The U.S. Department of the Treasury and the IRS have released final regulations for tax reporting on digital asset sales, as part of the Biden-Harris administration’s implementation of the Infrastructure Investment and Jobs Act. Additionally, the Treasury and the IRS revealed that they anticipate issuing further rules later this year to establish reporting requirements for […]
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IRS Delays Enforcement of Digital Asset Reporting Rules, Awaiting Regulations
On Tuesday, the U.S. Internal Revenue Service (IRS) and Treasury provided transitional guidance on digital asset reporting, postponing enforcement pending regulation issuance.
IRS Temporarily Halts Enforcement of Digital Asset Reporting
The U.S. Treasury Department and the Internal Revenue Service (IRS) have announced a temporary reprieve for businesses in reporting certain digital asset transactions. The latest guidance, outlined in Announcement 2024-4, comes as a relief to many in the digital currency space.
As reported earlier, the Infrastructure Investment and Jobs Act, which recently revised the rules for taxpayers engaged in trade or business, had expanded the definition of cash to include digital assets. This meant businesses were required to report any receipt of digital assets over ,000, akin to cash transactions. However, the new announcement provides transitional guidance, delaying these requirements until further regulations are issued.
Despite this temporary relief, traditional cash transaction reporting rules remain unaffected. Businesses must continue to report cash transactions over ,000 within 15 days of the transaction.
The Treasury and IRS have clarified their intent to issue proposed regulations for digital asset reporting. These proposals will offer additional details and procedures, with an opportunity for public comment and potential public hearings.
The tax regulator’s decision to step back temporarily has been welcomed by many. The Blockchain Association stated in a post on X that this reprieve is, “a positive step forward given its impossibility and breadth of reporting required.”
The Republicans on the U.S. House Committee on Financial Services posted on social media, echoing the Blockchain Association:
We welcome this stopgap action by @IRSnews to clarify the forthcoming regulations on section 6050I for digital assets. However, this does not fix the underlying problems with the poorly constructed digital asset reporting requirements.
The IRS has not specified a timeline for introducing the proposed regulations, but the opportunity for public input suggests a collaborative approach toward shaping the future of digital asset regulation.
The Financial Services GOP X account recommended Congress step in with new legislation, “Congress must urgently consider the Keep Innovation in America Act, the bipartisan solution to fix the misguided reporting requirements from the IIJA and keep the digital asset ecosystem in the U.S.”
Do you think this enforcement of digital asset reporting will eventually go into effect? Share your thoughts and opinions about this subject in the comments section below.
South Korean Tax Accountant: Digital Assets Held in Non-Custodial Wallets Not Subject to Overseas Reporting Requirement
South Koreans with digital assets held in non-custodial or decentralized crypto wallets like Metamask or Ledger are reportedly not subject to the country’s overseas financial account reporting requirement. According to a South Korean tax accountant, only virtual assets held on overseas centralized exchanges are subject to this requirement.
The Overseas Account Reporting Requirement Controversy
The South Korean revenue collector, known as the National Tax Service (NTS), has reportedly clarified that residents holding digital assets in decentralized and non-custodial wallets are not subject to the country’s overseas financial account reporting requirement. The NTS clarified that Article 53 of the Act on International Tax Adjustment does not apply to South Koreans who have digital assets stored in wallets such as Metamask or Ledger.
According to a report, the clarification was in response to residents who wanted to know if the overseas account reporting, which commenced in January 2023, is also applicable to cold wallets and decentralized wallets holding assets worth over 0,000 (500 million won).
However, at the time when the revenue collector began enforcing the new law, many digital asset holders were reportedly unsure if the requirement applied to them. This prompted some residents to ask for clarification.
The report quotes a South Korean tax accountant, Kim Ji-ho, who spoke of how the clarification sparked a debate on what constitutes an overseas crypto wallet.
“The purpose of reporting overseas financial accounts is to report because there are limitations in obtaining overseas tax data, but there was controversy as to whether the Metamask wallet was an overseas wallet,” Ji-ho said.
The tax accountant, however, insisted that the South Korean taxman’s explanation potentially means many decentralized wallets will not be obliged to adhere to the overseas account reporting requirement. Only virtual assets held on overseas centralized exchanges are subject to this requirement, the tax accountant added.
What are your thoughts on this story? Let us know what you think in the comments section below.
South Africa Becomes the Sole African Nation to Adopt Crypto-Asset Reporting Framework
South Africa is the only African country to join the group of countries that have agreed to implement the Crypto-Asset Reporting Framework. According to the South African Revenue Collector, the reporting framework is expected to improve its “ability to ensure tax compliance and clamp down on tax evasion.”
