Coin Edition -
- Chainalysis’ Head of Global Tax says future crypto tax regime will be influenced by past events.
- Events leading to the final months of 2022 makes it difficult to implement the current tax regulation.
- There was no reference to the digital act or crypto anywhere in the tax code before the Infrastructure Act.
A disastrous end for cryptocurrency in 2022 would play a role in shaping the future crypto tax regime, according to Roger Brown, Head of Global Tax at Chainalysis. Brown made this comment during a Chainalysis “Know Your Crypto Compliance” Episode that has been uploaded on YouTube.
What role will #BlockchainAnalytics play in the future of #TaxRegulation? @RogerBr59295778 shares his perspective and experience navigating the complexities of cryptocurrency taxation on the latest episode of Know Your Crypto #Compliance. https://t.co/fgHtSUJ7no pic.twitter.com/I1JzLCbHRe— Chainalysis (@chainalysis) April 17, 2023
During the interview, Brown observed that the impact of the events around the crypto industry leading to the final months of 2022 makes it difficult to implement the current tax regulation. He explained that a single user could hold cryptocurrencies that qualify for capital losses and income at the same time, depending on the circumstance under which the assets are investigated.
Despite the evolving crypto industry, Brown thinks the tax regime has remained the same for the past year, a development he classifies as unsurprising. According to Brown, tax laws are made deliberately and often take years to catch up with market development. He also noted no reference to the digital act or crypto anywhere in the tax code before the Infrastructure Act. Hence, the reliance on either specific or general rules when treating crypto.
Brown compared the current crypto market conditions to the 2021 market when there was a high-profit ratio. He observed a different scenario with many people nursing losses from the crypto market. That makes it more complicated, as various issues test unrelated aspects of the tax code.
Some of the issues elaborated upon by Brown are offshoots of the disastrous activities that occurred toward the end of 2022 and the contagion that followed. He explained the chaotic impact of such events as they affected the resolution of capital losses and income and their calculations in enforcing the tax code. He acknowledged that those events would play a role in determining how the crypto tax regulation would evolve.
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