Listen up, U.S. taxpayers: the IRS is getting ready to publish its first guidance on cryptocurrency taxation subjects in years.
IRS Commissioner Charles Rettig noted as much in a response letter to the Congressional Blockchain Caucus, which had wrote to Rettig’s agency back in April requesting a series of public clarifications, such as how U.S. cryptocurrency users should be taxed on crypto forks for example.
Therein, the commissioner said the answers to the caucus’s range of cryptocurrency questions could be expected in short order:
“I share your belief that taxpayers deserve clarity on basic issues related to the taxation of virtual currency transactions and have made it a priority of the IRS to issue guidance […] We have been considering these issues and intend to publish guidance addressing these and other issues soon.”
The commitment to further clarity comes after American crypto users have been complaining for years about an ambiguous regulatory thicket in the country. The IRS has hitherto treated digital currencies as property, while other U.S. government agencies approach them as commodities, securities, and money.
The IRS has told Congress that it will issue new cryptocurrency tax guidance soon. https://t.co/z0oEi0dbfC
— Coin Center (@coincenter) May 20, 2019
Of course, the IRS can’t clear up that confusing regulatory landscape in one fell swoop. But any additional clarifications the agency can offer will be gladly welcomed by traders who want to pay their taxes accurately.
How Should Cryptocurrencies Be Treated? It’s a Layered Question — There’s Many Twists and Turns Ahead
The IRS treats crypto as property, which makes it taxable in a very specific way in the U.S.– namely by bringing capital gain and/or capital loss implications into play.
Whether that’s the right way to treat cryptocurrency is a question ultimately for the American people to decide. If enough pro-crypto politicos were eventually elected to Congress, then federal legislation could be passed that could instruct the IRS to not tax crypto as property, among any number of other similar mandates. And that’s just one major regulatory wrinkle among hundreds in a single national jurisdiction.
Beyond just the people, the world’s most powerful institutions are also increasingly grappling with how to approach the cryptocurrency ecosystem.
For example, in a paper published this month by the European Central Bank (ECB), the institution that backs the euro and shapes the currency’s monetary policy said that “crypto-assets” did not currently pose a threat to the financial stability of the Eurozone economy … for the time being.
Indeed, the ECB said that threat could grow in the future:
“The sector nevertheless requires continuous careful monitoring, as market developments are dynamic and linkages to the wider financial sector may increase to more significant levels in the future.”
Accordingly, one of the most draconian Western takes yet on how cryptocurrencies should be treated came from U.S. Representative Brad Sherman earlier this month, when he proposed the creation of a bill that would ban cryptocurrency ownership in America altogether.
Today in Congress Rep. Sherman called for a bill to ban all cryptocurrencies.
This is why Coin Center is needed in DC now more than ever. pic.twitter.com/jgikm7z8bI
— Coin Center (@coincenter) May 9, 2019
Why so harsh? Rep. Sherman said it would be good to “nip [crypto] in the bud” because “it is the announced purpose of the supporters of cryptocurrency to take … power away” from the U.S. dollar, which the congressman attributed as being the foundation of America’s power on the international stage.
New Global Standards to Corral Crypto Coming
In other regulatory news, the inter-governmental Financial Action Task Force (FATF) is releasing new standards recommendations in June that will see the body asking member nations to enforce tougher rules on cryptocurrency exchanges.
Specifically, the forthcoming FATF recommendations would make it so such platforms have to provide relevant customer data among each other in order to facilitate transactions — a bank-like responsibility.
The prospect has already proven unpopular with stakeholders in the cryptoeconomy, though how entrenched the recommendations will become is up in the air for now.