Every Friday, Law Decoded delivers analysis on the week’s critical stories in the realms of policy, regulation and law. Editor’s note One of the most persistent myths about Bitcoin is its supposed anonymity. More properly termed pseudonymity, BTC wallets are permanently tied to their public keys. Most of you know that. But it took government investigators years of trying to corral Bitcoin transactions on dark web marketplaces like the Silk Road to figure that out. Now, however, blockchain analysis is a growing industry, catering to a range of clients including many of the most shadowy of government agencies. This was …
Seems like we now all have stories starting with, “What I did during the pandemic...” Most begin with cleaning out the closet and, hey, guess what? That’s where my story starts, but I bet you can’t guess where it ends! Let’s start with what I found in that closet: family photos before the days of digital. I know — memories of boring trips with the kids and people who I either owe money to or who don’t talk to me anymore! And all of these are nicely arranged in photo albums. You know, photo albums. Big, bulky books with strange …
As important as Ethereum has become, even eclipsing Bitcoin (BTC) in some circles, it is no wonder that its fifth birthday has prompted comments — some prophetic, others nostalgic. Few, however, will mark the occasion by thinking about taxes, but that could be shortsighted. The last five years have seen near-tectonic shifts in how investors, exchanges and government agencies see cryptocurrencies. The Internal Revenue Service, or IRS, is at the top of the heap when it comes to tax enforcement. This is plainly true in the United States, and it is increasingly true worldwide, too. In 2008, the IRS and …
When you file your taxes this year, the Internal Revenue Service will ask you a simple question: “At any time during 2019, did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency?” It’s pretty simple, just yes or no, right? What could go wrong? It’s not really asking for numbers or any detail, though if you sold some it should go elsewhere on your tax return. After all, since the IRS classifies crypto as property, any sale is going to produce either a gain or loss. Perhaps the IRS is just surveying who is …
2021 will be remembered as the year of nonfungible tokens (NFTs). In a year where names like Beeple and Bored Ape Yacht Club dominated the headlines, it’s estimated that NFTs have generated more than $23 billion in trading volume. The rise of NFTs has ushered in a new generation of investors who spend time scouring platforms like Discord and OpenSea looking for the next 100x opportunity. However, it’s important for the NFT investor of today to keep tax implications in mind. Otherwise, they risk repeating the mistakes of the past. After the 2017 bull run, many crypto traders found themselves …