Aug 8, 2023

Crypto traders have been waiting for a set of new rules that will overhaul how they report their cryptocurrency taxes since the issuance of crypto tax documents was required in the law two years ago.

Video transcript

Crypto investors and their brokerages are waiting for a us tax rule that will completely revamp how they report their crypto taxes. Joining us now to discuss is the one man who deserves every one of our last tax dollars. That's Coindesk global policy and regulation. Managing editor Nick Day, who is also the editor of the most important newsletter saved from mind. Uh Coindesk state of crypto newsletter. Welcome and good morning, Nick. Good morning. So Jesse Hamilton is saying that the IRS actually came up with this proposal months ago, months ago. It took him forever to put it. I guess they're busy auditing people. Uh But really, what's the delay here is it is that they don't have the resources. Yeah. So what we're talking about here is the uh proposed broker dealer tax rule enshrined in the Infrastructure Investment and Jobs Act of 2021 otherwise known at the time as the bipartisan uh infrastructure bill, otherwise known as the massive thing in August that uh happened very quickly and drew a lot of concern from the industry over how it might classify crypto entities as brokers for tax purposes. Um So the IRS uh apparently has concluded its work on the proposed rule for, uh you know, how they don't want to find brokers uh with, uh with regard to crypto basically letting people know whether or not, you know, for example, entities like miners, wallet providers, et cetera. Um whether or not they'll be classified as brokers or how they'll be treated under this tax law. According to our colleague, Jesse Hamilton, um there has been some kind of a delay in actually publishing it. Uh He says uh based on his reporting, it appears to be coming from the White House rather than the Treasury Department itself. So, uh you know, concerns could be include the fact uh or this idea that um releasing this rule would kind of normalize crypto in a way that uh you know, not the court as quote is not, but, you know, of course, we have not heard back from the White House on this. So I still freaking us out. This is not normal. Sorry, Nick, can I just throw out a random sort of like paypal pao thing just to play around with here? So like we just had, you know, pax on the show and we were talking about the whole stable coin regulation thing and he kind of made it sound like all a company needs to do is like go to New York and register as a trust and then like all the regulatory problems are over, like I'm just curious. I was just like, if you could just rip on that for a second. Yeah, I mean, on the one hand sounds easier than it is, uh, based on all the companies that have actually, you know, been working in New York, a lot of companies have, you know, chosen not to operate in New York, but those companies that do operate in New York, they do have that, you know, that advantage of being able to say, yeah, we're overseen by, you know, one of the earliest regulators to get into crypto. We've got this, uh you know, regulatory framework, we're operating under uh a lot of companies that are, you know, operating in New York do have uh advantages because of that. Um you know, they're able to put on their marketing materials, they're able to tell, you know, sophisticated clients. Uh Yeah, you know, we're safe, we're not gonna, you know, fall apart like certain Bahamas based crypto exchanges uh and lose like money. Um So I guess like the, the two sides of the coin are on the one hand, uh if you are able to navigate, you know, the bit license process become a trust uh or otherwise get approved for what's interesting though, he was like drawing the distinction, right? Like he was saying that like us DC has the bit license, but they're a trust, right? If I understood correctly like that, they sort of have a different regulatory framework than, than us. Yeah, they, they're two different things. So bit licenses for like crypto exchanges. It's, I guess like a crypto version of a money transmitter license. So it lets them do certain activities. But trust is a different thing, um, under the same regime. But, uh, yeah, it gives them like certain other, uh, powers and authorities, um, you know, things like custody and, uh managing, um, you know, money directly, kind of if that makes sense, specter gadget needs to be involved in it. No, sorry, Nick. I I quickly want to ask you coming back to the taxes, what's gonna actually be different when these new rules come about uh when it comes to how investors file their taxes? Well, the big thing is um you know, when it comes to filing taxes right now, uh one of the questions people have is uh you know, first off, what am I filing. So the broker provision would basically kind of um enact certain data collection and sharing policies for the uh companies that are involved in these transactions. So in theory, at least on the investor side, it might become a little bit easier to uh figure out the tax situation. If you're a company, you'll have uh you know, some of those probably, you know, greater compliance costs and uh issues to deal with because you're gonna have to make sure that you have all the information, the reporting information that is required under the law. All Right, Nick. Great seeing you this morning. Thanks for that. That was Coindesk global policy and regulation. Managing editor Nick Day. Don't forget to sign up for the state of crypto newsletter on coindesk dot com.

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