The US Internal Revenue Service (IRS) held a crypto summit in Washington D.C. on March 3, which saw a gathering of cryptocurrency experts and advocates, and some members of the government to discuss their concerns over cryptocurrency regulations, including plans on cryptocurrency profit taxation.
Company spokespersons from Coinbase, Kraken and Chainalysis attended the summit and agreed that the IRS is still rather vague when it comes to cryptocurrency tax. Greater clarity on cryptocurrency profit taxation is crucial at this point so crypto businesses have ample time to react to regulatory developments and plan for their progress accordingly.
According to a report by CoinTelegraph, Kraken representative Lisa Askenazy Felix, who is also head of global tax in the company, said that the level of scrutiny and pressure the US crypto industry is facing from regulators is unjustified. They also noted that the actions of big, prominent companies currently making headlines in the news are not representative of crypto businesses in the country.
In fact, companies in the crypto sphere have more to gain if they comply with regulations and cooperate with governing financial authorities. However, current IRS regulations are unclear and the crypto industry, which is fairly new, is facing challenges in trying to understand and react to sudden adjustments in regulations.
“Because it’s such an emerging industry, we are still very much trying to react to all these different developments in all these domestic jurisdiction we might be doing business in and all these foreign jurisdiction we might be doing business in,” she shared at the meeting.
At the summit, members at the conference touched on the topic of how blockchain and public ledgers, in particular, could help provide regulators with greater transparency to transactions happening on a blockchain network. Jesse Spiro, a representative from Chainalysis, said that regulators can see “transaction lifecycle(s)” with blockchain technology.
However, other panelists highlighted the limitations of blockchain data as many crypto exchanges, for example, still utilize centralized ledgers. In general, there are plenty of crypto exchanges in the market that are not subject to robust crypto laws, and companies may also choose to be based in other US states where laws are more lenient.
Several reports emerged last year of cryptocurrency holders receiving batches of warning letters from the IRS asking them to accurately declare the crypto assets they owned. With crypto assets added to the 1040 income declaration form, individuals who own digital assets will have to declare them truthfully from this year onwards.
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