns. Until the economy has recovered, which may take years, interest rates are likely to remain low and keep driving money into the stock market. Negative interest rates would only do so more rapidly.

Infrastructure Investing

The sorry state of American infrastructure needs to be addressed and likely will be by the upcoming administration. This is likely to be largely a “Buy American” effort that will stimulate the economy, provide needed jobs, and spread prosperity throughout the country. Although roads, bridges, airports, and ports are commonly noted to need uplifts, advanced technical efforts like upgrading to 5G will also benefit.

No Tax Increases

The disparity between the rates normal people pay in taxes and what the super-wealthy pay has been in public discussion for some time. However, to raise corporate taxes and plug loopholes for the super-rich, the Democrats need to control both houses of congress. Right now they are two short of a 50-50 tie. Because Vice President Harris can vote to break a tie, the Democrats need to take both senate seats that are in run-off elections in Georgia. Although they may flip one of them, taking both seems like a long shot. As such we expect the Republicans to keep control of the Senate and block any efforts at increased taxes on your investments.

Biden Bull Market Investments- Charging Bulls
Running of the Bulls, Pamploma

The Pandemic Will Subside

As painful as the Covid-19 pandemic has been and as burdensome it has been on the economy, it will subside. There are three vaccines (and counting) ready for review and possible initiation of vaccinations by the end of December 2020. Producing workable vaccines in less than a year has been barely short of magic considering that the process typically takes a decade or more. Everyone does not need to get vaccinated. If the number of folks who get vaccines plus the folks who have been ill and have recovered gets to the 70% range, the pandemic will begin to subside. This will allow life to start returning to normal. That won’t require any laws to be passed to political arm-twisting. Money will start to flow and value stocks, especially, will benefit.

Democrats Tend to be Better for the Stock Market

The stock market has tended to do better when a Democrat is in the White House and so does the economy. This is generally because there is more money being spent and spread around. We don’t expect the Biden administration to be any different. For some thoughts about potential Biden bull market investments, take a look at what The Motley Fool writes about stocks to look at for a Biden bull market.

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Cryptocurrency Investment Regulation

Those who purchased cryptocurrencies like bitcoin when they were a few dollars each have become rich. And, those who purchased bitcoin at the end of the 2019 pump and dump lost their shirts as the cryptocurrency fell from nearly $2000 each to the $600 range. Now that the pandemic has raised havoc in the economies of the world, bitcoin and other cryptocurrencies are soaring again. Cryptocurrencies are a concern to governments around the world because one can buy and sell, transfer assets, and never been seen. Terrorists and the drug trade are believed to benefit from the hidden nature of cryptocurrency trading. While many would like Bitcoin and other cryptocurrencies to move into the mainstream, regulation will be necessary to protect investors and reduce the attractiveness of cryptocurrencies to those who want to hide money.

Cryptocurrency Investment Regulation

A major issue for cryptocurrency investment regulation is how to trade bitcoin and others. Are they securities, commodities, or currencies? The Library of Congress Law site provides insight into how cryptocurrencies are treated, avoided, regulated, or ignored around the world.

One of the most common actions identified across the surveyed jurisdictions is government-issued notices about the pitfalls of investing in the cryptocurrency markets.  Such warnings, mostly issued by central banks, are largely designed to educate the citizenry about the difference between actual currencies, which are issued and guaranteed by the state, and cryptocurrencies, which are not.  Most government warnings note the added risk resulting from the high volatility associated with cryptocurrencies and the fact that many of the organizations that facilitate such transactions are unregulated.  Most also note that citizens who invest in cryptocurrencies do so at their own personal risk and that no legal recourse is available to them in the event of loss.

Before cryptocurrencies are accepted into the financial mainstream, they need to be regulated. The report summarizes how this has been done in 130 nations across the world.

Cryptocurrency Investment Regulation

Cryptocurrencies as Securities, Commodities, or Currency

Who regulates a cryptocurrency and how they do so depends on what you consider this type of asset to be. looks at this issue. In the EU central banks have noted that cryptocurrencies do not fit the legal definition of a currency as they are digital representations of value and not issued by central banks or other like institutions. However, the European Court of Justice said that for tax purposes they should be treated as currencies.

Because securities are tangible proof of ownership of debt, the Chairman of the US SEC said that cryptocurrencies do not qualify as they don’t represent ownership.

In regard to cryptocurrencies as commodities, regulators have noted that cryptocurrencies do not represent anything of underlying value such as with coffee, gold, or natural gas. Nevertheless, the US Commodity Futures Trading Commission said in 2018 that in certain instances cryptocurrencies are commodities. In fact, you can trade Bitcoin futures on the Chicago Mercantile Exchange.

Because this issue is still up in the air, two nations have moved to qualify cryptocurrencies as Digital Ledger Assets (DLTs). They have both enacted laws regulating cryptocurrencies within their jurisdictions using this definition.

Cryptocurrency Sales and Taxation

Although the USA does not yet have a strict definition of what a cryptocurrency is for regulatory purposes, the IRS has made it clear that profits from selling bitcoin and other cryptocurrencies are taxable either as short term or long term profits, depending on how long you have held them before selling.

Regulation and the Future of Cryptocurrencies

The general consensus of experts is that regulation will have a dampening effect on the wide swings in monetary value of cryptocurrencies. It will probably have a beneficial effect on the safety of holding cryptocurrencies as exchanges will likely need to open their books to regulators and have better guarantees that assets to not disappear overnight with a couple of computer keystrokes!

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