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IRS Cryptocurrency Tax Compliance May Become Stricter

Blocksight Staff

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IRS Cryptocurrency Tax Compliance May Become Stricter

The Internal Revenue Service could do more to crack down on tax delinquency by users of virtual currency or digital assets, a new report suggests.

THE relationshipreleased Monday by the Treasury Inspector General for Tax Administration, acknowledged that the IRS had established “Operation Hidden Treasure” to identify taxpayers who omitted digital assets, such as cryptocurrency, from their tax returns. However, the operation was limited to acquiring tools and training, rather than prosecuting taxpayers. The project’s statute did not include specific enforcement objectives, in terms of criminal investigations or civil examination results, or statements identifying what it was seeking to accomplish.

The anonymity of virtual currency and the fact that cryptocurrency trading platforms do not routinely report virtual currency transactions to the IRS complicate enforcement efforts, TIGTA noted.

Internal Revenue Service IRS Headquarters in Washington, DC

Stefani Reynolds/Photographer: Stefani Reynolds/B

“Enforcing taxes on virtual currency transactions is a challenge for the IRS because it does not have a clear window into taxpayers’ virtual currency investments or transactions because their names are typically not directly associated,” the report said. “Furthermore, the IRS does not consistently receive reports from trading platforms about virtual currency transactions.”

The number of taxpayers using cryptocurrency as a means of payment is growing. Between April 2020 and July 2023, the number of virtual currencies increased by 420%. Since the IRS considers virtual currency to be property, any time a taxpayer uses cryptocurrency as a means of exchange, it potentially creates tax consequences.

“Making payments with virtual currency has encouraged taxpayers to move money abroad, purchase illegal goods and services, and engage in other nefarious activities,” the report said. “Users may believe there is an opportunity to evade tax reporting obligations.”

The IRS Criminal Investigation Division has leveraged analytics to address virtual currency noncompliance, the report noted. From fiscal years 2018 to 2023, the IRS CI investigated 390 cases involving virtual currency or digital assets, with 224 of those cases recommended for prosecution.

On the civil side, the IRS’s civil enforcement efforts that focus on digital assets like cryptocurrencies are “mostly indirect and negligible,” according to TIGTA. Form 1040 includes a question about digital assets, but the publicly released version of the report is partially redacted, so it’s unclear how the information from that question is being used.

The Infrastructure Investment and Jobs Act of 2021 requires brokers to file an informational return listing all digital asset transactions that occurred during the year, so the IRS created a new informational form, Form 1099-DA, to report the information needed to calculate gains or losses on those transactions. However, while the law is set to go into effect for transactions after January 1, 2023, the proposed regulations are effective for transactions after January 1, 2025 for gross proceeds reporting and January 1, 2026 for basis reporting. The proposed two-year implementation delay will likely hinder efforts to regulate the cryptocurrency industry and result in a loss of tax revenue.

TIGTA recommended that the IRS develop a compliance plan that includes the use of Form 1099-DA data, case identification, and digital asset case selection. Other recommendations were mostly censored.

“The IRS agrees that digital asset compliance enforcement can be improved,” Heather Maloy, IRS tax compliance officer, wrote in response to the report. “IRS compliance efforts are still recovering from years of underfunding. The multi-year funding provided by [the Inflation Reduction Act] allows us to hire more law enforcement personnel and invest in data analytics and technology solutions to support compliance efforts. We will use advanced data, analytics, and technology tools to select compliance cases based on the highest risk of noncompliance.”

Accounting Today recently interviewed Don Fort, former head of IRS Criminal Investigation and now chief business officer of IVIX, an AI-powered platform designed to help tax authorities fight financial crime and tax noncompliance, on the sidelines of the NYU Tax Controversy Forum in New York in late June. He explained how the IRS CI is using the technology to uncover unreported crypto transactions.

“At the moment, there is no information on cryptocurrencies,” Fort said. “There is a little bit, but it’s not the government-mandated 1099, and it won’t go into effect until January 2025 unless it gets deferred, which means you won’t see the 1099 until the 2026 filings. The previous commissioner and I think this commissioner, and many IRS officials, have talked about the fact that they believe part of the tax gap is attributed to cryptocurrencies and cryptocurrency and unreported capital gains, and buying and selling goods and services in cryptocurrency. But how do you find out who these people are? The blockchain is open and available to the public, but it doesn’t tell you the name of the person, so how does the IRS know that the person lives in the United States? How does a state know that the person resides within their state borders? This is an area where cryptocurrencies, because they are very technological, generally leave footprints behind that you can make connections with, whether it’s buying NFTs or something like that. Many of these people, even if they don’t want a tax authority to know who they are, leave footprints behind them.”

