48-Nation Bloc To Crack Down On Using Crypto Assets To Avoid Tax (theregister.com) 30
A bloc of 48 nations have developed the Crypto-Asset Reporting Framework (CARF), aimed at standardizing reporting requirements for crypto assets to address concerns related to money laundering and tax evasion. It's set to be implemented by 2027. The Register reports: Developed by the Organisation for Economic Co-operation and Development (OECD), the CARF was developed under the 168-member Global Forum on Transparency and Exchange of Information for Tax Purposes, with the G20 and the Organisation for Economic Co-operation and Development looking on approvingly and lending a hand. As the name implies, that Forum is all about sharing data so that each nation's tax authorities have the information they need to understand money movements and make sure they can see what they're allowed to tax. The Forum and the legislative instruments it has fostered include reporting requirements that ensure relevant information is collected by those who facilitate transactions and will be shared.
CARF brings similar reporting requirements to crypto assets. Note the term "crypto assets." That's important, because cryptocurrency is not the only blockchain-based instrument that worries authorities. Some, like non-fungible tokens, rely on the same "greater fool" theory that pumped up cryptocurrency prices, and can attract - ahem - interesting investors. But others are far less contentious or speculative, and instead aim to speed transaction processing. Stablecoins, for example, are often suggested as a means for faster and cheaper cross-border transactions than is possible with dominant transaction processing services. Tokenized assets can also be more easily integrated into applications to ease automated money movements.
That speed and flexibility is increasingly appreciated. But unless transactions made with those instruments can be observed, the potential for their use to evade tax authorities is high. CARF's use of the term "crypto assets" therefore signals an effort to cover the weird world of cryptocurrencies and the emerging classes of classier tokenized assets. The Framework was signed off in March 2023, and in the time since OECD members and other interested nations have been dotting the Is and crossing the Ts to prepare for its implementation. The Framework can be found here.
CARF brings similar reporting requirements to crypto assets. Note the term "crypto assets." That's important, because cryptocurrency is not the only blockchain-based instrument that worries authorities. Some, like non-fungible tokens, rely on the same "greater fool" theory that pumped up cryptocurrency prices, and can attract - ahem - interesting investors. But others are far less contentious or speculative, and instead aim to speed transaction processing. Stablecoins, for example, are often suggested as a means for faster and cheaper cross-border transactions than is possible with dominant transaction processing services. Tokenized assets can also be more easily integrated into applications to ease automated money movements.
That speed and flexibility is increasingly appreciated. But unless transactions made with those instruments can be observed, the potential for their use to evade tax authorities is high. CARF's use of the term "crypto assets" therefore signals an effort to cover the weird world of cryptocurrencies and the emerging classes of classier tokenized assets. The Framework was signed off in March 2023, and in the time since OECD members and other interested nations have been dotting the Is and crossing the Ts to prepare for its implementation. The Framework can be found here.
Well, I guess then that's it (Score:2)
That's pretty much the last reason gone to deal in shitcoins.
How is crypto different than cash in this regard? (Score:3)
I'm in the "crypto is a carbon intensive ponzi scheme" crowd but how exactly does it enable tax evasion? If you're focusing on transactions, as TFA seems to be, e.g., I'm paying the babysitter and she ain't claiming it on her taxes, how is that any different than cash? Or Venmo and friends with the "goods and services" option flipped off? My partner pays me over 10k annually for her half of our household expenses and Venmo has never reported it to the IRS. If they did report it to the IRS it would not be considered taxable. My partner writing me a check [wikipedia.org] (kids, those were negotiable paper instruments) for her half of the household expenses would not be taxable either. It's not "income" to me..
If you want to talk about capital appreciation, that's a taxable event, but don't all the crypto exchanges report sales with realized gain (or loss) to the relevant authorities?
If the real beef is with transactions, as it seems to be, this is a whole lot of nothing and crypto doesn't offer anything cash hasn't offered since basically forever. You still need a platform of some sort to sell your wares at scale large enough to matter for tax purposes. I can sell you something on Etsy and make you meet me in a dark alley to pay for it with cash. There's still a record of that sale in Etsy's systems. If Etsy's records disagree with what I report to the IRS by a few hundred bucks nobody is going to care. If they disagree by thousands or more, someone is going to notice, and if the IRS comes calling you better have a plausible and legal explanation for the difference.
