TaxDAO Crypto Compliance Policy Report for the First Half of November
Abstract
This report summarizes the tax and regulatory policy developments in the global cryptocurrency sector during the first half of November 2024.
On the tax front, Italy adjusts the cryptocurrency tax rate to 28%. The United States – IRS: Cryptocurrency rewards must be taxed even if the account is frozen. Russia advances cryptocurrency tax legislation, implementing a two-stage taxation approach. Israel State Auditor holds tax authority accountable for $800M crypto tax gap: report. Kenya has collected over $77 million in taxes from 384 cryptocurrency traders.
On the compliance front, the United States – Russian CEO’s market manipulation services snared in U.S. Justice Department’s cryptocurrency crackdown. The U.S. FBI’s creation of a token has led to significant plea agreements dismantling a cryptocurrency fraud syndicate. French Regulator says it’s examining Polymarket. UK Lords echo support for digital assets property bill. The cryptocurrency mining legalization bill in Russia has taken effect.
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Part I Tax
Europe and America
Italy
Tax – Italy – Italy Adjusts Cryptocurrency Tax Rate to 28% (11.14)
Italian Prime Minister Giorgia Meloni’s government is poised to reduce the proposed cryptocurrency tax rate from 42% to 28%, which is currently set at 26%. This means that under the current policy, the tax rate will see a slight increase rather than rising to 42%. This policy shift aims to balance the need for increased tax revenue with the goal of attracting investment. The revised tax rate is a response to industry concerns that a higher tax could negatively impact Italy’s competitiveness in the growing digital asset sector. Click to read the original article
The United States
Tax – The United States – IRS: Cryptocurrency Rewards Must Be Taxed Even if the Account is Frozen (11.2)
The Internal Revenue Service (IRS) has clarified that cryptocurrency rewards must be taxed even if the account holding them is frozen. According to a recent memorandum, individuals must report and pay taxes on cryptocurrency rewards received before their account was locked, including staking bonuses, in the year they were received. This guidance, which aligns with sections of the Internal Revenue Code, emphasizes that the tax obligation is tied to the year of receipt, regardless of subsequent access to the account. The IRS further specifies that only rewards that have not been credited before the freeze are exempt from taxation until they become accessible. This ruling underscores the importance of understanding tax liabilities associated with digital asset holdings, especially in the context of platform bankruptcies and account freezes. Click to read the original article
Asia
Russia
Tax – Russia – Russia Advances Cryptocurrency Tax Legislation, Implementing a Two-Stage Taxation Approach (11.13)
On November 11th, the Russian Government’s Committee on Legislative Activities advanced a cryptocurrency tax bill. The bill defines cryptocurrency as property and establishes different tax requirements for individual and corporate miners. Under the new regulations, businesses must register with the Federal Tax Service to legally conduct mining operations, while individuals with a monthly electricity consumption of less than 6,000 kilowatt-hours are exempt from registration. The new framework adopts a two-stage tax model, with the first stage taxing at the time of cryptocurrency receipt and the second stage taxing at the time of sale. Starting from 2024, individual traders and miners with an annual income exceeding. Click to read the original article
Israel
Tax – Israel – Israel State Auditor Holds Tax Authority Accountable for $800M Crypto Tax Gap: Report (11.6)
Israel’s State Comptroller, Matanyahu Englman, reportedly held the tax authority responsible for not strengthening its crypto tax collection efforts. This comes as the nation’s debt burden rises amid ongoing war. A Tuesday report from Israel’s top financial newspaper Globes states that the government could have collected 3 billion New Israeli Shekels ($800M) in taxes for the Finance Ministry. Englman urged finding effective ways to tax crypto rather than raising public taxes. Click to read the original article; Click to View Hot Topic Analysis from TaxDAO
Africa
Kenya
Tax – Kenya – Kenya may strengthen the tax collection of crypto assets through technological upgrades. (11.7)