Tax Transparency Standard
South Africa has joined more than 40 other countries and jurisdictions in agreeing to implement the so-called Crypto-Asset Reporting Framework (CARF), a statement issued by the country’s tax collector has said. Developed by the Organisation for Economic Co-operation and Development (OECD), the CARF is a tax transparency standard whose agreement was reached in March 2023.
According to a joint statement unveiled by His Majesty’s (HM) Treasury on Nov. 10, the agreement provides a basis for the “automatic exchange of information between tax authorities on crypto exchanges.” The goal of such an exchange is to combat offshore tax avoidance and evasion. The agreement also commits the 40-plus countries and jurisdictions to the simultaneous implementation of amendments to the Common Reporting Standard (CRS).
Meanwhile, in a statement explaining why South Africa has agreed to implement the CARF, the South African Revenue Service (SARS) argued that this is the only way the African country can keep up with developments.
“To keep pace with the rapid development and growth of the crypto-asset market and to ensure that recent gains in global tax transparency will not be gradually eroded, we welcome the new international standard on automatic exchange of information between tax authorities developed by the OECD – the Crypto-Asset Reporting Framework (CARF),” the revenue collector explained.
Combatting Crypto Tax Evasion
The revenue collector also argued that when widely and consistently implemented, the crypto reporting framework will improve its “ability to ensure tax compliance and clamp down on tax evasion.”
The SARS press statement revealed that the revenue collector is planning on “transposing the CARF into domestic law” by 2027. However, any such switch to CARF will be subject to national legislative procedures, the statement added.
So far, South Africa is the only African country that is party to the agreement while China and Russia are some of the notable omissions from the list of countries unveiled by the HM Treasury.
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What are your thoughts on this story? Let us know what you think in the comments section below.
40+ Countries Implementing International Crypto Reporting Framework
Over 40 countries have agreed to implement the crypto reporting framework developed by the Organisation for Economic Co-operation and Development (OECD) as mandated by the G20. The widespread, consistent, and timely implementation of this crypto reporting framework “will further improve our ability to ensure tax compliance and clamp down on tax evasion, which reduces public revenues and increases the burden on those who pay their taxes,” they said.
48 Jurisdictions Implementing OECD’s Crypto Reporting Framework
Forty-eight jurisdictions, including more than 40 countries, issued a joint statement on Friday regarding the implementation of the Crypto-Asset Reporting Framework (CARF), developed by the Organisation for Economic Co-operation and Development (OECD), as mandated by the G20.
The statement was jointly issued by Armenia, Australia, Austria, Barbados, Belgium, Belize, Brazil, Bulgaria, Canada, Chile, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Liechtenstein, Lithuania, Luxembourg, Malta, Mexico, Netherlands, Norway, Portugal, Romania, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, the U.K., and the U.S. The Crown Dependencies of Guernsey, Jersey, and the Isle of Man, as well as the U.K.’s Overseas Territories of the Cayman Islands and Gibraltar, also issued the statement.
“We welcome the new international standard on automatic exchange of information between tax authorities developed by the OECD — the Crypto-Asset Reporting Framework (CARF),” the statement begins, adding:
The widespread, consistent and timely implementation of the CARF will further improve our ability to ensure tax compliance and clamp down on tax evasion, which reduces public revenues and increases the burden on those who pay their taxes.
The implementation of the CARF aims to “keep pace with the rapid development and growth of the crypto-asset market and to ensure that recent gains in global tax transparency will not be gradually eroded,” the statement notes.
The CARF was developed pursuant to a mandate from the G20. It provides a standardized way to report tax information on crypto transactions so that this information can be automatically exchanged with taxpayers’ jurisdictions of residence on an annual basis.
All the above jurisdictions stated that they “intend to work towards swiftly transposing the CARF into domestic law and activating exchange agreements in time for exchanges to commence by 2027, subject to national legislative procedures as applicable.”
In conclusion, the statement notes:
We invite other jurisdictions to join us with a view to enhancing the global system of automatic information exchange which leaves no hiding places for tax evasion.
What do you think about these jurisdictions implementing the OECD’s crypto reporting framework? Let us know in the comments section below.
Pennsylvania State House Committee Passes Bill on ‘Reporting Requirements’ for Crypto Miners
The Environmental Resources and Energy Committee of the Pennsylvania General Assembly recently passed a bill which proposes “reporting requirements for qualifying crypto-asset mining operations.” Sponsor of the draft legislation Greg Vitali said the bill “doesn’t prohibit any cryptocurrency operation from operating in any way.”
