The government of the United States, crypto-assets, and a Token could regulate in a different way as stocks and traditional assets, by changing the existing regulatory framework for securities.
On 22. December, told CNBC that two congressmen, namely, Warren Davidson and Darren Solo, a cross-party draft bill entitled “law on the taxation of Token” (“Token Taxonomy Act”), introduced to prevent over-regulation of the crypto currency area.
“In the early days of the Internet, the Congress passed laws of the messengers, the security. The temptation was resisted, the market überzuregulieren. Our intention is to achieve a similar gain for the American economy and the American leadership position in this innovative field,” says Davidson.
What impact might the cross – party law on the taxation of Token to the crypto-currency and Blockchain-industry?
clarity – Exactly what the industry needs
In a statement, said the Blockchain Association, a non-profit trade Association in Washington, D.C., many of the largest companies in the cryptocurrency industry, such as Coinbase, Circle, Digital Currency Group believes that the draft law contains a Definition of crypto-assets, and the digital Token, which would you exclude from the classification as securities.
In the last two years, many Blockchain projects from the US have turned away from market, to Token sales in countries such as Switzerland and Singapore. These provide a forgiving and flexible environment for Initial Coin Offerings (ICOs).
With a clear Directive to the regulatory aspects of tokens and digital assets, the law Blockchain projects, and encouraged to stay in the US market and to the growth of the local crypto – currency and Blockchain industry.
The vast majority of Token sales, and ICO projects – apart from a few, such as Telegram, a private Token of sale according to Reports, with the approval of the U.S. securities and exchange Commission (SEC) has investors in the United States due to the ambiguity of the existing securities laws from participating in the Token sales excluded.
Even projects such as 0x (ZRX), which were recorded from the strictly regulated U.S.-crypto-currency exchange Coinbase, enabling the project to avoid a classification as the value of paper, were investors in the country to participate in the ICO.
“If these terms are now clarified, we can monitor bad actors and promote the Good at the same time. Innovators from the USA get to the frame you need in order to develop technologies and services for the next Generation here, instead of this valuable work abroad”, so the Blockchain Association.
The draft law currencies also provides for the first Time in the history of the market clarity in terms of tax policy with Crypto. Thus, the friction between Blockchain networks and users is eliminated.
Currently, users are obliged in the United States, capital income taxes to be paid on all crypto – currency TRANS – actions-small or large-because the U.S. tax authority IRS of crypto currencies as a Form of property has been classified.
Although the bill does not want to change the classification of the crypto-currencies as property, not before he sees a exemption from capital gains tax on transactions in excess of US $ 600 (around 530 Euro). In order for such transactions from tax-free exchange transactions.
The Blockchain-Association added:
“in addition, this legislation contains provisions that would include questions on the tax treatment of the Token. In 2014, the IRS stated that “virtual currencies” will be treated as property, which means that for all transactions, taxes on capital income must be calculated. This led to enormous tensions in decentralized networks. The legislation addresses this aspect by providing a De minimis exemption for income of less than 600 US provides for Dollar and a tax-free similar exchange allows for transactions.”
decentralization is the key
The bill will require the SEC and other law enforcement authorities lump all types of tokens and ICO projects as Non-securities. It allows the SEC to continue, on the basis of a newly defined and Directive authority over Token exercise, which are considered to be securities.
On 14. June, the Director of the corporate Finance Department of the SEC, Bill Hinman said that the degree of decentralisation of the project was a key factor in determining whether a Token in accordance with the existing regulations, the value of paper.
If a Blockchain network is sufficiently decentralised and no Central party has control over the majority of the elements of the project, including of its monetary policy, and development, can not be considered to be in the company’s own Token to the Blockchain network in accordance with the existing rules as securities, the SEC Director in a speech. Hinman said:
“If the network on which the Token or Coin is to work, is sufficiently decentralised, and the buyer must not expect that a Person or group performs significant managerial or entrepreneurial activities, represent the assets may not be in the investment contract. If, in addition, the efforts of the third party is no longer a key factor for business success, the significant information asymmetries.”
The SEC and the legislature of the draft, I agree that a value paper, as long as it is sufficiently decentralized, it is allowed to exist without Intervention by the authorities.
Should the law be passed, it is expected that both the Token-Issuer and the investors are able to assess, on the basis of the newly revised securities guidelines better, whether a Token will be considered securities or not. The law could also encourage more companies to register with the SEC to sell securities by means of an issue of tokens, in a private sale.
In the coming months, the Blockchain Association, a nonprofit organization, and represented companys and the US regulatory authorities work together for the improvement of the draft law, and it is so far forward, in order to obtain the consent of Parliament and of Congress.
