Accointing Weekly Crypto News

Accointing Weekly | June 3

Our weekly crypto newsletter is here! Learn more about the different ways the OECD and the IRS plan to curb crypto tax evasion and how crypto can be used in humanitarian relief cases! We also have a crypto 101 tip for you!

Nailing crypto dodgers with whistleblowers

Tax authorities in the US and worldwide are considering putting extra pressure on crypto tax evaders by rewarding tipsters who give information about underreporting income on crypto transactions. As a result, taxpayers who evade crypto taxes could become both criminally and civilly liable under the state False Claims Acts (FCAs).

Delaware, Florida, Illinois, Indiana, Nevada, New York, Rhode Island, and D.C. authorize state FCA suits for tax evasion or falsely filed tax returns. While the federal False Claims Act explicitly excludes tax cases, the IRS and DOJ have tools tailored narrowly for tax fraud and evasion. The Internal Revenue Code envisions a 75% civil penalty for any underpayment of taxes attributable to fraud. When fraud can’t be established, penalties for failure to report or underreporting income could apply. Moreover, the Joint Chiefs of Global Tax Enforcement have announced their plans to try to adopt a whistleblower program to boost their crypto tax enforcement efforts. 

OECD wants to curb crypto tax evasion

Some crypto industry representatives met for the second time with representatives of the OECD at the end of May to discuss possible frameworks for better regulation of crypto assets. More narrowly, the discussion centered on whether crypto companies should be required to provide financial account information and report customer crypto holdings to national tax authorities. 

Banks are already required to do so under the Common Reporting Standard (CRS) or the Foreign Account Tax Compliance Act (FATCA) in the US. However, it’s questionable to what extent this could apply to crypto. The Coinbase representative Lawrence Zlatkin criticized the plans as currently being still “too broad.” Not only financial assets such as Bitcoin should be included, but also NFTs. The valuation of an NFT alone would pose further challenges for the industry, as there are no concrete parameters for this yet. There is still time to agree on a compromise acceptable to both sides. One thing is certain, though – the crypto market will undergo further regulations soon.

The humanitarian case for crypto 

The crypto skeptics will rush to tell you how overhyped crypto is or how destructive it could be to the economy and environment. Yet, crypto optimists rarely have a humanitarian argument in their rebuttal. Thankfully, in the past few years, crypto has matured to be the lifeline in humanitarian disaster relief and a way of payment for many financially excluded people in the developing world. 

In the summer of 2021, Hope for Haiti was planning a crypto pilot program that’d give cellphones with digital wallets and payment cards to 150 mothers, providing them with $50 in stablecoins they can spend on family essentials. Instead, the pilot project took a different direction after an earthquake destroyed the island, becoming the main channel for donations. Haiti was thus able to immediately receive tens of thousands of dollars in disaster relief funds – a process that usually takes months.

Read more about other cases where crypto has had a humanitarian dimension in this article

Crypto 101: What’s an ICO?

You’ve probably already encountered the abbreviation “ICO” throughout your crypto journey. But what is an ICO? Fear not – we’ve got the answer. It stands for Initial Coin Offering, and you can think of it as the crypto equivalent of an Initial Public Offering. It’s the first moment when a token for a specific project is available to trade on the market. An ICO is often the primary method to gather funds for the project.

Buying during an ICO is usually limited to a handful of investors that were “whitelisted,” and they get to purchase the token at a fixed price. This is a double-edged sword as sometimes the price might skyrocket while, in other cases, it’ll plummet after the ICO.

For more details on ICO, Bitcoin, and much more, check our Cryptocurrency 101 Beginner’s Guide!

Was this post helpful?

Related posts

Accointing Weekly | June 10
Our weekly crypto newsletter is here! Learn more about the recently proposed crypto bill in...
Accointing Weekly | June 17
Our weekly crypto newsletter is here! Learn more about the possible implications of the MiCA...
Accointing Weekly | June 24
Our weekly crypto newsletter is here! Learn more about IRS’ hunt for “hidden treasure” and...