The latest cryptocurrency news put the Internal Revenue Service (IRS) in the focus. According to reports, the IRS is hunting suspected cryptocurrency holders and traders who may have misreported digital assets on their tax returns. As the sources show, there have been more than 10,000 warning and action letter sent by the authority.
Letters such as the 6174-A, 6173 and CP2000 have all appeared in the mailboxes of many cryptocurrency traders all around the United States. A lot of crypto tax software companies are also on the hunt list – and have seen an influx of customers coming to them for tax help out of fear of penalties.
As many best cryptocurrency news sites showed, the main problem and reason why IRS is hunting traders is the misreporting of their documents. However, traders claim that the authority does not have all of the necessary information – and that the information they have is extremely misleading.
For those of you who don’t follow our Bitcoin and altcoin news, cryptocurrencies like Bitcoin in the US are treated as a property from a tax perspective – and not a currency. Just like many other forms of property (stocks, bonds, real estate etc.) the capital gains and losses are incurred on the bills.
It also doesn’t come as a surprise that a lot of traders are not paying taxes on their crypto activity. This is why the IRS is hunting traders – which is also why it makes sense to start out carrying out these enforcement campaigns.
In general, cryptocurrency users are constantly transferring crypto in and out of the exchanges. Therefore, the exchanges have no way of knowing how, when, where or at what cost the cryptocurrencies are acquired. They can only see what appears in the wallet on the specific platform.
The second a person transfers crypto in or out of an exchange is when the exchange loses the ability to give users an accurate report detailing the cost basis and the fair market value of the cryptocurrencies. Both of these aspects are mandatory components for tax reporting.
All in all, the IRS is hunting traders without all the information. So, if you receive a warning letter from the IRS, you should not panic. As long as you are properly filing your crypto gains and losses, you should be fine.
G7 Says ‘Global Stablecoins’ Are A Threat To Financial Stability
"The G7 believe that no stablecoin project should begin operation until the legal, regulatory and oversight challenges and risks are adequately addressed. [...] Addressing such risks is not necessarily a guarantee of regulatory approval for a stablecoin arrangement."The G7 also says that global stablecoins with the potential to scale rapidly are the ones that could stir up the competition and threaten the financial stability if users lose confidence in the coin. The report will purportedly be presented to finance ministers at an annual meeting of the International Monetary Fund this week.The BBC features that G7 says that while the report does not single out Facebook's Libra stablecoin project - it could spell further trouble for the already beleaguered proposed payments system, the Libra news show.On the other hand, we have global regulators that are increasingly leaning on the project. The Bank of England (BoE) recently established provisions with which it must comply before it can be issued in the United Kingdom.The CEO of Facebook, Mark Zuckerberg, will testify before the United States House of Representatives Financial Services Committee about Libra this month. Earlier this year, the committee drafted its “Keep Big Tech out of Finance Act.”While G7 says that stablecoins like Libra are a threat to the financial system, it seems like the backers behind Libra are on the same page. If you followed our previous news, you probably know that on October 4, the major payments network PayPal withdrew from the organization - later followed by Visa, Mastercard, Stripe and eBay.Furthermore, we saw Finco Services of Delaware initiating a lawsuit against Facebook and alleging trademark infringement, unfair competition, and “false designation of origin” regarding the use of the Libra logo.
US SEC Deems $1.7 Billion Telegram Offering As Illegal
“Our emergency action today is intended to prevent Telegram from flooding the U.S. markets with digital tokens that we allege were unlawfully sold.”Earlier today, our site reported that the SEC along with other US regulatory agencies including the Commodity Futures Trading Commission and the Financial Crimes Enforcement Network - decided to issued a warning to crypto asset holders against violations of the Bank Secrecy Act and the use of crypto in money laundering cases as well as terrorism financing.Before that, two weeks ago the news featured a US SEC hearing before the House Financial Services Committee which followed a lot of questions that remained as to who would be taking the lead on determining the status of cryptocurrencies - whether it's going to be regulators or legislators. The US SEC Commissioner Robert J. Jackson Jr. spoke at the time and said:
“Is this going to be more of a legislative move or an SEC move? [...] At the moment I don’t know.”This is not the first time that the US SEC regulator is taking such approach in deeming projects illegal. The Telegram Open Network (TON) is valued at $1.7 billion and has been in the blockchain news lately as one of the more promising projects.Meanwhile, the markets are still suffering and slowly declining in their comfort zones. BTC holds on to the $8,300 level, while Ethereum is at $185. XRP's momentum builds up as the cryptocurrency broke through $0.2778 overnight.
Alipay Will Ban All Bitcoin (BTC) And Other Crypto Transactions
“If any transactions are identified as being related to bitcoin or other virtual currencies, @Alipay immediately stops the relevant payment services,” the tweet read.This move, as the cryptocurrency news show, follows various reports that Alipay is being used for BTC transactions.Before the news that Alipay will ban BTC and other transactions, we saw an update from Binance on October 9 which showed that the exchange has begun accepting fiat currencies through the online payment service Alipay and the mobile and messaging app WeChat. The CEO was in the latest Binance news - Changpeng Zhao said that the exchange is not working directly with WeChat or Alipay and that users are still able to use these services for peer-to-peer transactions.Even though it seems contradictory to this, the fact that Alipay will ban these types of transactions comes as a surprise for many people. China's stance on crypto has been changing all the time and Binance was definitely among the main drivers of a positive regulation.Meanwhile, AliPay is a popular third-party mobile and online payment platform established in Hangzhou, China in February 2004 by Alibaba Group. The app offers a variety of services that bring convenience in the users' everyday life. According to some reports, Alipay is the most widely used third-party online payment service provider in the world, with more than 100 million daily transactions and 520 million active users.As soon as the news that Alipay will ban Bitcoin and other crypto services came, there was an ocean of responses by traders who stated that this is a backward stance by the leading payment provider and not a very smart move at all.
IRS Issued Its First Crypto Tax Guidance In 5 Years
- the tax liabilities created by cryptocurrency forks;
- the acceptable methods for valuing cryptocurrency received as income;
- how to calculate taxable gains when selling cryptocurrencies.
“If your cryptocurrency went through a hard fork, but you did not receive any new cryptocurrency, whether through an airdrop (a distribution of cryptocurrency to multiple taxpayers’ distributed ledger addresses) or some other kind of transfer, you don’t have taxable income,” the document reads.Accrding to Jerry Brito who is an executive director at Coin Center, the IRS language might create even more confusion.
“While the new guidance offers some much-needed clarity on certain questions related to calculating basis, gains, and losses, it seems confused about the nature of hard forks and airdrops,” Brito told the media a while ago, adding that "one unfortunate consequence of this guidance is that third parties can now create tax reporting obligations for you by simply forking a network whose coins you own, or foisting on you an unwanted airdrop.”
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