Hello Dear Hustlers,
Today, we're diving into the intricate world of crypto taxation, but don't worry, we promise it won't be as dry as the tax code itself! 📖💼 We also have some exciting news about Twitter/X and lastly, we analyze why the SEC has delayed crypto ETFs.
New Crypto Tax Proposal
The U.S. government has released new crypto tax proposals.
Consisting of 282 pages, it's not your average bedtime story. But worry not, we've gone over it so that you don’t have to.
Here's your guide to the latest U.S. tax rule proposals:
1. Crypto Brokers in the Limelight
The headline act: Crypto brokers are now in the spotlight. This category contains crypto trading platforms (both centralized and decentralized), crypto payment processors, and specific crypto wallets. Their mission? To collect and report customer information to the IRS.
2. Unpacking the 1099 Form
Brokers are tasked with reporting customer tax positions through a brand-new 1099 form. This document leaves no stone unturned, meticulously detailing gains and losses, leaving no room for ambiguity.
3. The Horizon: 2026
Should these rules earn approval, they will officially kick in during 2026, becoming effective for the 2025 tax year. Mark your calendars!
4. The Architects Behind the Curtain
This ambitious proposal hails from a joint effort between the Department of Treasury and the IRS. Teamwork makes the dream work, after all.
So, why all the fuss?
The Duality of the Blade
On one hand, precise rules and regulations are the backbone of crypto's growth and evolution. They will usher the crypto realm out of the shadows and potentially fill the U.S. government's coffers with an estimated $28 billion over the next decade. Cha-ching!
On the other hand, resistance is palpable. These proposals cast a wide net covering decentralized exchanges and self-hosted wallets. If passed, they could reshape the U.S. decentralized finance landscape, and not necessarily for the better.
What Lies Ahead?
The crypto community and the public now hold the reins. The U.S. government has opened a public comment period, running until October 30th, followed by a public hearing on November 7, 2023.
Team-Inspired Analyst's Perspective:
Taxes are a certainty, much like paid subscriptions – you can't escape them, no matter how frustrating the service might be. However, vague regulations that cast doubt on decentralized platforms and the entire crypto space may encourage crypto companies to seek more welcoming shores. This migration has already begun, with some crypto firms bidding farewell to their U.S.-based services.
Founders are now advising crypto developers to focus on international clientele for the next 5-10 years. While these proposed tax rules remain in limbo, it feels like U.S. crypto enthusiasts are being kept at home by their parents, while the rest of the world revels in the crypto fiesta.
Twitter/X Scores a Crypto License in the U.S.
Twitter/X has achieved something quite substantial. It's been granted a "Currency Transmitter" License in the U.S., But what does that even mean?
Here's the breakdown:
1. The License Essentials
This license essentially gives companies the green light to handle digital assets in various ways. Picture this: storing them, transferring them, and even exchanging them. Not only that, but it also permits these companies to hold users' assets on their behalf. It's a pivotal step in Twitter's journey towards integrating digital assets into its platform.
2. A Full Package
But wait, there's more. This license isn't just about Twitter holding onto some cryptocurrencies. It extends its reach to cover related services too. Think crypto wallets, payment processors, and even exchanges. Twitter is gearing up to be a one-stop shop for all things crypto.
Now, isn't that intriguing?
SEC Extends Wait for Bitcoin ETF Decisions: Patience Required
We've got news from the SEC (Securities and Exchange Commission), and it's a mixed bag.
The SEC has hit the snooze button on its decision-making process regarding bitcoin ETF (Exchange-Traded Fund) applications. Applicants, including industry giants like BlackRock and WisdomTree, will have to hold their breath until October for a verdict.
Why the Delay?
Now, here's the backstory. The SEC has decided to give everyone a little more time. This extension means more opportunities for folks to chime in with their thoughts and opinions. Public feedback and the comment period will stretch out, allowing for a more comprehensive evaluation of these applications.
The Ripple Effect
This news might be a tad underwhelming, especially after the recent Grayscale case, which had the markets brimming with anticipation for a swift approval. However, let's not hit the panic button just yet.
This delay is similar to suspense building in your favourite movie. While it might test your patience, the extra time invested in scrutinizing these applications could ultimately lead to more informed decisions.
And that's a wrap on our weekly newsletter!
This is Zain from Team Inspired Analyst
-Signing off
Disclaimer:Â This is not financial advice or recommendation for any investment. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.