Spot Bitcoin ETFs: A Recipe for Disaster
Former head of internet enforcement at the U.S. Securities and Exchange Commission (SEC), John Reed Stark, has come out with a scathing critique of spot bitcoin exchange-traded funds (ETFs). These ETFs, which the SEC is expected to approve on Wednesday, have drawn criticism from Stark, who described them as a ploy by billionaire financial institutions to exploit investors and expose them to significant risks.
John Reed Stark's Expertise
John Reed Stark, currently the president of cybersecurity firm John Reed Stark Consulting, brings a wealth of experience to the table. With 11 years as the chief of the SEC Office of Internet Enforcement and 15 years as an SEC enforcement attorney, he is well-versed in the complexities of the financial industry.
The Dark Side of Spot Bitcoin ETFs
Stark doesn't mince his words when it comes to spot bitcoin ETFs. He lambasts them as a "fee-sucking" mechanism designed to benefit financial behemoths at the expense of unsuspecting investors. According to Stark, these ETFs are part of a larger problem within the crypto market, which he describes as corrupt, criminal, and filled with speculative investments that prey on the vulnerabilities of individuals.
Spot Bitcoin ETFs: A Ponzi Scheme
Stark goes further to label cryptocurrency as a "mammoth Ponzi scheme." He argues that crypto investments are more expensive, complex, and risky compared to traditional finance. Additionally, he criticizes the notion that cryptocurrency is a solution for the unbanked, stating that it perpetuates predatory practices and affinity fraud.
The Dark History of Crypto
To support his argument, Stark points to the numerous crypto bankruptcies and controversies surrounding Tether minting. He also references a letter from Better Markets to the SEC, which highlights the potential financial carnage and investor losses that could arise from approving spot bitcoin ETFs.
A Laughable Concept
Stark dismisses the idea of a bitcoin spot ETF as laughable. He believes that it would not only create another opportunity for Wall Street scams and excessive fees but also represent a highly centralized crypto mechanism. In the world of cryptocurrency, market manipulation and fraud are not only rampant but also incentivized.
Have Your Say
What are your thoughts on the warnings issued by former SEC internet enforcement chief John Reed Stark regarding spot bitcoin ETFs? Share your opinions in the comments section below.
Frequently Asked Questions
How much should I contribute to my Roth IRA account?
Roth IRAs are retirement accounts that allow you to withdraw your money tax-free. You can't withdraw money from these accounts before you reach the age of 59 1/2. There are some rules that you need to keep in mind if you want to withdraw funds from these accounts before you reach 59 1/2. You cannot touch your principal (the amount you originally deposited). This means that regardless of how much you contribute to an account, you cannot take out any more than you initially contributed. If you are able to take out more that what you have initially contributed, you must pay taxes.
The second rule says that you cannot withdraw your earnings without paying income tax. When you withdraw, you will have to pay income tax. For example, let's say that you contribute $5,000 to your Roth IRA every year. Let's also assume that you make $10,000 per year from your Roth IRA contributions. Federal income taxes would apply to the earnings. You would be responsible for $3500 That leaves you with only $6,500 left. The amount you can withdraw is limited to the original contribution.
Therefore, even if you take $4,000 out of your earnings you still owe taxes on $1,500. On top of that, you'd lose half of the earnings you had taken out because they would be taxed again at 50% (half of 40%). So even though your Roth IRA ended up having $7,000, you only got $4,000.
Two types of Roth IRAs are available: Roth and traditional. Traditional IRAs allow pre-tax contributions to be deducted from your taxable tax income. You can withdraw your contributions plus interest from your traditional IRA when you retire. There is no limit on how much you can withdraw from a traditional IRA.
Roth IRAs don't allow you deduct contributions. You can withdraw your entire contribution, plus accrued interests, after you retire. There is no minimum withdrawal amount, unlike traditional IRAs. You don't need to wait until your 70 1/2 year old age before you can withdraw your contribution.
What is the Performance of Gold as an Investment?
Gold's price fluctuates depending on the supply and demand. It is also affected negatively by interest rates.
Due to the limited supply of gold, prices for gold are highly volatile. There is also a risk in owning gold, as you must store it somewhere.
What precious metals could you invest in to retire?
Silver and gold are two of the most valuable precious metals. They're both easy to buy and sell and have been around forever. If you want to diversify your portfolio, you should consider adding them to your list.
Gold: The oldest form of currency known to man is gold. It is also extremely safe and stable. This makes it a good option to preserve wealth in uncertain times.
Silver: Silver has always been popular among investors. It is an excellent choice for investors who wish to avoid volatility. Silver is more volatile than gold. It tends to rise rather than fall.
Platinium is another precious metal that is becoming increasingly popular. It's durable and resists corrosion, just like gold and silver. It is, however, more expensive than its competitors.
Rhodium: Rhodium is used in catalytic converters. It's also used in jewelry making. And, it's relatively cheap compared to other types of precious metals.
Palladium: Palladium is similar to platinum, but it's less rare. It's also much more affordable. Investors looking to add precious and rare metals to their portfolios love it for these reasons.
How does a Gold IRA account work?
You can purchase gold bullion coins in physical form at any moment. You don’t have to wait to begin investing in gold.
You can keep gold in an IRA forever. Your gold holdings won't be subject to taxes when you pass away.
Your heirs inherit your gold without paying capital gains taxes. It is not required that you include your gold in the final estate report because it remains outside your estate.
You'll first have to set up an individual retirement account (IRA) to open a gold IRA. Once you've done so, you'll be given an IRA custodian. This company acts as a middleman between you and the IRS.