Social media apps and other sites can help analytics tools make these connections.

“People can leave a footprint that you might be able to triangulate and figure out who someone is,” Fort added. “There aren’t a lot of people out there that can generate leads in the cryptocurrency space. There are a lot of people who can track, but identifying who people are, aside from whistleblowers and John Doe citations, how do you actually figure out who these people are? I think that’s one of the most valuable areas we’re working in right now.”

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We are the editorial team of Blocksight, where seriousness meets clarity in cryptocurrency analysis. With a robust team of finance and blockchain technology experts, we are dedicated to meticulously exploring complex crypto markets with detailed assessments and an unbiased approach. Our mission is to democratize access to knowledge of emerging financial technologies, ensuring they are understandable and accessible to all. In every article on Blocksight, we strive to provide content that not only educates, but also empowers our readers, facilitating their integration into the financial digital age.

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Ether Drops Further After ETF Launch

Blocksight Staff

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Bitcoin Surpasses $66,000 Thanks to Strong ETF Flows

Key points

  • Spot ether ETFs began trading in the U.S. today, with the funds initially having more than $10 billion in collective assets under management.
  • Analysts expect the launch of spot ether ETFs to have a net negative impact on the underlying price of ether in the near term, due to expected outflows from the pre-existing Grayscale Ethereum Trust.
  • Spot Bitcoin ETFs continue to see strong inflows, with BlackRock’s IBIT alone seeing more than $500 million in inflows on Monday.
  • Franklin Templeton, a spot ETF issuer on bitcoin and ether, has invested in a project that intends to bring Ethereum technology to Bitcoin.

Nine-point ether exchange-traded funds (ETFs)) started trading on the stock market on Tuesday, but all the optimism ahead of their approval did not translate into gains for the cryptocurrency markets.

Ether (ETH), the native cryptocurrency of the Ethereum blockchain, dropped less than 1% around the $3,400 level as of 1:30 PM ET, while Bitcoin (BTC) fell more than 2% to around $66,000.

Ether ETFs’ Debut Isn’t as Flashy as Bitcoin ETFs’

Spot ether ETFs began trading at just over $10 billion assets under management (AUM)), according to Bloomberg Intelligence analyst James Seyffart, most of that money is in the current Grayscale Ethereum Trust (ETHE) which has now been converted into an ETF.

“In the long term, Grayscale will simultaneously have the highest and lowest fees in the market. The asset manager’s decision to keep its ETHE fee at 2.5% could lead to outflows from the fund,” Kaiko Research said in a note on Monday.

Outflows from ETHE, if they occur, would be similar to those faced by Grayscale’s Bitcoin Trust (GBTC) after spot bitcoin ETFs began trading in January of this year, most likely due to high fees for the two original funds. Grayscale’s existing fund charges 2.5% fees, while a new “mini” ether ETF will charge 0.15% and commissions for other ETFs are set at 0.25% or less.

Such outflows could impact the price of ether and market sentiment.

“There could be a pullback shortly after the launch of Ethereum spot ETFs, i.e. outflows from Grayscale Ether Trust could dampen market sentiment in the short term,” Jupiter Zheng, a partner at Hashkey Capital’s liquid fund, told The Block.

But Grayscale remains optimistic.

“Compared to the splashy debut of spot bitcoin ETPs in January, the launch of ethereum ETPs has been relatively muted,” said Zach Pandl, Grayscale’s head of research, adding that investors may be “undervaluing” ether ETFs that are “coming to the U.S. market in tandem with a shift in U.S. cryptocurrency policy and the adoption of tokenization by major financial institutions.”

Bitcoin ETF Inflows Continue to Rise

As for bitcoin, there is clearly no lack of demand for spot ETFs, such as BlackRock’s iShares Bitcoin Trust (IBITS) recorded its sixth-largest day of inflows in its short history on Monday, at $526.7 million, according to data from Farside Investors. Daily inflows for the overall spot bitcoin ETF market also hit their highest level since June 5.

In particular, asset manager Franklin Templeton, which has issued both bitcoin and ether ETFs, appears to have decided to cover its back when it comes to Ethereum by investing in Bitlayer, a way to implement Ethereum technology on a second-layer Bitcoin network, according to CoinDesk.