On the draft, which is only in the last few months in work, said the Blockchain Association that he was, in many ways, perfect. But in the course of the year 2019, the industry leaders, experts and legislators will be working together to the policies for the crypto – currency and Blockchain-to strengthen the area.
“As with all laws in the initial phase, we expect that this law is still not perfect. What is, however, thrilled that it was suggested by a cross-party Team. This shows that there is a Vision for Innovation, and responsibility, in which the parties are in agreement. With the new Congress starting in January, we hope that digital tokens will play a role, on which we can build. We want to work together, to discuss the key issues, to ensure an adequate level of consumer protection and the legislation that represents our common views,” said the Association.
crypto-tax policy needs to be reformed
crypto-currencies like Bitcoin are fundamentally different, structurally and conceptually, of shares and more traditional forms of value. The Bitcoin market behaves and moves differently than the majority of the stocks with extreme volatility and fast price movement. Mainly because the market for investors, stock market is open in the global digital Asset 24 hours a day.
currencies The Problem with Crypto or with any new asset class in the beginning of time is that an investor could achieve by the end of the year a profit of 300 percent on the paper and in the following year, the entire profit could lose.
Since losses are not transferred to the next year, and the crypto-control is exactly as in the case of shares and real estate are calculated, the mismanagement of a crypto currency portfolio, a high tax burden for the investor.
On 21. December, the Wall Street Journal reported that investors could use certain strategies in order to reduce the taxes on crypto currency investments. For example, the sale and repurchase of crypto was called assets.
Without such strategies could relate to the aggressive approach of the IRS in the collection of taxes in the case of crypto-investors in the future, many investors. An example of this aggressive approach is to see, for example, in the Federal court decision, in which Coinbase has been arranged to provide information on about 13,000 crypto-currency trading accounts between 2013 and 2015, exceeding a value of US $ 20,000 (€17,500),.
Currently, the IRS assesses tens of thousands of trading accounts between 2013 and 2015, possible taxes on capital income to rise in crypto-currency investors. Investors who do not have the necessary Know-how, in order to reduce their tax rates, could be prosecuted in the future by the IRS, as the tax policy in relation to crypto continues to be the stocks and real estate.
If the bill is passed, and a new Definition for crypto-assets is introduced, most of the areas of the asset class, including taxation, probably.
From 2017 to 2018 rose Bitcoin to around 1,900 percent, from US $ 1,000 (877 Euro) of 19,500 U.S. Dollar (17.100 Euro). Since then, Bitcoin has fallen by around 85 per cent to US $ 4,000 (€3,500). For an asset class that tends to rise in value by margins that are not with the stock market comparable, and to fall, it is impractical to fall under the same tax policy.
Even large-scale projects, operating a
13. December announced the Basis that it is adjusting its operation, and by him applied to 133 million US-Dollar (EUR 116.6 euros) to the investors. The base is a Stablecoin project, which was financed by some of the biggest venture capital firms in the world, as Andreessen Horowitz and Bain Capital Ventures.
In contrast to other widely used stable coins, such as the USDC of the Circle and the GUSD of Gemini, is comprised of a base of an algorithm and changes the Token offer to the rates of other major crypto-assets, such as Bitcoin and Ethereum.
In an official statement said the Basis Team that the setting of the project is ultimately due to the securities law in the United States.
“there was over time becoming less and less regulatory instructions to our lawyers to the conclusion that there is no way to avoid a classification as a securities for debt and equity – Token (even though the base probably would not meet this characterization). Due to their Status as non-registered securities, bonds and shares are subject to the Token restrictions on the Transfer, where Intangible Labs for the restriction of the Token ownership to accredited investors in the United States in the first year after release and for the conduct of aptitude tests for international users was responsible.
According to the statement of Basis, it is likely that the SEC and the lawyers of the project were of the view that the Coin would not decentralised enough, as the development of a company officer the developer is directed team.
Basis was regarded as a promising algorithmic Stablecoin project. Inefficient regulatory framework and investment guidelines the crypto-assets just like stocks, and traditional assets, treat, limited the possibilities of the project.
For long-term growth of the crypto currency industry, the bipartisan bill is a new Definition of crypto-currencies is crucial to facilitate the development of the Blockchain technology and to promote innovations in the space. Jake Chervinsky, a securities lawyer at Kobre & Kim, said:
“would provide The law on the taxation of tokens is exactly the kind of regulatory clarity that needs the crypto industry. Such legislation is far more important than a non-binding recommendation for action by the authorities such as the SEC.”
will be approved During the time frame, to the non-partisan bill, it is uncertain to remain an industry leader and expert with regard to the first Initiative of the members of Congress for efficient Rderegulation of crypto-currencies in General, optimistic.
