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The United States Internal Revenue Service is developing “hundreds” of soon-to-be-public cases involving crypto, according to a Bloomberg Tax report citing division chief Jim Lee.

The cases being built reportedly involve crypto-to-fiat “off-ramping” transactions, as well as individuals being paid in crypto and not reporting it as income.

The report follows news that the IRS was granted the power to issue a “John Doe” summons to M.Y. Safra Bank. This provided the tax authority with the ability to obtain data on customers of the bank’s partner and crypto prime broker, SFOX.

In March, an IRS official said to “expect more” broad information requests to crypto exchanges — such as those previously seen involving Coinbase, Kraken and Circle.

The IRS has notably made clear its plans to ramp up hiring across the agency. Lee has now said the tax authority is expecting a “more significant” hiring increase for the remainder of the fiscal year.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Quick Take

• Coinbase generated $576mm net revenue, ($545)mm net loss, and ($116)mm Adjusted EBITDA
• The company also reported $159bn quarterly trading volume and $101bn assets on platform 
• Cash & cash equivalents fell to $5.01bn from $5.68bn from Q2’22 to Q3’22 
• Trading closed at $55.80, a 6.8% decline in 1-day trading, but went up to $58.55 in after-hours trading 
• Recently dismissed CPO  Surojit Chatterjee as part of ongoing restructuring efforts 

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Singapore’s financial regulator granted HashKey Group’s investment arm a license to operate in the city state. 

The firm announced today that it has received approval for a Capital Markets Service license from the Monetary Authority of Singapore. HashKey Capital Singapore will offer fund management services in the country.

“Once the CMS license is granted, HashKey Capital will be able to offer its services to institutional and accredited investors,” said Deng Chao, CEO of HashKey Capital Singapore, in a statement. 

HashKey Group founded its venture arm in 2018, and claims to have managed more than $1 billion to date. HashKey Capital also received a license from Hong Kong to manage a portfolio entirely composed of digital assets in September. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Standard Chartered-backed crypto infrastructure provider Metaco has teamed up with insurer OneDegree to provide insurance to digital custody users. 

The deal will see OneDegree provide digital wallet insurance to financial institutions using Switzerland-based Metaco’s Harmonize custody platform, according to a release from the companies. 

Metaco focuses on developing custody and trading platforms for regulated financial institutions, including BNP Paribas and Citigroup, tapping the market for such services as banks and asset managers move into crypto. The tie-up with OneDegree, a Hong Kong-based insurer, means Metaco clients can also access insurance and risk management services, according to the release.

Providing institutional-grade crypto custody services is a growing market at the moment. BNY Mellon, the world’s largest custodian bank, last month started its own offering. On Monday, private equity group Apollo Global Management announced a partnership with Anchorage Digital to store the large majority of the digital assets the firm handles for its clients. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Most bitcoin mining stocks tracked by The Block fell in the markets on Thursday. 

Bitcoin was trading at around $20,190 by market close, according to data from TradingView.

BTCUSD Chart by TradingView

The biggest declines were from Iris Energy Ltd. (-10.94%), Stronghold Digital Mining (-9.56%) and Riot Blockchain (-6.13%). 

Here’s how crypto mining companies performed on Thursday, Nov. 3:

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Miners in Quebec may soon be looking off-grid for power solutions.

Public utility provider Hydro-Quebec cited increased electricity demands over the next decade as it filed a request with the region’s electricity transmission and distribution regulator, Regie de l’energie, to suspend services for the blockchain industry.

The request came as a part of the provider’s Electricity Supply Plan 2023–2032, a report that said its electricity demand is expected to see an uptick of 14% over the next 10 years. Around 270 MW reserved for mining operations would “increase pressure on current balances,” Hydro-Quebec said.

It is unclear if Regie de l’energie will opt to grant the request.

Regie de l’energie did not immediately respond to The Block’s request for comment.

Blockchain mining organizations faced challenges over the last year, with a significant downturn in bitcoin mining revenue, data from The Block Research show.

As the market conditions persist, bitcoin mining operator Iris Energy faces a likely default as soon as Nov. 8.

North American bitcoin miner Argo also had its share of struggles, failing to close a £24 million ($27 million) subscription deal, the announcement of which prompted the company’s stock price to fall by 50%.

Similar woes emerged for bitcoin miner Core Scientific after the company revealed that it may run out of capital by year’s end and is considering bankruptcy.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Block Inc. reported a $14.7 million net loss in the third quarter and bitcoin sales volume of $1.76 billion in the third quarter.

The net loss accounts for a $2 million impairment loss related to bitcoin and a $56 million amortization charge. Excluding those charges, Block’s net income totaled $43 million.

Block’s bitcoin gross profit totaled nearly $37 million in the third quarter, compared with $41 million in the second quarter. 

The company reported total net revenue of $4.52 billion in the third quarter, up 17% year-over-year. Excluding bitcoin revenue, net revenues were $2.75 billion. 

