“I remember watching the hearings before the Energy and Commerce Committee with Mark Zuckerberg, and it was clear that a lot of my colleagues didn't really know a lot about technology,” recalls U.S. Representative Darren Soto. When Soto (D-FL) speaks about technology, it sounds personal. He references space launches at Cape Canaveral, which lies adjacent to his district, Florida’s 9th. It is, he mentions, also home to Disney World and Universal, which have made it a major hub for virtual reality as well as vacationers. A co-chairman of the Blockchain Caucus and sponsor of several closely pieces of blockchain legislation, …

Every Friday, Law Decoded delivers analysis on the week’s critical stories in the realms of policy, regulation and law. Editor’s note DeFi has stolen the show lately. Spectacular rises and falls of unaudited tokens named after meme-able foods changing hands via ascendant liquidity pools have left many of us unimaginative observers mostly blinking. In this area, I can offer no particularly hot takes beyond the line that keeps coming to me: “This does not end well.” Chalk it up to some midwestern assumption that money you make too quickly is never truly yours. But the situation with DeFi and yield …

A proposed tax cut by U.S. President Donald Trump could be a big win — or a relatively insignificant win — for the crypto industry if it is passed. In a news conference at the White House earlier this week, President Trump said that his administration was “very seriously” considering a capital gains tax cut. “We’re looking at also considering a capital gains tax cut, which would create a lot more jobs.” There is a debate over the extent of President Trump’s ability to deliver tax cuts. The long term capital gains rate of 20% is primarily governed by Congress, …

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 …

On Aug. 4, four U.S. congressional representatives wrote to the Internal Revenue Service (IRS) asking the tax authority not to overtax rewards from Proof-of-Stake blockchains. Explaining the difference in energy consumption between PoS and Proof-of-Work blockchains like Bitcoin’s, Representatives Tom Emmer (R-MN), Darren Soto (D-FL), David Schweikert (R-AZ) and Bill Foster (D-IL) wrote that the IRS may be overestimating gains: “We believe that taxpayers' true gains from these tokens should indeed be taxed. However, it is possible the taxation of 'staking' rewards as income may overstate taxpayers' actual gains from participating in this new technology.” Industry response and clarity on …

Crypto and taxes hardly go together like cream and sugar. Yet every crypto investor or business these days faces them. For many, starting with the United States Internal Revenue Service’s launch of the “it’s property, not currency” mantra in 2014, it has been six long years of trying to comply. However, there are plenty of useful tools available that may help with the process. But make no mistake, there are still many unanswered questions that can make doing your taxes a nightmare. Even most noncrypto taxpayers think of taxes as complex, and they are not wrong. But when it comes …

The United States’ Internal Revenue Service (IRS) is seeking information and tools to help it trace transactions using privacy coins, layer two protocols such as Lightning Network and side chains like Plasma and OmiseGo (OMG). A June 30 request for information published by the U.S. Department Of The Treasury reveals the IRS’ Criminal Investigation Division is seeking submissions for “an interactive prototype” with a graphic user interface for analyzing distributed ledger-based transactions involving privacy coins and other privacy-enhancing blockchain technologies. IRS peeks into privacy The document explicitly names Monero (XMR), Zcash (ZEC), Dash (DASH), Grin (GRIN), Komodo (KMD), Verge (XVG), …

The COVID-19 pandemic has crushed businesses, crippling life all across the world. It is costing darknet drug traffickers millions as well because their methods of moving drugs and funds have been compromised during the lockdown, according to a blog post by Chainalysis. “Darknet market revenue has fallen much more than we’d expect following Bitcoin’s recent major price drop,” Chainalysis reported, noting that supply problems for Mexican drug cartels and dealers in China’s Hubei province could be “hampering darknet market vendors’ ability to do business.” “Perhaps darknet market customers aren’t buying as many drugs given the public health crisis,” Chainalysis wrote, …

Famed currency speculator George Soros, who in 1992 broke the Bank of England to emerge a billionaire overnight by forcing the pound out of the European Exchange Rate Mechanism, believes: “We will not go back to where we were when the pandemic started. That is pretty certain. But that is the only thing that is certain. Everything else is up for grabs.” Giles Coghlan, the chief currency analyst at HYCM, had the following to say: “The volatile market conditions that have come about as a result of COVID-19 has investors looking for safe haven assets to protect their capital. The …

Multinational professional services firm Ernst & Young have released a crypto tax app called EY CryptoPrep. It’s a fully automated, web-based Software as a Service (SaaS) product to assist clients with U.S. tax filings. EY CryptoPrep takes data from numerous exchanges and major cryptocurrencies, automatically applies relevant tax rules and completes Form 8949. Clients can choose to use the program themselves or have it as part of a managed service. EY America’s Vice Chair of Tax Services Marna Ricker explained that the application was a direct response to growing interest in cryptocurrencies: "Our clients increasingly hold and trade crypto assets, …

There is only one month left until the United States tax season. After being extended due to the COVID-19 pandemic, the official deadline to file tax returns is now July 15. If you think that the U.S. Internal Revenue Service is all hung up on dealing with the COVID-19 stimulus package and will not carefully examine crypto reports — you had better think again. The IRS is taking steps to build cases against taxpayers who fail to report cryptocurrency, and after the new crypto tax guidance was published in October 2019, there are really no more excuses left to not …

The United States Tax Court has affirmed the IRS’ decision to deny a Maryland couple an installment plan. They state instead that the couple should liquidate their $7 million cryptocurrency holdings to pay off the tax debt. The couple failed to pay their 2017 tax return. As a result, they owe the IRS $1.1 million in unpaid taxes and penalties. In July 2018, they asked the IRS to allow them to pay the debt over a six-year installment plan, or IP. Along with the IP request, they enclosed a special form to prove that they are eligible for the proposed …