Crypto Compliance and Taxation Outlook of the America - Espay Exchange - PowerPoint PPT Presentation

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Crypto Compliance and Taxation Outlook of the America - Espay Exchange

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Cryptocurrencies in America are not considered legal tender. However, Cryptocurrency exchanges are legal and the regulations vary by state. In this article, we will be discussing the entire regulation and taxation situation in the US, along with state laws that pertain to Cryptocurrency and blockchain technology. – PowerPoint PPT presentation

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Title: Crypto Compliance and Taxation Outlook of the America - Espay Exchange


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(No Transcript)
2
Introduction
  • Cryptocurrencies in America are not considered
    legal tender. However, Cryptocurrency exchanges
    are legal and the regulations vary by state. In
    this article, we will be discussing the entire
    regulation and taxation situation in the US,
    along with state laws that pertain to
    Cryptocurrency and blockchain technology. Lets
    get started!

N. America
S. America
3
Cryptocurrency Regulation Outlook
  • It is quite overwhelming to find a reliable
    lawful approach to Cryptocurrencies in the US.
    Every law that is governing centralized crypto
    exchanges varies by state. Moreover, federal
    authorities differ in their definition of the
    term Cryptocurrency. The FinCEN (Financial
    Crimes Enforcement Network) doesnt consider
    Cryptocurrencies to be a legal tender. However,
    FinCEN has been considering exchanges as money
    transmitters since 2013, based on the fact the
    tokens are other value that substitutes for
    currency. On the contrary, the IRS considers
    Cryptocurrencies as property and has issued tax
    regulation for that reason.  
  • Regulatory laws for Cryptocurrency exchange in
    the US are also in an indecisive lawful
    territory. Many of the federal regulators allege
    jurisdiction. The Securities and Exchange
    Commission has indicated that it considers
    Cryptocurrencies as securities. In March 2018,
    SEC stated that it was seeking to apply
    securities laws comprehensively for exchanges and
    digital wallets. On the contrary, the Commodities
    Futures Trading Commission has adopted a friendly
    and do-no-harm approach, explaining Bitcoin as a
    commodity and permitting Cryptocurrency
    derivatives to buy and sell openly. 

4
Cryptocurrency Regulation Outlook
  • The Justice Department is working with the CFTC
    and SEC over future Cryptocurrency regulations to
    make sure that the customers are effectively
    protected and regulatory oversight is more
    streamlined. Treasury of the US has emphasized an
    urgent need for crypto regulation to combat
    domestic and global criminal activities. In
    January 2018, Steve Mnuchin and Treasury
    Secretary declared a new FSOC working group to
    look at the progressively more crowded
    Cryptocurrency marketplace.
  • In June 2015, New York managed to become the
    first state of the US to regulate virtual
    currency companies via state agency rulemaking.
    In 2019, there were 32 states of the US that
    introduced legislation accepting or encourage the
    utilization of Bitcoin and blockchain distributed
    ledger technology (DLT). A few states passed them
    into law. However, some of them established task
    forces to revise the further use of technology.
    In 2017, the FTC gave LedgerX Crypto trading
    platform operator in the US, permission to become
    the first federally regulated digital currency
    options exchange and clearinghouse.

5
New York
  • Crypto Regulatory Sandbox In 2015, New York
    released the BitLicense that is needed by any
    virtual currency company serving New York
    business owners or residents. The New York State
    Department of Financial Services (NYDFS)
    established the BitLicense to provide guardrails
    that safeguard customers and root out illegal
    doings without stifling advantageous
    improvement.  According to the legislation, any
    individual or company who is involved in any of
    the following activities in New York should
    obtain a BitLicense
  • Performing exchange services as a customer
    business
  • Trading virtual currency as a customer business
  • Virtual currency transmission
  • Issuing, controlling or administering a virtual
    currency
  • Maintaining custody of virtual currency on the
    behalf of others

New York
6
New York
  • Trading Ban No
  • Banking Ban No
  • Tax Haven Region No
  • Is it best Place for License Yes, BitLicense
    can be acquired by following simple instructions
    in New York

New York
7
Washington State
  • Crypto Regulatory Sandbox In December 2014, the
    DFI in Washington State formed the Emerging
    Payments Task Force during the annual conference
    of State Bank Supervision (CSBS). In September
    2015, the annual conference of State Bank
    Supervision released a model regulatory platform
    for virtual currencies. 
  • According to the Washington States government,
    virtual currencies are considered as a digital
    currency or Cryptocurrency. Virtual currencies
    are the medium of exchange not adopted by a
    government. In December 2014, Bitcoin was added
    to the definition of Money Transmission. Every
    virtual currency in the state of Washington is
    subject to the UMSA Uniform Money Services Act.
  • Trading Ban No
  • Banking Ban No
  • Tax Haven Region Yes
  • Is it best Place for License Yes, Washington
    has generated a multi-state licensing program to
    make it easy for companies to comply with crypto
    regulations.

