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Squid unveils direct swaps across Cosmos and EVM blockchains

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Squid, a protocol specializing in cross-chain swaps, has expanded its services to facilitate liquidity routing and token swaps across the Ethereum blockchain, various Ethereum Virtual Machine blockchains, and the Cosmos ecosystem.

By integrating Axelar Network and adopting the Cosmos Inter-Blockchain Communication (IBC) protocol, along with a partnership with the decentralized exchange network Osmosis, Squid has broadened its capabilities to encompass tokens swaps across both EVM and Cosmos blockchain ecosystems simultaneously.

In January, Squid raised$3.5 million seed round led by North Island Ventures.

Squid’s cross-chain swap protocol

Transferring assets between EVM and Cosmos blockchains can be complex due to their inherent incompatibility. Squid, which is built on the Axelar Network, seeks to address this issue.

Squid uses Axelar’s General Message Passing (GMP) technology in conjunction with the IBC protocol. The combination enables the transport of both tokens and smart contract logic between the Cosmos and EVM ecosystems.

“By making cross-chain token swaps among both Cosmos and EVM blockchains trivial, Squid extends this vision of interoperability and lowers the barrier to economic collaboration across these ecosystems,” said Fig, the pseudonymous co-founder of Squid.

© 2023 The Block. 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.

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. CoinReporter.io and EUReporter.co does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Polygon Labs asks senators to consider apple orchard as they tax crypto

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Polygon Labs used a novel analogy to explain crypto staking to Senators Ron Wyden, D-Ore., and Mike Crapo, R-Idaho, in a letter responding to a request for comments on the taxation of digital assets — apple farming. 

“Assume a group of farmers happens upon an apple orchard on ownerless property,” Polygon Labs chief legal officer Rebecca Rettig wrote in the letter. “They agree to take turns picking apples. To ensure no one cheats, each farmer is required to ante up the first 32 apples they pick. If they cheat, those apples are thrown into a river.”

“Over time, each of the farmers begins selling some of their apples, establishing a market price for them,” the example continued. “Although a system thus emerges from the aggregate of each farmer’s actions, the farmers are not taxed until they sell their apples. Stakers should be treated similarly on their newly minted tokens.”

Polygon Labs thinks potential rewards from staking should be taxed when tokens are sold, and not as they are accrued, according to the letter. Failure to do so could result in over taxation, it argued in the Sept. 8 letter, citing what it said was a long-standing tradition in the U.S. of there not being a tax event simply for exercising dominion and control over property for which there is no previous owner.

Sens. Crapo and Wyden asked for input on how to tax digital assets in July and asked for stakeholders to respond by last week. The Internal Revenue Code of 1986 does not classify digital assets in a straightforward way, they said. 

“This uncertainty creates complex reporting issues for taxpayers, and warrants examining how the IRC can provide clearer guidance for taxpayers on the treatment of digital asset transactions,” the lawmakers said in July in a statement.

Others also filed letters to Sens. Wyden and Crapo including the Tax Policy Center, the Coin Center and the Crypto Council for Innovation. Both senators lead the Senate Finance Committee, which has jurisdiction over the Treasury Department.

Oil, gas and minerals

“When taxpayers extract oil, gas, or minerals, they are not taxed until they sell that property,” Polygon Labs’ Rettig continued. “When they breed animals, they are not taxed until they sell the animals. When they harvest crops, they are not taxed until they sell the crops. The same rule applies when taxpayers create art, manufacture goods, bake scones, affix their autograph to paper, or otherwise assume control over property that does not have a previous owner.”

Polygon Labs further argued that newly minted tokens that accrue to stakers are created by software and should not be considered as income for tax purposes. It also pointed out staking rewards can only be used after a validator un-stakes them, and it also said that taxing staking rewards only upon disposition would be the administratively easiest option.  

“Tax policy should not incentivize one product type over another,” the letter continued. “In this nascent stage of blockchain development, taxing staking rewards when credited to validators risks doing just that, without materially increasing tax revenues.”

© 2023 The Block. 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.

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