Bitcoin (BTC/USD) Price Technical Analysis for February 17, 2017

Investors are still generally cautious about putting funds back in bitcoin after all the goings-on in China. This is the largest bitcoin market in the world so anything that happens locally would have repercussions on global bitcoin activity. Earlier in the year, government authorities stepped up their efforts to curb bitcoin activity as part of their goal to reduce offshore investments and speculative yuan positioning.

This forced bitcoin to return a lot of its recent gains throughout January, although a rebound occurred when authorities seemed to ease up on their regulatory moves. However, bitcoin price tanked once more when a couple of major exchanges in the mainland were prompted to halt client withdrawals in compliance with ongoing investigations. This led traders to liquidate their holdings and be extra cautious when going long.

With that, liquidity has been significantly weighed down in the past few weeks so this low volatility environment could be the norm for bitcoin, unless any major industry updates pop up. So far, the industry has been showing positive developments in terms of bitcoin acceptance in the mainstream and on Wall Street. Aside from that, geopolitical risks in the West stemming from the Trump administration and the upcoming French elections are also keeping bitcoin supported. Foreseen financial troubles in Greece and Italy could also shore up demand for the cryptocurrency in the coming weeks.

On the flip side, factors that dampen bitcoin gains are that of Fed rate hike expectations for March which would boost dollar demand and anticipation for Trump’s tax reform plan which would encourage traders to put money in US assets instead. Of course there’s also the threat of Chinese regulation on bitcoin or penalties on clients that could further undo bitcoin gains.

Trump Administration’s Perception in the UK

It’s fair to say that Donald Trump’s surprise victory in the US Election in November was not universally welcomed. In the UK, it was widely reported that as the result unfolded, the Canadian immigration website crashed because of high levels of traffic. The UK immigration website stayed active, but we are seeing increased numbers of enquiries from US residents about coming to the UK.

Speaking alongside Google boss Sundar Pichai in November, London Mayor Sadiq Khan said

If talented people based in the US want to come here to London, my message is simple – London is open.

And despite Brexit uncertainties, the UK has a strong economy; a stable government; world class financial and judicial systems and is well located for easy access to east and west. Coupled with a strong real estate market and a vibrant cultural scene, it’s an attractive place to live.

So, whether you are considering a first-time move to the UK or if you’re an ex-pat thinking of returning, here are top ten legal and tax tips to bear in mind:

  1. If you don’t have a UK domicile of origin, the UK tax regime can be friendly (for 15 years at least), and foreign assets can be excluded from tax here if the structuring is correct.
  2. Becoming UK tax resident can result in family trusts becoming UK tax resident for income tax and capital gains tax due to residence rules for trusts being based on the residence of individual trustees. ‘Living Trusts’ are popular in the US, but inadvertently importing such a trust by moving here can trigger adverse tax consequences. It may be enough to appoint new non-UK trustees, but care should be taken to avoid unforeseen consequences.
  3. If you are a US-dwelling Brit, you may immediately re-acquire UK domicile on your return to the UK, rendering your worldwide assets subject to inheritance tax, income tax and capital gains tax in the UK. Further, if you were UK tax resident and have spent less than 5 years outside of the UK, you can find income and gains arising during that period of non-residence can become subject to UK tax on your return to the UK.
  4. Complexity (and a tax charge) can arise on death where one spouse is UK domiciled, but the other is not. There are some solutions, but these need careful planning.
  5. Acquiring a UK home through a company (which has long been favoured by non-domiciled individuals) now carries a high tax cost – extra taxes arise in the form of the Annual Tax on Enveloped Dwellings, additional Stamp Duty Land Tax – and no longer removes it from the scope of Inheritance Tax on death. Make sure you look into the true tax cost of acquiring property in advance.
  6. Timing is important. There are new rules on the tax treatment of individuals arriving in the UK part way through a tax year (our tax year runs from 6 April in one year to 5 April the next). Mostly this can be managed, but it is a trap for the unwary.
  7. If you are a US resident with offshore investments, you should check that your investments are structured to ensure clean capital, income and capital gains are segregated into identifiable accounts, before arriving in the UK. This is important for non UK-domiciled individuals who are taxed on the remittance basis in the UK and may need to bring non-UK funds into the UK. This forward planning can result in a much lower UK tax outcome on remitted funds.
  8. Subject to local tax issues, it may be advisable to realise income and latent gains before you become resident in the UK, to secure optimum tax treatment between the two jurisdictions.
  9. If you are acquiring assets in England, particularly real estate, you should make an English Will. If you’re retaining assets in the US, it’s sensible to have a separate US Will.
  10. If you’ve entered into a pre- or post-nuptial agreement, have it reviewed by a UK lawyer. Although these arrangements can be binding in the UK, they need to follow strict criteria to carry any weight.

