The Daily: Denmark proposes taxing unrealized crypto gains, Kraken plans 'Ink' Ethereum Layer 2 launch and more

Happy Thursday! In today's newsletter, Denmark proposes taxing unrealized crypto gains, Kraken plans "Ink" Ethereum Layer 2 launch, Base makes a move toward decentralization and more.

Meanwhile, bitcoin could test its all-time high above $73,000 on U.S. election day, according to Standard Chartered analyst Geoff Kendrick.

Plus, Coinbase sees AI agents and crypto driving an economic boom, a day after CEO Brian Armstrong offered a memecoin trading bot a wallet.

Let's get started.

Denmark proposes taxing unrealized crypto gains

Denmark's tax authority has recommended a "mark-to-market" taxation on crypto assets as part of its upcoming legislative proposal.

• The recommendations aim to "eliminate the asymmetry in the taxation of gains and losses" and address the challenge of taxing decentralized, unregulated crypto assets, the tax authority said.
• If the proposed rules take effect, the taxation would treat unrealized gains or losses as capital income, and investors would be taxed on these gains or losses even if the assets are not sold.
• Mark-to-market taxation typically refers to taxes levied on the annual changes in the value of certain assets.
• The Minister of Taxation plans to introduce the bill at the beginning of 2025 and suggested that the potential new tax regulations should take effect no earlier than Jan. 1, 2026.
• The legislation may include requirements for crypto service providers to report client transactions.
• The proposed tax on unrealized gains could be as high as 42%, impacting assets acquired since bitcoin's inception in 2009, according to Steno Research senior crypto analyst Mads Eberhardt.

Kraken plans 'Ink' Ethereum Layer 2 launch

Kraken plans to launch its own Ethereum Layer 2 blockchain called "Ink," built using Optimism's OP Stack.

• Confirming initial reports of the prospect from November 2023, Ink is expected to debut its testnet later this year, with a full mainnet launch to follow in the first quarter of 2025.
• Ink will offer permissionless access to several DeFi applications upon launch and join the broader Ethereum ecosystem as part of the Superchain — a network of interoperable Layer 2 blockchains using the same tech stack.
• However, unlike some of its Superchain counterparts, Kraken does not intend to issue a token for the Layer 2.
• Kraken may hope to replicate the success of Base, incubated by crypto exchange rival Coinbase, which became the largest Ethereum Layer 2 by total value locked earlier this month.

Base to introduce fault proofs in decentralization move

Ethereum Layer 2 network Base is set to introduce permissionless fault proofs on Oct. 30, designed to help decentralize the network and eliminate single-entity control.

• Base noted its collaboration with Optimism on the upgrade, allowing any participant to challenge potentially fraudulent transactions, improving the Layer 2's security and transparency.
• The introduction follows a model similar to Optimism's OP Mainnet and Base is also part of its broader Superchain ecosystem alongside Zora, World Chain, Unichain and others.
• Base's upgrade marks a major step toward decentralization, aligning it with other Layer 2 rollups like Arbitrum that also already feature the technology.

Stokr raises $8 million to establish one of first corporate bitcoin treasuries in Europe

Tokenization platform Stokr has raised €7.4 million ($8 million) to establish one of the first corporate bitcoin treasuries in Europe, following in the footsteps of MicroStrategy's approach.

• The funding round, led by Fulgur Ventures, included 100 BTC ($6.7 million) and €1.2 million ($1.3 million) in cash to drive Stokr's bitcoin treasury expansion over the coming years.
• Stokr plans to launch new Bitcoin-based tokenized assets and build infrastructure on Bitcoin Layer 2 technologies like the Liquid Network to streamline institutional tokenization.
• The Luxembourg-based company also aims to transition from a Virtual Asset Service Provider to a regulated Crypto Asset Service Provider under the European Union's MiCA framework.

Michael Saylor endorses bitcoin self-custody following criticism of previous remarks

MicroStrategy founder Michael Saylor said he supports the right to bitcoin self-custody for all in a Wednesday post, following criticism of his earlier endorsement of "safer" forms of regulated bitcoin custody.

• Saylor's initial remarks favored regulated entities like BlackRock and Fidelity as bitcoin custodians, sparking backlash from figures like Vitalik Buterin, who called them "batshit insane," while others emphasized the importance of self-custody for maintaining decentralization.
• Saylor clarified that bitcoin benefits from all forms of investment, welcoming both self-custody and regulated options for individuals and institutions globally.

In the next 24 hours

• It's quiet on the economic calendar front.
• The Plan ₿ Forum kicks off in Lugano, Switzerland.

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