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Decentralized Platforms May Benefit From Strict US Crypto Tax Laws

Decentralized Platforms May Benefit From Strict US Crypto Tax Laws
For the first time, cryptocurrency transactions in the United States will become subject to third-party tax reporting requirements. This reflects growing interest driven by rising digital asset valuations. The shift could also lead investors to decentralized platforms, as analysts say.

According to the final regulation published by the US Internal Revenue Service (IRS), centralized crypto exchanges (CEXs) and other brokers will start reporting the sales and exchanges of digital assets, including cryptocurrencies,

As per IRS report issued in June 2024, this decision aims to help investors “file accurate tax returns with respect to digital asset transactions,” and to address potential noncompliance in digital currency.

Anndy Lian, author and intergovernmental blockchain said, some investors may see this as an overreach, which could drive more users to decentralized trading platforms.

There’s a “real risk of pushing users toward decentralized platforms like Uniswap or PancakeSwap,” Lian told Cointelegraph.

Swiss state-owned bank PostFinance launches ETH staking

A crypto-friendly retail bank, PostFinance, fully owned by the Swiss government, is offering Ether staking to its 2.7 million customers, who make up roughly a quarter of the Swiss population.

In a blog post on Jan 16, the bank said the service would offer investments using Ether

ETH $3,380.90 for a fixed minimum term of twelve weeks, with the opportunity to sell the credited staking rewards.

It comes as other traditional banks move into the crypto space. In December, Anchorage Digital became the first US federally chartered bank to support liquid Ether staking.

A minimum of 32 Ether is generally required to stake, worth roughly $106,000, according to CoinGecko. PostFinance says it will allow people to stake using 0.1 Ether, worth roughly $331.

Alexander Thoma, head of digital assets at PostFinance, said in a statement that the bank’s staking service will be based on native staking directly on the Ethereum blockchain.

He said, “The staking service is completely integrated into PostFinance’s existing services.”

“This means that customers can see their staking rewards directly in their asset statement, together with their other crypto assets,” Thoma added.

 

 

Source: https://www.outlookmoney.com/cryptocurrency/decentralized-platforms-may-benefit-from-strict-us-crypto-tax-laws

 

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author. The latest book is Web4: The Age of Autonomous Intelligence.

www.anndy.com
j j j

Decentralized platforms may benefit from strict US crypto tax laws

Decentralized platforms may benefit from strict US crypto tax laws

Cryptocurrency transactions in the United States will become subject to third-party tax reporting requirements for the first time, reflecting growing interest driven by rising digital asset valuations. This shift could lead investors to decentralized platforms, analysts say.

Starting in 2025, centralized crypto exchanges (CEXs) and other brokers will start reporting the sales and exchanges of digital assets, including cryptocurrencies, according to the final regulation published by the US Internal Revenue Service (IRS).

The decision aims to help investors “file accurate tax returns with respect to digital asset transactions,” and to address potential noncompliance in digital currency, according to the IRS’ report issued in June 2024.

Some investors may see this as an overreach, which could drive more users to decentralized trading platforms, according to Anndy Lian, author and intergovernmental blockchain expert.

There’s a “real risk of pushing users toward decentralized platforms like Uniswap or PancakeSwap,” Lian told Cointelegraph:

“This shift could lead to a paradoxical situation where the IRS’s desire for tax revenue might drive more users towards environments where tax enforcement is currently unfeasible.”

Showcasing the crypto industry’s backlash, the Blockchain Association filed a lawsuit against the IRS in December 2024, arguing that the rules are unconstitutional since they include decentralized exchanges (DEXs) under the “broker” term, extending data collection requirements to them.

Blockchain analytics could make DeFi transactions traceable by 2027

Crypto transactions on decentralized finance (DeFi) protocols are harder to trace for tax authorities since these platforms aren’t operated by central intermediaries.

However, DeFi protocols will likely become more traceable by 2027, thanks to advanced blockchain analytics, Lian said, adding:

“While decentralized systems currently pose challenges for tax enforcement, advancements in blockchain analytics and potential regulatory developments by 2027 could change this landscape.”

To prevent a potential exodus, Lian said the crypto industry needs specialized tax brackets that account for high volatility and significant retail participation. “Treating crypto gains the same as traditional capital gains may not always be fair,” he said.

The soaring cryptocurrency valuations have invited the attention of other jurisdictions as well.

European retail investors should also brace for taxation following the implementation of the Markets in Crypto-Assets (MiCA) framework, according to Dmitrij Radin, the founder of Zekret and chief technology officer of Fideum, a regulatory and blockchain infrastructure firm focused on institutions.

He told Cointelegraph:

“Retail users will be way more, obligated to provide information, data which will be screened. They will be accounted for. Most Europeans will see taxation.”

MiCA is the world’s first comprehensive regulatory crypto framework, which went into full effect for crypto-asset service providers on Dec. 30.

 

Source: https://cointelegraph.com/news/decentralized-platforms-gain-from-strict-us-crypto-tax-laws

 

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author. The latest book is Web4: The Age of Autonomous Intelligence.

www.anndy.com
j j j