There is clearly going to be complexity in switching between two sophisticated jurisdictions such as the US and UK. But it’s a well-trodden path, and much of the complexity can be managed. Most important of all is to take advice early and to ensure your advisers in both countries talk to each other and understand what matters most to you.

China Regulator Urges Insurers to Avoid ‘Reckless’ Offshore Investments: Report

A senior Chineseinsuranceregulator warned against the industry’s reckless overseas investment, saying some insurers behaved recklessly when it came to offshore acquisitions, the official Securities Times reported on Thursday.

Chen Wenhui, vice chairman of the ChinaInsuranceRegulatory Commission (CIRC) urged insurers to take a cautious approach when investing overseas, the newspaper said.

UK tax reforms make Bermuda trusts appealing

The Bermuda trust is a popular estate planning vehicle for private clients wishing to structure their affairs in a tax efficient manner. There are a whole host of reasons why this is so, including asset protection, preservation of wealth for future generations, confidentiality, settlor reservation of control, ensuring business continuity, protection of vulnerable heirs and prudent succession planning.

Now, there is another reason.

On April 6 2017 widespread reforms to UK tax rules for UK resident but non-domiciled individuals and their property holding structures are scheduled to take effect. From April 6 (the beginning of the new UK tax year), individuals who have been resident in the UK for 15 of the previous 20 tax years will become “deemed domiciled” for all UK tax purposes under the proposed changes. These individuals will become subject to UK tax on their worldwide personal income and gains. In addition their worldwide personal assets will become subject to UK inheritance tax on their death.

An individual wishing to break the deeming provisions will need to leave the UK for six complete tax years before returning to the UK and restarting the clock, or three years (for inheritance tax purpose only) where there is no intention to return to the UK.

Many UK advisors are recommending the use of offshore trusts settled with suitable assets before an individual becomes UK deemed domiciled on April 6 under the so called “protected trust” rules. A Bermuda trust is one such example.

The settlor of a protected trust will generally be exempt from UK income tax (on the trust’s foreign income) and UK capital gains tax (on the trust’s UK or non-UK gains). This benefit can be incredibly attractive to a non-UK domiciliary who subsequently acquires UK deemed domicile status and wishes to protect assets from UK tax.

However, the key proviso in order to benefit from these tax exemptions is that the settlor may not subsequently add property or income to the trust (‘tainting’ rules), with some very limited exceptions. The settlor will be subject to tax if they receive amounts from the trust as will other beneficiaries. Care needs to be taken if there have been capital distributions prior to April 6 2017 as these can come into charge in certain circumstances. Anti-avoidance measures are being introduced to tax the settlor on distributions to ‘close family members’ (essentially minor children and spouse/civil partner/cohabitee) if the amount does not come into charge because, say, the recipient is non-UK resident.

Trusts established by an individual before becoming UK deemed domiciled also provide UK inheritance tax savings. Generally the settlor will not be subject to UK inheritance tax on the non-UK assets of the trust provided that no funds are added to the trust by the settlor (after becoming deemed domiciled) in any way. UK assets will be protected if held via a non-UK company except for UK residential property, which will always be subject to UK inheritance tax under new rules to be introduced in April.

Protected status is only available to offshore trusts and not to directly-held investments or offshore companies. This creates a planning opportunity for non-domiciled individuals who risk becoming deemed domiciled in April. Where they hold offshore investments, either directly or through an offshore company, they could consider settling these assets into a Bermuda trust prior to April 6 in order to benefit from prudent tax planning.

Unfortunately, returning former domiciliaries (that is, individuals born in the UK with a UK domicile of origin) will be treated as domiciled in the UK for all tax purposes on their return to the UK, although there will be a short grace period with respect to inheritance tax exposure on their worldwide assets. These individuals will also not be able to benefit from the new protected trust regime — and worse, trusts of which they are settlor effectively fall into the UK tax net, including for inheritance tax.

The upcoming rules are creating quite a stir in the private client and trust community. Advisors and trustees are busy restructuring existing trusts with a view to benefiting different family beneficiaries who may be materially affected as a result of the April tax changes. Splitting of existing trusts may also be desirable in order to separate trust portfolios with different investment strategies. It may be prudent to review whether past income should remain in or be distributed out of existing trust structures before the April tax changes. If UK tax is a concern then these changes should all be implemented prior to April 6 2017.

Time is fast running out for individuals who will soon become deemed domiciled under the April deeming provisions to get their affairs in order. If appropriate, and subject to receiving suitable UK tax and Bermuda legal advice, a Bermuda trust to hold non-UK assets settled prior to an individual becoming UK deemed domiciled, can be incredibly attractive in light of the looming UK tax changes.