Your gold IRA Custodian will manage the paperwork and submit all necessary forms to IRS. This includes filing annual reports.
Once your gold IRA is established, you can purchase gold bullion coins. Minimum deposit is $1,000 If you make more, however, you will get a higher interest rate.
Taxes will apply to gold that you take out of an IRA. If you are withdrawing your entire balance, you will owe income tax plus a 10% penalty.
However, if you only take out a small percentage, you may not have to pay taxes. There are exceptions. There are some exceptions. For instance, if you take out 30% or more from your total IRA assets, federal income taxes will apply plus a 20 percent penalty.
You shouldn't take out more then 50% of your total IRA assets annually. A violation of this rule can lead to severe financial consequences.
What is the best precious-metal to invest?
The answer to this question depends on how much risk you are willing to take and what type of return you want. Gold is a traditional haven investment. However, it is not always the most profitable. Gold may not be right for you if you want quick profits. Silver is a better investment if you have patience and the time to do it.
If you're not looking to make quick money, gold is probably your best choice. If you are looking for a long-term investment that will provide steady returns, silver may be a better choice.
How to Open a Precious Metal IRA?
First, decide if an Individual Retirement Account is right for you. Once you have decided to open an Individual Retirement Account (IRA), you will need to complete Form 806. To determine which type of IRA you qualify for, you will need to fill out Form 5204. This form must be submitted within 60 days of the account opening. Once this is done, you can start investing. You may also choose to contribute directly from your paycheck using payroll deduction.
To get a Roth IRA, complete Form 8903. The process for an ordinary IRA will not be affected.
To qualify for a precious Metals IRA, there are specific requirements. The IRS says you must be 18 years old and have earned income. You cannot earn more than $110,000 annually ($220,000 if married filing jointly) in any one tax year. You must also contribute regularly. These rules will apply regardless of whether your contributions are made through an employer or directly out of your paychecks.
An IRA for precious metals allows you to invest in gold and silver as well as platinum, rhodium, and even platinum. But, you'll only be able to purchase physical bullion. This means you can't trade shares of stock and bonds.
You can also use your precious metallics IRA to invest in companies that deal with precious metals. Some IRA providers offer this option.
There are two main drawbacks to investing through an IRA in precious metallics. First, they're not as liquid as stocks or bonds. It's also more difficult to sell them when they are needed. Second, they don't generate dividends like stocks and bonds. So, you'll lose money over time rather than gain it.
What are the benefits of having a gold IRA?
You can save money on retirement by putting your money into an Individual Retirement Account. It's tax-deferred until you withdraw it. You have total control over how much each year you take out. There are many types available. Some are better suited for college students. Others are made for investors seeking higher returns. Roth IRAs permit individuals to contribute after the age 59 1/2. Any earnings earned at retirement are subject to tax. But once they start withdrawing funds, those earnings aren't taxed again. This type account may make sense if it is your intention to retire early.
A gold IRA is similar to other IRAs because it allows you to invest money in various asset classes. Unlike a regular IRA which requires taxes to be paid on gains as you wait to withdraw them, a IRA with gold allows you to invest in multiple asset classes. This makes gold IRA accounts a great choice for those who want their money to be invested, not spent.
Another advantage to owning gold via an IRA is the ease of automatic withdraws. That means you won't have to think about making deposits every month. To make sure you don't miss any payments, you can also set up direct deductions.
Finally, gold is one the most secure investment options available. It is not tied to any country so its value tends stay steady. Even during economic turmoil, gold prices tend to stay relatively stable. As a result, it's often considered a good choice when protecting your savings from inflation.
- Indeed, several financial advisers interviewed for this article suggest you invest 5 to 15 percent of your portfolio in gold, just in case. (aarp.org)
- (Basically, if your GDP grows by 2%, you need miners to dig 2% more gold out of the ground every year to keep prices steady.) (smartasset.com)
- The price of gold jumped 131 percent from late 2007 to September 2011, when it hit a high of $1,921 an ounce, according to the World Gold Council. (aarp.org)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)
- Gold IRA: Add Some Sparkle To Your Retirement Nest Egg
- Understanding China's Evergrande Crisis – Forbes Advisor
- 7 U.S. Code SS7 – Designation boards of trade as contract market authorities
- 26 U.S. Code SS 408 – Individual retirement funds
How to Buy Physical Gold in An IRA
An easy way to invest gold is to buy shares from gold-producing companies. However, there are risks associated with this strategy. It isn't always possible for these companies to survive. Even if they do survive, there is still the possibility of losing money to fluctuating gold prices.
An alternative option would be to buy physical gold itself. This requires you to either open up your account at a bank or an online bullion dealer or simply purchase gold from a reputable seller. This option offers the advantages of being able to purchase gold at low prices and easy access (you don’t need to deal directly with stock exchanges). It is also easier to check how much gold you have stored. You will receive a receipt detailing exactly what you paid. You also have a lower chance of theft than stocks.
There are also some drawbacks. You won't get the bank's interest rates or investment money. Also, you won't be able to diversify your holdings – you're stuck with whatever you bought. Finally, tax man may want to ask where you put your gold.
BullionVault.com is the best website to learn about gold purchases in an IRA.
By: Kevin Helms
Title: Former SEC Official Warns Against Spot Bitcoin ETFs as Recipe for Financial Ruin
Sourced From: news.bitcoin.com/former-sec-official-blasts-spot-bitcoin-etfs-as-recipe-for-financial-ruin/
Published Date: Wed, 10 Jan 2024 05:00:25 +0000