That airdrop is going to cost you

Good morning! Welcome to The Daily Moon. New York’s two-year ban on PoW mining won’t magically save the planet. New permits won’t be issued and existing ones won’t be renewed when due. However, those already mining are not being forced to shut shop. TL;DR Emissions stay intact. As you were. 

About That Terra Airdrop…

It’s like Luna investors can’t sit still for a minute. The token crash and revival were still being digested. And now there’s a tax hit. Close to 160,000 Indian investors face up to 30% tax on the recently airdropped LUNA 2.0. 

Investors cannot write off the massive losses, because Indian tax laws don’t allow it. They’ve lost money and the tax bill has come due. 

Taxes piling upThe Indian finance minister imposed a 30% tax on all income earned from crypto assets. The new rates have been applicable since April 1, 2022. This means:

• If you made a loss on Luna 1.0 token and measly profits on your LUNA 2.0 tokens, you cannot deduct your losses from those profits. 

• Airdrops or token distribution could be construed as potential income, even if they are unrealised. Hence, they’ll be subject to up to 30% in taxes. 

So when you file taxes for this year, the tax payment will be mandatory. But remember that 30% is the maximum taxation. The actual taxes will depend on which income bracket you fall under. 

Two stages For crypto assets, the tax will be imposed through stages:

1. When you receive the airdrop, you have to pay tax based on the valuation at the time.

2. During sale, up to 30% of tax will be imposed on the incremental income. 

For instance, you’re a part of the hodl crowd. You’ve got an airdrop of tokens worth Rs 1 lakh. But the token price falls and is now worth Rs 20,000. You still have to pay tax on the Rs 1 lakh. Even if the value has ebbed away. 

Now, in another possibility, let’s say your token value increases to Rs 1.2 lakh. You have to pay tax on the original Rs 1 lakh and 30% on the Rs 20,000 you just made. 

ICYMI Luna 2.0The Terra-Luna crash wiped off $40 billion of investor money. A hard fork split the system into Terra Classic (Luna Classic token) and Terra (Luna token). Its newly launched token Luna isn’t faring any better. It is trading at ~$5 levels from its high of ~$20. 

Dubai’s Crypto Pull

Crypto.com is entering Dubai. UAE has been going all out to woo crypto firms. In a bid to become the global crypto capital, the country’s regulator has even launched its metaverse headquarters. 

Laying the foundationAt a time when the world is divided on crypto, the UAE has clarity. It wants to become the destination for crypto firms. 

To enable changes, the UAE set up VARA, or the Virtual Assets Regulation Authority, in March. Crypto firms that were tired of regulatory uncertainty chose to shift to the UAE. The country has made it easier to open companies and the tax rates are lower. Polygon, FTX, Binance, and Bybit are among the many firms setting up a base in the UAE. Binance is also stepping up hiring in the region. 

Dubai’s designsThere are a couple of reasons ‌UAE through Dubai is cozying up to crypto. 

1. The world is moving on from oil. Electric cars and green hydrogen aren’t distant specs on the horizon anymore. This means the country needs other sources of revenue.

2. The unease in Hong Kong has meant that companies are looking for a city that gives them easy access to Asia and is not too far away in terms of distance and time to either Europe or the US. 

Learning From The Past

TRON has learnt its lessons from Terra’s $40 billion crash in May. The blockchain is now over-collaterised, meaning that it has set aside funds higher than required.  Launched on May 5, TRON’s stablecoin USDD has a current market supply of $668 million. Strong backingTo comfort investors. As against a minimum collateral ratio of 130%, USDD’s present backing stands at 218%. Around $1.4 billion of Bitcoin, Tether, and Tron’s native digital asset TRX back the USDD in circulation.

Bringing the pegAs a stablecoin, the norm is to maintain a 1:1 ratio with a fiat currency like the US dollar. Some coins like Tether play it safe by having a dollar in reserve for every USDT that is circulating. 

But that's not how algorithmic stablecoins like USDD or TerraUSD function. They rely on their twin tokens to maintain the needed peg. The Bitcoin reserves in TRON’s case will come in handy. 

Scam-verse Is Thriving

The 2021 crypto craze meant good times for scammers. More than 46,000 people lost over $1 billion in crypto scams in that year. This was a time when Bitcoin hit an all-time high of $69,000. 

Falling for itFor most victims, it was an innocent start. They saw an ad, a message, or a post online. And then it all went south. Some stats stand out:

• Every $4 out of $10 lost in scams was because of Facebook, Instagram, and WhatsApp. 

• Just the first three months of 2022 saw investors losing $329 million to fraudsters.  

• People between the ages of 20-49 were scammed 3X more than seniors. The loss per transaction was $2,600 per transaction. 

• Bitcoin, Ethereum, and Tether were the most stolen. 

Talking about scams, Australians lost $113 million in 2022 alone from crypto frauds.

Ape woesThe Bored Ape Yacht Club (BAYC) is hacked, again. The attacker scuttled with NFTs worth 200 ETH, or about $360,000. Community members blamed Discord for the server hack. Not the first time, though. In April, Ethereum NFTs worth $2.8 million were stolen from BAYC’s Instagram page. 

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Who are we? There is a lot happening in our world. Everything has layers, and each layer has to be carefully peeled so you, the reader, know how the world of money is changing every day. That’s our promise. Help you unpeel the onions, which are the public markets in the US, India, and crypto, so that you know just a little more.