On 27 April 2023, HM Revenue & Customs (HMRC) released a second consultation regarding the taxation of transactions in the Decentralised Finance (DeFi) market. In short, HMRC proposes to legislate to ensure that the use of cryptoassets in certain DeFi transactions would no longer give rise to a taxable disposal, but instead would trigger taxation only when the assets are economically disposed of in a non-DeFi transaction. This is a significant step for HMRC and the UK…
Washington based think tank Coin Center has brought a lawsuit against, among others, the United Sates Treasury Department and Internal Revenue Service regarding a reporting requirement included in last yearās major infrastructure legislation. We wrote at that time about the criticism of the bill with respect to the reporting burdens that were going to be placed on ābrokersā of ādigital assetā transfers. The Coin Center lawsuit focuses on the so-called Section 6050I reporting requirement, which…
On May 16, 2022, the Australian Tax Office issued a publication that identified four key focus areas for the 2021-22 tax year. These four are areas where the ATO says they see people making mistakes. One of the areas is capital gains from crypto assets. The ATO plans to ensure that there is an appropriate level of scrutiny on correct reporting of deductions and income for the priority areas. The ATO warned that taxpayers who…
On April 25, 2022, European Central Bank Executive Board member Fabio Panetta delivered a speech at Columbia University in New York in which he was very critical of cryptoassets. As indicated in the title of the speech — āFor a Few Cryptos More: the Wild West of Crypto Financeā — Mr. Panetta compared cryptocurrencies to the Wild West gold rush in the United States in the second half of the 19th century (while also working…
It was big news when the U.S. Senate recently passed the $1 trillion infrastructure bill.Ā One aspect of that bill was a revenue raising provision aimed at the cryptocurrency industry.Ā In an article that was just published in Bloomberg’s Tax Management Memorandum, we look at the nuts and bolts of that provision, and take a deeper dive into the criticism of the bill by the cryptocurrency community, as well as the failed attempt to modify the bill…
If you happened to prepare your own tax return this year or at least looked at the top of the first page, you might have noticed that the IRS has literally moved cryptocurrency transactions to the top. We recently published an article in Bloombergās Tax Management Memorandum that looked at the aggressive moves the IRS is taking with respect to cryptocurrency. We looked at the disparate ways that the various U.S. government agencies define cryptocurrency,…
Since the ICO boom in 2017, governments around the world began settling on different approaches to regulating the crypto industry. Many legislatures and regulators proactively drafted new laws, regulations, guidance and frameworks for the crypto industry. Others used investigatory authorities and enforcement actions to regulate the industry. We expect that governments around the world will remain active for the foreseeable future as cryptoassets become more mainstream. Baker McKenzieās new guide, Crypto around the World, presents…
In a previous post, we explained how the U.S. Internal Revenue Service had introduced a question on the 2020 tax form that asked, āat any time during 2020 did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency.ā Along another path, the IRSās Operation Hidden Treasure is a partnership between the civil office of fraud enforcement and the criminal investigation unit aimed at rooting out tax evasion from cryptocurrency owners. …
A federal judge in Canada issued an Order compelling Coinsquare Ltd to divulge customer details to the Canada Revenue Agency. Coinsquare is a crypto-exchange based in Toronto. In a statement posted to its blog, Coinsquare characterized the result as a āsignificant victory.ā According to Coinsquare, instead of providing the CRA with all client data dating back to 2013 as was initially requested, Coinsquare and the CRA agreed that information relating to 90-95% of the clients…
An indictment unsealed on December 9, 2020 shows that cryptocurrency founder, Amir Bruno Elmaani (aka āBruno Blockā) has been charged with two counts of U.S. federal tax evasion. Elmaani is alleged to have made millions of dollars in income from the sale and exchange of cryptocurrencies but attempted to obscure his ownership of that income through various schemes and evaded reporting that income to the U.S. IRS. In September and October 2017, Elmaani, using his…