Lawyer Vanessa Schrum is a Partner and Local Group Head of the Private Client and Trusts Practice Group at Appleby. A copy of Mrs Schrum’s column can be obtained on the Appleby website at www.applebyglobal.com.

The author would like to thank Gill Smith of Moore Stephens LLP for her contribution.

This column should not be used as a substitute for professional legal advice. Before proceeding with any matters discussed here, persons are advised to consult with a lawyer.

Bankruptcy Court Approves Stone Energy’s Restructuring Plan

Stone Energy Corp.s pre-packaged restructuring plan to wipe out $1.2 billion in debt was approved this week by the US Bankruptcy Court for the Southern District of Texas, bringing the company one step closer to being turned over to its noteholders.

Pending the consent of its creditors, Stone said it expects the restructuring plan to become effective on Feb. 28 once all conditions have been met.

Under the plan, noteholders would receive their share of $100 million in cash, $225 million of 7.5% senior second lien notes due 2022 and 95% of the common stock in the reorganized company. Lenders would receive a proportionate share of commitments under a new $200 million revolving credit facility and a cash payment, while existing stockholders would receive their share of just 5% of the common stock and rights to purchase more.

Included in the approved plan is an Appalachia sale agreement in which EQT Corp. hasagreed to pay $527 million for about 85,000 net acres in the Marcellus and Utica shales of West Virginia and Pennsylvania. Once that sale closes — which is scheduled for Feb. 27 — Stone would be left with offshore assets in the Gulf of Mexico.

Early last year, Stones credit facility wasreduced, which resulted in a borrowing base deficiency and the possibility of default. Low commodity prices in Appalachia squeezed the company as well and it began negotiating the sale of those assets before it filed for Chapter 11 bankruptcy last December.

Illinois could be first state to regulate online small business loans

ILLINOIS NEWS NETWORK

Illinois could become the first state in the country to regulate online loans to small businesses.

Business loans done over the Internet are likely to have little to no oversight regarding how they are presented to the lendee. State Sen. Jacqueline Collins (D-Chicago) and a group of bipartisan state and city of Chicago officials want to create some ground rules for the online outlets that Collins said are largely good companies but can stray into deceptive habits.

All we’re trying to do is help those responsible lenders, but also create some oversight to those who are moving in the direction of being predatory, Collins said.

The Small Business Lending Act of 2016 would require the online companies to register with the Illinois Department of Financial and Professional Regulation as well as always list their interest rate in annual increments. Collins said monthly or even daily interest rates, which are currently offered, can fool businesses into agreeing to rates she described as gouging.

The measure would make online loan outlets limit the number of late fees and early termination fees they are able to impose.

There’s a lack of uniformity among small business loan offers and it makes it difficult to compare loans and to fully understand the terms of the loan, Collins said.

Collins said opponents to the legislation have, surprisingly, included larger banking corporations. She believes they are providing the money for some of the online loans. Opponents say the state should let the federal government handle the regulation of online loan outlets. Collins discounts that idea, saying it could take a decade before anything happens.

That could be five years. That could be ten years, Collins said. Why should that preclude us on the state level from dealing with a problem that exists in the state of Illinois?

Collins said she plans on presenting the bill once the General Assembly reconvenes this November. State Sen. Karen McConnaughay (R-St. Charles) is a co-sponsor of the bill. Collins said the idea for the legislation originated with Chicago Treasurer Kurt Summers.

Square Capital Starts Offering Loans More Broadly

Its not surprising that Square is expanding its lending program beyond just the millions of businesses who use Squares point of sale hardware. New customers will only continue to grow the already burgeoning business. In the second quarter of 2016, Square extended nearly 34,000 business loans totaling $189 million, an increase of 123% year over year and 23% from the previous quarter in 2016. Revenue from Square Capital, and the company’s other software services, was up 130% to $30 million from the same quarter in 2015 and up 25% from the previous quarter in 2016.

The small business lending market will likely also get more competitive for Square as American Express is set to debut a new lending arm later this year.

The goal is to serve all 30 million small businesses in the US with Square Capital, Reses said.

Greece’s National Bank Securittises Business Loans To Raise 300mn

National Bank of Greece (NBG) said on Monday it had concluded the securitisation of business loans which would allow it to raise up to 300 million euros in medium-term funding.

The bank said it would place the senior notes with the European Investment Bank, the European Investment Fund and the European Bank for Reconstruction and Development.

It was the first securitisation transaction since 2007, National Bank said.

It said the transaction sought to enhance the access of Greek small to medium sized businesses to ‘affordable financing’.

Additionally, the bank said it would launch new lending for investment projects in Greece in November, covering a two year period in which more than 2,000 small to medium sized businesses and midcaps stood to benefit.
Source: Reuters