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>but don't all the crypto exchanges report sales with realized gain (or loss) to the relevant authorities?
Not necessarily.
They make them available if the authorities want to poke around, but they don't have to report them. For example, in Canada cryptocurrency exchanges are required to report transactions worth more than $10,000 to the CRA. Under 10K they don't have to report it to anyone.
The various tax collecting agencies around the world invariably have been relying on you to fill out the proper forms
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It helps avoid them by not having the money in the bank where it might be reported. However eventually it has to be turned into real money to spend, and if that can be done also without the banks noticing (like the exchanges that act like a bank but which refuse to follow the laws). Also if they spend the fauxcoins directly with a vendor that does not collect sales tax or VAT.
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Also it's quite difficult to do large scale tax evasion using cash as the supply is controlled. Much easier to do it using property (as the orange one is currently demonstrating), metals, shares, et al. The notion that a small cash only corner store is defrauding the IRS/HMRC/ATO of billions of your currency unit is absolutely ludicrous. They might be avoiding a little bit of sales tax, but that's peanuts to actual tax evasion and chances are they wouldn't end u
120 Nation Bloc to embrace Cryptocurrency (Score:2)
"You may notice that several known tax havens made the above list. A few others didn't sign up, meaning CARF won't completely crush crypto's role as a means for moving messy money."
With 120 remaining choices, that's hardly a crackdown and a far cry from completely crushing it.
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I noted only one BRICS member that signed up, and a few EU countries that didn't also.
Crypto-washing Investment Fraud (Score:2, Insightful)
It's braindead simple. All cryptocurrencies, inclusive of Bitcoin, demand an investment of money, whether directly or by using a resource (electricity etc.) as a proxy. In exchange for that investment, the buyer gets a speculative digital token which allows them to claim returns from funds contributed by later investors.
That's it. That's all. There it is. Congratulations, y
Re: Crypto-washing Investment Fraud (Score:2)
Devil's advocate (Score:4, Insightful)
Most people take this kind of financial reporting for granted. Let's take a step back, and ask: why?
Pick any asset. What about tools? Those are expensive. Maybe gems and jewelry, they are a bit more easily used in trade and barter. Does the government know about the number of rings you own? Those expensive earrings you just bought your spouse?
Now, if the government suspected that you were running a criminal enterprise, and tools (or gems) were the way you took payment, they could get a warrant. They could get records from the local hardware store (or jeweler). They could search your house. Without evidence? No warrant, and you have privacy.
Why is this different for financial assets? Why does your bank tattle on you, anytime you make a transaction over a certain threshold? Why does the government get copies of your salary slips? Why, in this particular area, are you not entitled to the same privacy - the same presumption of innocence - as in every other area of your life?
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The ownership of high-value physical assets is taxed. If bitcoin is a physical asset then they are just doing their job and looking to tax a high-value asset. However, if bitcoin is a currency then it's tax evasion and they are just doing their job.
If you don't understand the most fundamental economic principles underpinning all modern societies then you should stay silent on the topic.
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If you don't understand the most fundamental economic principles underpinning all modern societies then you should stay silent on the topic.
Or perhaps you should actually read my comment.
I understand perfectly well that governments want to collect their taxes. My question is: if your government thinks that you are hiding income or assets, in order to avoid taxation, why should they not have to get a warrant to breach your privacy? Why should governments have automatic insight into your financial records?
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Why should governments have automatic insight into your financial records?
To detect money laundering, tax evasion, and other criminal activities. Organized crime, foreign influence campaigns, and terrorism undermine the rule of law causing your nation to trend toward becoming a failed state and recovering from that is no simple task. If you need an example, just take a look at Mexico.
So again, if you don't understand the most fundamental economic principles underpinning all modern societies then you should stay silent on the topic.
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Please sign me up for your newsletter. I need a good laugh once in a while.
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Folks, just blend into the background, get some popcorn, and watch the devil's grand finale fireworks but make sure you've first maximized your self reliance and minimized your government dependency, or you won't stand a chance.
I'm guessing you're excluded from your own advice since it seems you're looking down on others as if you're doing a lecture at a TEDTalk.
At least share with the everyone how YOU maximized your self reliance and minimized your government dependency.
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So (Score:1)
Essentially, they want to force reporting centralized digital currency assets, similar to how now banks report fiat accounts.
It will be more difficult to enforce it, it's no longer 2013 that USA can dictate stuff like FATCA.
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