Reporting Requirements for Crypto Miners
The Pennsylvania House Environmental Resources and Energy Committee recently passed a bill on “reporting requirements for qualifying crypto-asset mining operations and for an impact study.” The committee also reportedly voted to remove the two-year moratorium on new mining operations from Bill 1476.
According to a report published by The Centre Square, the bill was passed despite resistance by Republicans on the committee. Sponsored by committee chairman Greg Vitali, the bill will now be forwarded to the full house. Explaining why he pushed for the bill’s passage, Vitali reportedly said:
This bill simply is a reporting and study bill. It doesn’t prohibit any cryptocurrency operation from operating in any way. It simply requires them to report what they are doing. Right now we’re in a situation where many cryptocurrency operations are gravitating towards Pennsylvania and we simply don’t know where they are and what they’re doing.
As per the draft bill, owners of qualifying crypto-asset mining operations will be required to furnish authorities with “the number and geographic locations” of any such operations. The type of mining machines, and their purchase as well as their retirement dates. As expected, the proposed law also requires crypto miners to share with authorities the amount of electricity consumed as well as when it is used.
However, Martin Causer, a Republican from Bradford, who opposed the bill, said the reporting standards proposed in the Vitali-sponsored bill are “burdensome and not necessary.” Concerning crypto miners’ alleged contribution to the State’s pollution legacy, the Republican representative said:
“A lot of these operations utilize waste coal and actually are beneficial to cleaning up waste coal in the commonwealth — which I think is beneficial.”
What are your thoughts on this story? Let us know what you think in the comments section below.
7 Senators Urge Treasury and IRS to Rapidly Implement Crypto Tax Reporting Rule
Seven U.S. senators have called on the Treasury Department and the Internal Revenue Service (IRS) to “implement the proposed crypto broker reporting rule as rapidly as possible.” The lawmakers stressed: “We are alarmed by the self-inflicted two-year delay for the rule’s implementation.”
Senators Want Crypto Tax Reporting Rule Implemented Swiftly
Senators Elizabeth Warren, Angus King, Richard Blumenthal, Gary Peters, Bernie Sanders, Sheldon Whitehouse, and Brian Schatz sent a letter to Treasury Secretary Janet Yellen and Internal Revenue Service (IRS) Commissioner Daniel Werfel on Oct. 10 concerning cryptocurrency taxation. “We write regarding the Treasury Department and Internal Revenue Service’s (IRS) recently proposed rule concerning tax reporting requirements for crypto brokers,” the letter begins.
“We are alarmed by the self-inflicted two-year delay for the rule’s implementation, which would contravene the requirements of the bipartisan Infrastructure Investment and Jobs Act, disadvantage law-abiding Americans, and cause the federal government to lose out on billions of dollars in tax revenue,” the lawmakers emphasized, adding:
We urge your agencies to limit this troubling delay and implement the final rule as swiftly as possible, while maintaining the rule’s substance in the face of industry attacks.
The reporting rule requires brokers to “provide crypto users with the information they need to file their taxes through a modified 1099 form” and “provide the IRS with income information from crypto trades so that would-be tax avoiders are easier to track down,” the senators explained. Moreover, the rule defines “brokers” to include “any party who facilitates crypto sales while in a position to know the identity of the seller and the nature of the transaction,” the letter clarifies.
“Limiting any further delay in the implementation of the Administration’s proposed rule would combat industry efforts to evade regulation, provide clarity to law-abiding taxpayers, and generate billions in tax revenue from a chronically tax-avoidant industry,” the lawmakers noted, adding:
Accordingly, we request that the Treasury Department and IRS implement the proposed crypto broker reporting rule as rapidly as possible and ask that you provide an update by October 24, 2023 on your efforts to do so.
What do you think about the senators asking the Treasury and the IRS to implement the proposed crypto tax reporting rule as rapidly as possible? Let us know in the comments section below.
US Representative Introduces Legislation to Mandate Reporting of Off-Chain Crypto Transactions to the CFTC
Virginia’s Democratic representative Don Beyer has ushered in a fresh bill mandating the documentation of off-chain transactions and over-the-counter (OTC) crypto engagements by cryptocurrency exchanges, to be catalogued in a repository under the purview of the U.S. Commodity Futures Trading Commission.
