TaxDAO Crypto Compliance Policy Report for the Second Half of December
This report summarizes tax, accounting, and compliance policy developments in the global cryptocurrency industry for the second half of December 2024.
On the tax front, The IRS has classified DeFi front-ends as brokers for tax reporting. The US reiterated its position in a tax dispute case, arguing that rewards from staking activities do not constitute new property and opposing legal challenges to delayed tax collection. Japan proposed that the 2025 tax reform outline will clearly include “review of virtual currency tax adjustments.”
On the accounting front, The Financial Accounting Standards Board (FASB) has implemented its Fair Value accounting rule for crypto, effective Dec. 15, 2024.
On the compliance front, The Russian government imposed a six-year ban on crypto mining in 10 regions. UK FCA Launches Discussion Paper for Its Crypto Regime. The National Bank of Cambodia (NBC) has permitted commercial banks and payment institutions to offer services involving Category 1 crypto assets. Turkey has introduced new anti-money laundering regulations for cryptocurrency.
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Part I Tax
Tax-USA-The IRS has classified DeFi front-ends as brokers for tax reporting (12.27)
The United States Internal Revenue Service (IRS) has issued final regulations requiring brokers to report digital asset transactions, expanding existing reporting requirements to include front-end platforms, such as decentralized exchanges. Set to take effect in 2027, the rules mandate that brokers disclose gross proceeds from sales of cryptocurrencies and other digital assets, including information regarding taxpayers involved in the transactions.Click here to read the original article.
Tax-USA-IRS doubles down on crypto staking taxes (12.23)
The Jarretts filed a second lawsuit in October 2024, seeking a declaration that their staking rewards should be treated as property and taxed only upon sale. The United States Internal Revenue Service (IRS) has reiterated its position that rewards from staking activities do not constitute new property, opposing a legal challenge that sought to defer taxes until rewards are sold or exchanged. According to a Dec. 23 Bloomberg report, the agency denied arguments from a second lawsuit brought by Joshua Jarrett and his wife, Jessica Jarrett. The agency claimed that rewards constituted taxable income upon receipt. The IRS’ response states: “Revenue Ruling 2023-14 requires taxpayers who receive staking rewards to report the rewards as income at their fair market value upon having the ability to sell, exchange, or otherwise dispose of them.”Click here to read the original article.
Tax-Japan-The 2025 Tax Reform Outline explicitly includes “Review of Cryptocurrency Taxation”(12.20)
In connection with this matter, the Digital Headquarters of the Liberal Democratic Party, along with Takeya Hirai, the first Digital Minister, visited the Financial Services Agency and presented “Urgent Proposals to Make Cryptocurrency an Asset Beneficial to the National Economy” to Minister of State for Financial Services, Katsunobu Kato. With the inclusion of cryptocurrency transaction taxation in the Liberal Democratic Party’s tax reform outline, a clear path for future reforms will be laid out, including the review of tax rates, the improvement of loss and profit offset rules, and changes to tax classifications. Click here to read the original article.
Part II Accounting
Accounting-USA- New fair value Bitcoin accounting rules go live paving way for corporate reserve adoption(12.26)
The Financial Accounting Standards Board (FASB) has implemented its Fair Value accounting rule for crypto, effective Dec. 15, 2024.This update aims to address accounting and disclosure practices gaps for cryptocurrencies while enhancing transparency in financial reporting. Under the new rule, companies must measure their crypto holdings at fair value and update these valuations in every reporting period. This change enables businesses to reflect gains and losses from market price fluctuations in their financial statements.Click here to read the original article.
Part III Compliance
Compliance-Russia-Russia Imposes 6-Year Ban on Crypto Mining in 10 Regions (12.24)
The Russian government imposed a six-year ban on crypto mining in 10 regions due to the industry’s high power consumption. The ban, which includes participation in a mining pool and temporary restrictions in other regions during periods of peak demand, takes effect Jan. 1 and ends March 15, 2031.Click here to read the original article.
Compliance-UK-UK Set to Prohibit Public Offers of Crypto (12.16)
The U.K. intends to prohibit public offers of crypto, the Financial Conduct Authority said in its paper on the incoming crypto regime. Legislation will be put in place to prohibit public offers of crypto, building on the U.K.’s promotion rules that prevent unregistered crypto firms from reaching out to U.K. clients. Only crypto asset trading platforms and offers qualifying for exemptions may not be subject to this.Click here to read the original article.
Compliance-Cambodia-Cambodia’s Central Bank Greenlights Stablecoins and Backed Coins
The National Bank of Cambodia (NBC) has permitted commercial banks and payment institutions to offer services involving Category 1 crypto assets, such as backed or stable cryptocurrencies. This marks the first time the NBC has approved such services, as outlined in a directive issued on December 26 and announced on December 27.However, unbacked cryptocurrencies like Bitcoin remain prohibited. The directive seeks to regulate operations involving digital currencies, reflecting Cambodia’s efforts to align with global financial trends.Click here to read the original article.
Compliance-Turkey-Turkey Tightens Crypto AML Rules (12.25)
Turkey is set to implement stringent crypto regulations by February 2025 as part of their effort to tighten anti-money laundering (AML) frameworks to align with global standards. This legislative move, announced in the final week of 2024.From February 25, 2025, all crypto transactions exceeding the 15,000-lira threshold will require Turkish crypto service providers to verify identities. Click here to read the original article.