Washington State
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California
  • Crypto Regulatory Sandbox The legislature of
    California is working on a new set of regulations
    specifically designed for virtual currencies and
    inspired by the New York BitLicense. In February
    2017, the Virtual Currency Act was a bill
    proposed to the California Legislature. The
    Assembly Bill was released by the Legislature in
    August 2016. Just like the New York BitLicense,
    already established banks would not be needed to
    apply for the California Virtual Currency License
    if they want to involve themselves in the
    activities of the Cryptocurrency business.
    Nonetheless, the bill will be needed for any new
    businesses that lack a bank charter.
  • This bill would prohibit an individual from
    involving in any virtual currency business, as
    defined, in California unless the individual is
    licensed by the Commissioner of Business
    Oversight or is exempt from the licensure
    prerequisite, as provided. This bill will also
    need applicants for licensure, including an
    applicant for licensure and approval to get
    control of a licensee, in order to pay the
    commissioner a nonrefundable application fee and
    finish an application form, amongst other things,
    prior virtual currency services offered by the
    applicant, detail of the applicant, a sample form
    of receipt for transactions concerning the
    virtual currency business, and specified
    financial statements. 

California
9
California
  • Trading Ban No
  • Banking Ban No
  • Tax Haven Region No
  • Is it best Place for License No, its too early
    to create a license on Bitcoin and other virtual
    currencies since they are still in the earliest
    stages of development.

California
10
Argentina
  • According to the National Constitution of this
    country, the only authority that is able to issue
    legal currency is the Central Bank. Bitcoins are
    not lawful currency strictly speaking, as they
    are not issued by the monetary authorities of the
    government and are not a legal tender. 
  • Hence, they can be considered money but not legal
    currency. They are not an essential means of
    cancelling debts or obligations. 
  • Even though Bitcoins are not certainly regulated,
    they are increasingly being used in this country
    that has strict controls over foreign currencies.
    According to some professionals, a bitcoin can be
    considered a good or a thing under the civil
    code, and transactions related to Bitcoins can be
    governed by the rules of the sale of products
    under the civil code. The latest amendment to the
    Income Tax Law provides that the gain derived
    from the sale of digital currency will be
    considered income and taxed as such. 
  • Trading Ban No
  • Banking Ban No
  • Tax Haven Region No
  • Is it best place for License No

Argentina
11
Cryptocurrency Taxation Outlook of America
  • In October 2019, the US Internal Revenue Service
    (IRS) issued new guidelines on the tax treatment
    of virtual currency willing to assist taxpayers
    to understand tax and reporting obligations for
    transactions including virtual currency, along
    with tax treatment of hard fork transactions.
  • In the same year, the IRS also released a draft
    of Schedule 1 to Form 1040. That draft would need
    taxpayers to answer whether they had any virtual
    currency-related transactions during the tax
    year.
  • The guidelines issued by IRS and the proposed
    amendment of Schedule 1 Form part of the Virtual
    Currency Compliance Campaign of the IRS that was
    initiated in July 2018 and emphasizes that the
    tax outcomes of Cryptocurrency or virtual
    currency transactions are a focal point for the
    IRS.
  • The new guidelines also mention that the income
    tax treatment of certain transactions that are
    unique to Cryptocurrency, for example, airdrops
    and hard forks.

12
Cryptocurrency Taxation Outlook of America
  • According to the new guidance issued by the IRS
  • A person who is paying tax does not recognize
    gross income as an outcome of the hard fork of
    the Cryptocurrency owned by the taxpayer if that
    person does not receive units of new
    Cryptocurrency.
  • A person who is paying tax does recognize gross
    income, ordinary in character, as an outcome of
    an airdrop of new Cryptocurrency following a hard
    fork if the person who is paying tax receives
    units of Cryptocurrency. The total amount of the
    gross income to be recognized is the fair market
    value of the new Cryptocurrency.
  • If the person who is paying tax is capable of
    selling, transferring, or exchanging, or
    otherwise disposing of Cryptocurrency, which will
    be the case once the Cryptocurrency is recorded
    in the distributed ledger of the taxpayer, then
    the taxpayer has the vital extent of control and
    dominion.
  • In cases where the ledger of the taxpayer at a
    Cryptocurrency exchange does not get credited due
    to the reason that the exchange does not yet
    favors the new Cryptocurrency, the person who is
    paying tax does not have dominion until the new
    Cryptocurrency is accredited. 

13
Final Thoughts
  • Before you get started with centralized exchange
    development or white label crypto exchange
    software development in America, you must know
    about the crypto regulatory and taxation outcome
    of that region. As a crypto owner, you must stay
    updated with the compliance of the Commodity
    Futures Trading Commission and the US Securities
    Exchange Commission and then think of making your
    Cryptocurrency decision!

14
Thank You
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