TBW #56: Don't see yourself as too pretty

TBW #56: Don't see yourself as too pretty

Read all about The Big Whale's 56th Premium newsletter 🐳.

Hello Whales and welcome to the little newcomers who have just joined us in the Premium edition! There are more of you every week. Thank you so much 😍

To devour this week

🖊️ Editorial

🗣 Our exclusive news

📡 Survey DAC 8

🖼️ NFT Discovery of the Month


Don't think too highly of yourself 🙄

Brian Armstrong isn't happy 😡.

Engaged in a tug-of-war with the US securities regulator (SEC) over the regulation of cryptos, the Coinbase boss is pulling out all the stops, even if it means using the big guns. Two days ago, the American announced the creation of a crypto derivatives trading platform outside... the United States.

The message is very clear: "Coinbase International Exchange will enable us to continue to serve our customers in the best possible way", explained in particular the man who runs the largest crypto platform 🇺🇸.

A sign that the tensions do not only concern Coinbase, one of the other US heavyweights, Gemini, has also announced the creation of an offshore trading platform for institutional investors.

Beyond the concomitance of the announcements, it is also the geography of these new structures that is interesting. None of these platforms is in Europe.

Coinbase's is in Bermuda and Gemini's is in Singapore.

In itself, the fact that the two American groups did not choose the Old Continent to set up their new business is no tragedy. But it does show that Europe, if it wants to become a real home for crypto projects, will not have to be content to wait and see itself looking better than it is.

It will also have to be pro-active and do a little more than "stable" regulation like MiCA. Because other countries and jurisdictions are also attractive.


👉 Capsule Corp Labs (Ternoa) is working on a Series A

Waiting for the markets to pick up or taking advantage of the period to accelerate? This is THE dilemma facing most crypto projects, and while some have decided to temporise, others like Capsule Corp Labs seem to have opted for the second option. 👀

According to our information, the French company behind the Ternoa protocol (developed on Polkadot) has started work on a new fundraising round, which would be a Series A.

Launched in 2020, Ternoa is a layer 1 blockchain specialising in utility NFTs, notably used in the gaming industry; Time guardian and Virtual regatta are available on Ternoa. 🎮

Capsule Corp Labs is looking to raise around €15 million. Around €10 million would be in Capsule Corp Labs shares, and €5 million in caps, the token of the Ternoa blockchain.

The Series A process is still in its early stages, and given the context (read our survey), the deal could take several months, or even potentially not go through.

Capsule Corp Labs already raised €7.3 million at the end of 2022 as part of an initial round of financing, which was led by the Omnes Capital fund 🇫🇷 , accompanied by two funds specialising in the web3, Revam and DFG.

With this new round of financing, Capsule Corp Labs, which has 60 staff, wants to continue hiring, expand abroad, particularly in Asia. The money will also be used to take on offices in Paris to accommodate the teams and create a showroom to enable product testing.


DAC 8: the EU's lethal weapon for monitoring crypto-taxpayers

By Gregory Raymond (in Paris)

The European Commission is preparing a directive that would prevent crypto holders from circumventing taxation in the 27 member countries.

The European Union continues to drive its crypto agenda. Barely a few weeks after the final adoption of the MiCA regulation by the European Parliament, the Commission has just launched work on crypto taxation, and more specifically on ways to prevent cryptocurrency-related tax evasion.

It's no secret that the tax administrations of the 27 Member States do not have effective tools to hunt down those who cash in capital gains and "forget" to declare them. 💸

According to the Directorate General of Public Finances, only 20,000 French taxpayers declared gains in 2022 (in respect of the year 2021). Although there are no precise official figures, this number is clearly lower than the reality, especially given the figure on the percentage of French people holding digital assets.

According to the latest KPMG-Adan annual report, published in April, 10% of French people will hold digital assets in 2023; it was 8% in 2022.

"It is difficult to know the number of French people (and Europeans, editor's note) who do not declare their income in cryptocurrencies, however by cross-referencing data, we understand that tax evasion linked to these assets is still very significant," confirms Pierre Morizot, co-founder of Waltio, a tax assistant that helps European taxpayers declare their crypto capital gains.

While for some taxpayers there is a clear desire to evade tax, for others it is more the difficulty of the declaration itself that gets them off track (our guide to declaring everything by the book).

The fact remains that the tax authorities don't get their act together when they do the sums. 🤔

"At a time when governments are seeking to finance the ecological transition and curb the socio-economic impact of the health crisis, the capital gains realised on blockchain are looking like El Dorado", PwC already indicated in a report on the subject published in 2021.

According to the American blockchain data analysis company Chainalysis, the French would have realised €3.7 billion in crypto capital gains in 2021.

In theory, this should have brought €1.2 billion into the coffers. Except that the Treasury 🇫🇷 told BFM Business that it had only received €400 million in crypto capital gains tax in 2022 (tax year 2021).

Without getting into big calculations, the shortfall is pretty obvious.