According to the disclosure by the Kenya Revenue Authority (KRA) Commissioner General, Anthony Mwaura, Kenya successfully collected approximately 77.5 million (about 10 billion Kenyan shillings) in taxes from 384 cryptocurrency traders during the 2023-2024 financial year. Meanwhile, the KRA will continue to strengthen cryptocurrency taxation and plans to collect about 465 million (60 billion shillings) from the cryptocurrency sector in the next financial year. The KRA will collaborate with the Central Bank of Kenya to install a real-time tax system and will utilize machine learning, artificial intelligence, and data analysis technologies to enhance tax collection efficiency and transparency. Click to read the original article; Click to View Hot Topic Analysis from TaxDAO
Part II Compliance
Europe and America
The United States
Compliance – The United States – Russian CEO’s Market Manipulation Services Snared in U.S. Justice Department’s Cryptocurrency Crackdown (11.3)
The U.S. Department of Justice (DOJ) has taken down a Russian CEO’s market manipulation services in a significant cryptocurrency enforcement action. Aleksei Andriunin, the founder and CEO of Gunbot, has been indicted on charges of wire fraud and conspiracy to commit market manipulation and wire fraud, accused of orchestrating an extensive wash trading scheme to artificially inflate cryptocurrency trading volumes and deceive global investors and exchanges. Prosecutors allege that Andrunin employed wash trading techniques to fabricate transactions, creating a false impression of market activity, which aided Gunbot’s clients, including those in the U.S., in securing listings on platforms like Coinmarketcap and entry into larger cryptocurrency exchanges. Click to read the original article
Compliance – The United States – FBI’s Creation of a Token Has Led to Significant Plea Agreements Dismantling a Cryptocurrency Fraud Syndicate (11.2)
In a landmark operation involving a cryptocurrency token created by the FBI, a major cryptocurrency fraud ring has been dismantled with significant guilty pleas. Liu Zhou, the founder of MyTrade, has entered a guilty plea to federal charges of conspiracy to commit market manipulation and wire fraud, representing a groundbreaking case in the prosecution of a cryptocurrency “market maker.” Zhou, who was responsible for orchestrating a wash trading scheme on the MyTrade MIM platform to artificially boost trading volumes and market value for clients on various exchanges, is scheduled for sentencing on February 27, 2025, with potential penalties including a prison term of up to five years and substantial financial fines. Click to read the original article
France
Compliance – France – French Regulator Says It’s ‘Examining’ Polymarket (11.7)
France’s gambling regulator, ANy, is scrutinizing the operations of cryptocurrency-based prediction market Polymarket following a French national’s substantial profit from betting on Trump’s U.S. election win, potentially leading to a ban due to violations of French gambling legislation. Click to read the original article
UK
Compliance – UK – UK Lords Echo Support for Digital Assets Property Bill (11.7)
Members of the UK Parliament’s House of Lords have expressed their support for the Law Commission’s digital assets property bill, which is anticipated to streamline the resolution of crypto legal disputes. Additionally, they have called upon the new Labour government to provide further clarity on crypto regulations to foster a more transparent and supportive environment for digital assets within the United Kingdom. The bill could aid in efforts to remain at the forefront globally, Lord Frederick Ponsonby of Shulbrede said. Click to read the original article
Asia
Russia
Compliance – Russia – The Cryptocurrency Mining Legalization Bill in Russia Has Taken Effect (11.3)
A law legalizing cryptocurrency mining in Russia took effect on November 1, establishing qualification requirements for miners and assigning regulatory responsibilities. Russian citizens mining cryptocurrency must not exceed 6000 kWh of electricity per month; exceeding this limit requires registration as an individual entrepreneur and reporting the quantity of mined cryptocurrency and wallet addresses to tax authorities. Russia may prohibit mining activities in regions with electricity shortages, and President Putin has stated that Russia has become one of the world leaders in cryptocurrency mining.
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