New Legislation Targets Off-Chain Transfers in Crypto Industry
Representative Don Beyer (D-VA), has unveiled a new legislative piece reportedly aimed at safeguarding stakeholders in the digital assets arena. Titled the “Off-Chain Digital Commodity Transaction Reporting Act,” this bill mandates “trading platforms to report all transactions to a repository registered with the Commodity Futures Trading Commission (CFTC).”
Beyer posits that crypto trading platforms bear the responsibility for “reporting all such transactions to a registered digital asset repository of transactions as soon as technically practicable after the execution of each such transaction.” Under Beyer’s legislation, all off-chain digital asset transactions are to be reported within a 24-hour window. Off-chain transactions may encompass peer-to-peer swaps, OTC trades, and even the simple transfer of reserve assets.
“As consumers increasingly turn to large digital asset trading platforms to conduct their business, thousands of transactions each day are conducted off the publicly verifiable blockchain,” Beyer remarked on Thursday. “Unfortunately, internal record keeping among these private entities can vary wildly, and this can leave investors and consumers vulnerable to fraud and manipulation.
The Virginia-based politician added:
This bill is a common-sense measure to restore some transparency and confidence to the digital asset market.
Beyer’s press release underscored that the advent of crypto trading platforms, coupled with an aspiration to expedite transaction times and diminish costs, leads to thousands of transactions transpiring “off-chain” daily, absent from the public eye on the blockchain.
The bureaucrat posits that numerous platforms uphold internal private ledgers to chronicle transactions, though the integrity of these records can fluctuate. Beyer fervently contends that such inconsistencies might pave the way for disputes, manipulation, or fraud, emphasizing that the objective of this legislation is to shield ordinary investors.
In 2023, Democratic policy architects have set their sights on cryptocurrency markets, with nine U.S. legislators rallying behind U.S. senator Elizabeth Warren’s (D-MA) Digital Asset Anti-Money Laundering Act. Yet, a wave of Democratic voters have expressed disdain for Warren’s and the party’s stance on crypto, declaring their intent to cast ballots against the Democrats due to this issue.
What do you think about the politician’s new bill that would require crypto platforms to submit off-chain records to the CFTC in 24 hours? Share your thoughts and opinions about this subject in the comments section below.
Tether Calls Out WSJ ‘Tabloid Style’ Reporting, States Outlet ‘Disregarded’ Reporting Banking Industry Woes
Tether, the company behind the issuance of USDT, the largest stablecoin in the crypto market, has called out the latest report of the Wall Street Journal (WSJ) on the rise of its loan portfolio. The company stated that traditional banking institutions were “not addressing the needs of their customers” while facing “significant challenges,” with the WSJ not reporting on this issue.
Tether Blasts WSJ Article, Calls It ‘Tabloid Reporting’
Tether, the stablecoin company, has called out a recent Wall Street Journal (WSJ) article as “tabloid-style reporting” directed to “tarnish” the reputation of innovative companies.
The article, which points out the rise in Tether loans in the latest financial quarter update, was heavily criticized by the company, which stated that the news outlet had ignored reporting on the problems the traditional banking industry is facing.
In a statement, Tether declared:
The banking industry is facing significant challenges and has proven incapable of keeping up with evolving global financial markets, something the Wall Street Journal has disregarded countless times.
Furthermore, Tether defended its financial position, boasting more than .3 billion in excess reserves, a number that would reduce its exposure to these secured loans. Tether declared it was still committed to removing the secured loans from its reserves.
Lending Impasse
In the article bashed by the company, the WSJ reported that Tether spokeswoman Alex Welch confirmed the company received loan requests from customers with whom they had “cultivated longstanding relationships,” deciding to accommodate them.
WSJ writer Jonathan Weil explained these loans represented “a potential risk to the crypto world.” However, for Tether, the moves in its lending portfolio are a logical step given the company’s financial standing.
Tether rebuffed Weil’s assertions, declaring:
Anyone with a minimum understanding of financial markets would see how a company having .3 billion in excess equity and on track to make a yearly profit of billion is in all effects offsetting the secured loans and retaining such profits.
Tether has been expanding its focus, investing in bitcoin mining operations in Latam, like Volcano Energy in El Salvador and another undisclosed mining project in Uruguay.
Tether has also invested in the artificial intelligence (AI) semiconductor market. According to reports, the company purchased 10,000 Nvidia H100 graphics processing units (GPUs) used for AI computations for 0 million, securing a stake of 20% in Northern Data, a Bitcoin mining company.
What do you think about the increase in Tether’s loan portfolio and its criticism of WSJ’s coverage? Tell us in the comments section below.