Crypto Industry Battles to Exempt NFTs, DeFi From Tax Reporting Rules

More instability in crypto world 

Crypto Industry Battles to Exempt NFTs, DeFi From Tax Reporting Rules.  The OECD is trying to introduce new rules to stop crypto being used to stash assets out of sight of the taxman.  

By Jack Schickler in Coindesk 

Crypto industry representatives pushed back at attempts to make them report details of NFTs, decentralized finance (DeFi) transactions and retail payments to tax authorities at a meeting of the Organization for Economic Co-operation and Development (OECD) in Paris on Monday.

Under existing rules, known as the Common Reporting Standard (CRS) – whose U.S. equivalent is the Foreign Account Tax Compliance Act (FATCA) – banks are required to identify any account holders who are tax residents abroad and send their details to the appropriate authorities to make sure they aren’t evading tax.  ...'

But the industry has argued these requirements are a lot harder to meet for NFTs whose price – unlike, say, stocks or gold – isn’t known at any given time. They also point out that similar non-digital assets such as paintings aren’t included in existing rules ....  '

The Intelligent Crypto Thesis

Don't understand this as yet, but reaching out.  

Opinion Essay

AI and machine learning will usher in new forms of digital assets from intelligent NFTs to self-determining DeFi protocols.   This essay is part of CoinDesk's 'Big Ideas' series.

By Jesus RodriguezLayer 2   Jun 5, 2022 at 4:08 p.m. EDT in Coindesk

“Software is eating the world” has become one of the iconic phrases of the last decade of the software industry. Quoted in 2011 by software legend and venture capitalist extraordinaire Marc Andreessen, it synthesized the idea that companies that operated mostly in the physical world were transitioning to the digital economy in a trend that will essentially transform every company as a software company.

Jesus Rodriguez is CEO of IntoTheBlock, a blockchain and cryptocurrency market analysis firm. This article is a preview of a talk he will give this week on the Big Ideas stage at Consensus 2022 in Austin, Texas.

In recent years, the evolution of machine learning (ML) and artificial intelligence (AI) has permeated all areas of the software industry, leading many experts to claim that “machine learning is eating software.” Crypto and digital assets are rooted on the foundation of code and programmability and, consequently, are likely to be influenced by ML-AI trends. The intersection of ML-AI with digital assets is likely to usher in a new era in which intelligence becomes a native component of crypto assets.

The idea of intelligent crypto assets is conceptually trivial but full of practical challenges. Which are some of the fundamental ML trends that can rapidly impact the next generation of crypto assets? How about the main scenarios that can benefit from intelligence capabilities in crypto or some of the key technical challenges that need to be overcome for crypto to become intelligent. This essay explores some of these ideas and develops a thesis about the potential of the intersection of crypto and ML.

Only crypto can be natively intelligent

An important point to realize when thinking about AI-ML in the context of crypto-assets is that crypto is the only asset class in history that has the potential to become natively intelligent. AI-ML capabilities in traditional asset classes such as commodities or equities are implemented in vehicles like robo-advisors or quant strategies that live outside the asset itself. Even though there is an obvious role for those vehicles in the crypto space, crypto assets can natively embed those AI-ML capabilities in the assets. This benefit is, obviously, a side effect of the programmable and digital capabilities of crypto. Crypto assets are based on code and that code could take the form of AI-ML models.   .... ' 

Hybrid Smart Contracts

 Uses and considerations:

5 Ways Hybrid Smart Contracts Are Changing the Blockchain Industry  by 7wData

For years, the blockchain industry has been defined by the excitement around smart contracts, or tamper-proof digital agreements that automatically execute when a certain condition is met. Typically associated with blockchains like Ethereum, smart contracts allow developers to build decentralized applications or “dApps” that recreate all sorts of products without the need for a rent-seeking middleman. However, over the last year, smart contracts have begun to evolve.

While developers are still building smart contracts on top of blockchains like Ethereum, they’ve also begun to combine them with an entirely new piece of technology: oracles. Oracles are entities that enable blockchains to interact with data and systems from the traditional world. 

As a result, “hybrid smart contracts”, or smart contracts that combine on-chain code with off-chain oracles, have taken the world by storm due to the enhanced functionality they enable for dApps. Today, hybrid smart contracts power several new use cases across dozens of industries, and the combination of blockchains like Ethereum and popular oracle networks like Chainlink are now securing digital agreements that handle tens of billions of dollars in user funds.

Here are five exciting ways in which the hybrid smart contract model is transforming the blockchain industry. 

Today, the hybrid smart contract model forms the backbone of much of the decentralized finance (DeFi) industry, which seeks to recreate traditional financial products using decentralized architecture to honor financial terms. Hundreds of popular DeFi applications that let users borrow, lend, trade, save, and create assets now rely on an oracle network to fetch, validate, and deliver aggregated data from the real world. This data then determines how smart contracts execute and settle on blockchains. 

For DeFi giants like lending apps Aave and Compound, oracle networks can crowdsource accurate price data in a highly reliable and tamper-proof manner. Price data is the lifeblood of DeFi and is used to execute liquidations, determine lending rates, and verify limit orders by providing the fair market valuation of cryptocurrency, commodities, and more.

Hackers know this and often try to manipulate price data as a way of breaking a smart contract, causing great harm to DeFi apps that rely on low-quality data or insecure oracle mechanisms. To avoid this problem, many DeFi apps have turned to oracle networks that fetch data from premium data providers and that consist of nodes that are operated by professional DevOps teams.

The rise of the hybrid smart contract model has also been a boon for DeFi developers; instead of trying to figure out how to build infrastructure to securely source price data for their smart contracts, they can focus on their products and simply plug into an existing decentralized oracle network for their data when ready. In the same way that apps like Uber combine services like Twilio for messaging, Stripe for payments, and Google Maps for location, DeFi apps are being built by combining on-chain smart contract code with oracles for off-chain price data. 

Beyond DeFi, the hybrid smart contract model is being used to build all sorts of interesting applications that can change people’s lives for the better. Decentralized oracle networks now have the ability to deliver data onto blockchains about the weather from sources like the National Oceanic and Atmospheric Administration via Google Cloud or Accuweather, meaning projects like Arbol can build parametric insurance contracts that automatically pay out when a certain weather condition is hit. ... '