Shares rose 13% after the market close.

Gross profit was up 38% year-over-year to $1.57 billion. Third-quarter gross profit for Square was up 29% to $783 million, and gross profit was $774 million for the Cash App, up 51% year-over-year.

Block’s executives will further discuss the company’s third-quarter results during a webcast today at 5 p.m. EST. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Digital payments firm PayPal reported net revenue of $6.85 billion for the third quarter of 2022.

The Wall Street consensus was $6.82 billion, according to Factset. Net revenue rose 11% year-over-year, PayPal said in its earnings release.

GAAP earnings per share came in at $1.15 compared to the Street estimate of $0.96. EPS rose 26% year-over-year.

PayPal said that its total volume of payments grew 9% quarter-over-quarter, reaching $337 billion for the period. Venmo accounted for $63.6 billion of the quarterly figure.

“We delivered strong third quarter results,” President and CEO Dan Schulman said. “We will continue to invest against our key priorities to advance our leading position in digital payments and commerce.”

Earlier this year, PayPal beefed up its crypto wallet functions, adding the ability to send funds between PayPal and other wallets, a long-sought feature by users. PayPal first began offering crypto purchases in late 2020 through a partnership with Paxos.

PayPal scored a virtual currency business license from the New York Department of Financial Services in June, as previously reported.

Other crypto-related initiatives within PayPal include explorations around a possible stablecoin, though the company hasn’t divulged much on this front beyond confirming previous reporting by The Block that such work was underway.

PayPal’s stock plunged in value after the close of market trading. At press time, PYPL is down more than 12%. 

PayPal’s third-quarter earnings call is at 5:30 p.m. ET.

This is a developing story and will be updated post-earnings call.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Coinbase’s third quarter sales missed estimates while its Monthly Transacting Users (MTUs) topped expectations. Shares whipsawed in after-market trading.

The cryptocurrency exchange said revenue for the third quarter was $590 million, coming in shy of the $641 million estimate of analysts surveyed by FactSet. MTUs came in at 8.5 million, above the  7.7 million estimate.

Coinbase also said next year would be difficult, noting that it was preparing “with a conservative bias and assuming that the current macroeconomic headwinds will persist and possibly intensify.”

The exchange had warned of underperformance in the third quarter during its second-quarter earnings as exchange volumes have dwindled to almost two-year lows. MTUs were 9 million during the second quarter versus 9.2 million in the first quarter.

MTUs are defined as any retail user who actively or passively transacts one or more products on the platform, at least once during a 28-day rolling period. The MTUs presented are an average of each month during the quarter. 

Trading volume came in at $159 billion for the quarter, below estimates of $191 billion. Retail investors made up just $26 billion of this, while institutional investors accounted for $133 billion. The decline in exchange volumes is seen below on The Block’s data dashboard. October volumes fell to their lowest levels since Dec. 2020.

Assets on the platform rose to $101 billion, up from $96 billion in the previous period. Prices have generally stagnated over the past three months. On June 30 bitcoin was trading above $19,000, by Sept. 30 it was higher but still below $20,000. 

Coinbase had around $5 billion cash and equivalents as of Sept. 30, compared to $5.7 billion in the second quarter.

Yesterday Coinbase revealed it was restructuring its entire product team following the departure of its Chief Product Officer, Surojit Chatterjee. The reorganization will split Coinbase’s product talent into four divisions, according to a filing with the Securities and Exchange Commission. CEO Brian Armstrong will take a more hands-on approach in relation to product, with product directors now reporting directly to him. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The decentralized autonomous organization attached to the dYdX derivatives protocol could see the formation of a number of autonomous subDAOs with infrastructure changes, the foundation proposed in an announcement.

The prospective roadmap comes in anticipation of the launch of dYdX V4, slated for the third quarter of 2023, and builds on the organization’s previous steps toward fully decentralizing the protocol, the foundation said. Proposed for community consideration is an Operations subDAO that would complement a previously established dYdX Grants Program that, through an eight-person multi-signature trustee committee, oversees control over some 5,401,080 DYDX tokens (~$5.4 million).

Listed among the potential Operations subDAO’s responsibilities are the creation of a bank payment system, facilitation and maintenance of DAO communication, and the building of relationships with vendors and service providers. The Operations subDAO would also create a framework for the future creation and management of subDAOs, and in time form a year-round, 24/7 dYdX user support service.

To advance the suggested initiative, dYdX community members must vote to form the subDAO and decide on resource allocation to accommodate the associated costs.

In October, dYdX hired former ConsenSys director Charles d’Haussy as CEO, whose objectives include expanding the dYdX DAO ecosystem, community, and protocol in general. MakerDAO last month passed a vote to fragment its autonomous infrastructure into MetaDAOs, similar to dYdX’s proposal. The decision came amidst contention that MetaDAO founder Rune Christensen influenced the ultimate outcome.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.