A tried and tested solution: automatic exchange of information

It is to recover this windfall, in France and other EU countries, that the Commission has begun work on its DAC 8 directive.

"States have made great efforts in recent years to combat tax evasion," explains Alexandre Lourimi, a tax lawyer with ORWL, a firm specialising in disruptive technology law. "In the case of financial flows, what has been very effective is the implementation of better administrative cooperation between States, and cryptos will not cut it", he stresses.

The various Member States of the European Union will soon be subject to the 8th revision of the Directive on Administrative Cooperation (DAC 8). This will mainly affect crypto exchange platforms.

"Currently, Exchanges operating on European soil are obliged to report their customers' transactions to the tax authorities where they are based," explains Alexandre Lourimi. "This is effective when the clients are from the same country, but it gets complicated when they are foreign," he adds.

In other words, the French tax authorities are not necessarily aware of the crypto activity of a French tax resident in... Italy. And vice versa.

Except that this reporting will soon be automatically sent to the tax authorities in the customer's country of residence. In practical terms, the French tax authorities will know what taxpayers are doing on the Austrian exchange platform 🇦🇹 Bitpanda without even having to ask.

"The prism of information is very broad, there are obviously the names of customers and their contact details, but also all the transactions carried out during the year, i.e. deposits, withdrawals, cryptos to which they have been or are exposed, crypto-crypto exchanges, crypto-fiat exchanges, staking income or even cryptos received as part of airdrop", lists Alexandre Lourimi. 📡

The adoption of DAC 8 has not yet been validated, but there is a (very strong) chance that it will pass.

With the current timetable, we can bank on it coming into force in 2026. That is, more or less when the MiCA regulation will be fully active.

The tax authorities have until now been tracking down inconsistencies

The tax authorities obviously did not wait for the DAC 8 directive to take action, but the system remains poorly targeted. The biggest fish usually get caught by sending funds to their bank account from a crypto exchange platform.

The alert is triggered by the banks. When they detect a suspicious movement, they are obliged to inform the intelligence services in charge of combating money laundering, terrorist financing and tax fraud. In France, this is TracFin. 👋

Without this, the tax authorities move almost blindly.

But what is meant by "suspicious"?

If you receive an unusual amount compared to your regular flows (for example €100,000 when the largest payments are your salaries), there is a good chance that you will be the subject of a request for information from the tax authorities (read our investigation into the taxman's techniques for spotting fraudsters).

"The tax authorities do not currently have the capacity to track all movements," points out Alexandre Lourimi. "Many taxpayers, particularly those cashing in small or medium capital gains without arousing the vigilance of the banks, probably slip through."

With DAC 8, absolutely all flows will be automatically transmitted to the tax authorities in each client's country of origin, regardless of where in Europe the platform is located 🥸.

The tax authorities will therefore be able to gain a much more detailed view of all taxpayers' crypto portfolios.

There remains, however, the case of non-European platforms (even though, in theory, any platform that has at least one European customer must be registered somewhere in Europe)...

The OECD is preparing a system similar to DAC 8

For platforms operating outside Europe, the Organisation for Economic Cooperation and Development (OECD), which brings together 38 countries (including France), is working on a similar automatic information exchange system.

The name of this system: Crypto Asset Reporting Framework (CARF). It will operate on the same principle as DAC 8 (the latter was in fact inspired by it), but with a much broader target.

Given that this system requires the signing of a multilateral convention between states, its entry into force could take years. "This type of negotiation takes a very long time," insists Alexandre Lourimi.

In the end, crypto accounts will be subject to the same regime as the traditional financial system, which has been obliged since 2014 to automatically exchange all client information with their country of residence.

This is notably what put an end to banking secrecy in Switzerland 🇨🇭.

According to the OECD, the information exchanged between states concerned more than 111 million financial accounts involving almost €11,000 billion in financial assets during 2021.

"The positive side of this is that it will help bring the crypto sector out of hiding, if only from the point of view of banks that are not comfortable with their customers investing in cryptos," believes Alexandre Lourimi. "They will have much less reason to be suspicious when they see a transfer from an exchange platform that cooperates", he continues.

However, we have to ask ourselves the question of privacy in a world where little escapes the surveillance of states and major corporations.

"I would remind you that economic exchanges are an integral part of the private lives of individuals", warns the lawyer.


"Opepen Edition": the NFT collection for May


By Konohime, NFT analyst (in Nantes)

Each month, The Big Whale will analyse a collection of NFTs. For this first one, we've chosen to look at the Opepen Edition by Jack Butcher, known by the pseudonym "Visualize Value".

The rest is available on The Big Whale website. 🐳

This edition was prepared with ❤️ by Raphaël Bloch and Grégory Raymond. The Big Whale is a free and independent media. By supporting us, you are contributing to its development.
Everything that matters in Web3. Each week.
This offer is available until the 30.04.2024. Try insider for free, for 30 days.
All that matters in crypto.
Deciphering, insights, Data. Access the best of the ecosystem.
In this article
No items found.
Read next
No items found.
In this category
No items found.