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Spot Ether ETFs Start Trading Today: Here’s What You Need to Know

Blocksight Staff

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Spot Ether ETFs Start Trading Today: Here's What You Need to Know

Key points

  • Spot ether ETFs will begin trading on U.S. exchanges on Tuesday. Nine ETFs will trade on Cboe BZX, Nasdaq and NYSE Arca.
  • Ether ETFs offer investors exposure to the price of their underlying assets.
  • Commissions on these new ETFs generally range from 0.15% to 0.25%.
  • These ETFs do not provide exposure to Ethereum staking.

The U.S. Securities and Exchange Commission (SEC) has officially approved nine ether spots (ETH)exchange-traded funds (ETFs) for trading on U.S. exchanges. Trading for these new cryptocurrency investment vehicles begins today. Here’s everything you need to know.

What new ether ETFs are starting to trade today?

Spot ether ETFs starting trading today can be found at Quotation, NYSE Arkand Cboe BZX. Here’s a breakdown of each ETF you can find on these three exchanges, along with the fund tickers:

Cboe BZX will list the Invesco Galaxy Ethereum ETF (QETH), the 21Shares Core Ethereum ETF (CETH), the Fidelity Ethereum Fund (FETH), the Franklin Ethereum ETF (EZET) and the VanEck Ethereum ETF (ETHV).

Nasdaq will have the iShares Ethereum Trust ETF (ETHA) created by BlackRock, which also operates the largest spot bitcoin ETF under the ticker IBIT.

NYSE Arca will list the Bitwise Ethereum ETF (ETHW) and the Grayscale Ethereum Trust (ETHE). The Grayscale Ethereum Mini Trust (ETH), which will begin trading on the same exchange.

How does an ether ETF work?

Spot ether ETFs are intended to offer exposure to the price of ether held by the funds. Ether is the underlying cryptocurrency of the Ethereal network, the second largest crypto network by market capitalization.

ETF buyers are buying shares of funds that hold ether on behalf of their shareholders. Different spot ether ETFs use different data sources when it comes to setting the price of ether. Grayscale Ethereum Trust, for example, uses the CoinDesk Ether Price Index.

None of the ETFs launching today include pointed etherwhich represents a potential opportunity cost associated with choosing an ETF over other options such as self-custody or a traditional cryptocurrency exchange.

Ether staking currently has an annual return of 3.32%, according to the Compass Staking Yield Reference Index Ethereum. However, it is possible that the SEC will eventually approve Ether staking held by ETFs.

How can I trade Ether ETFs?

ETFs can simplify the trading process for investors. In the case of cryptocurrencies, instead of taking full custody of the ether and taking care of your own private keysSpot ether ETFs allow investors to purchase the cryptocurrency underlying the Ethereum network through traditional brokerage accounts.

Today, not all brokers may offer their clients spot ETFs on cryptocurrencies.

What are the fees for ether ETFs?

The fees associated with each individual spot ether ETF were previously revealed In the S-1 OR S-3 (depending on the specific ETF) deposit associated with the offerings. These fees are 0.25% or less for all but one.

The Grayscale Ethereum Trust, which converts to an ETF, has a fee of 2.5%. The Grayscale Mini Ethereum Trust has the lowest fee at 0.15%. These fees are charged on an annual basis for the provider’s management of the fund and are in line with what was previously seen with spot bitcoin ETFs.

Brokers may also charge their own fees for cryptocurrency trading.

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Kamala Harris Odds Surge Amid $81M Fundraise. What Does It Mean for Bitcoin and Cryptocurrencies?

Blocksight Staff

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Kamala Harris Odds Surge Amid $81M Fundraise. What Does It Mean for Bitcoin and Cryptocurrencies?

Market odds and memecoins related to US Vice President Kamala Harris have soared as the latest round of donations tied to the Democratic campaign raised $81 million in 24 hours, bolstering sentiment among some traders.

The odds of Harris being declared the Democratic nominee have risen further to 90% on cryptocurrency betting app Polymarket, up from 80% on Monday and setting a new high.

Previously, in early July, bettors were only betting on 8%, but that changed on Saturday when incumbent President Joe Biden announced he would no longer run in the November election. Biden then approved Harris as a candidate.

Polymarket traders placed $28.6 million in bets in favor of Harris, the data showsThe second favorite is Michelle Obama.

Somewhere else, Memecoin KAMA based on Solanaa political meme token modeled after Harris, has jumped 62% to set a new all-time high of 2 cents at a market cap of $27 million. The token is up a whopping 4,000% from its June 18 low of $0.00061, buoyed primarily by the possibility of Harris becoming president.

As such, Harris has yet to publicly comment on cryptocurrencies or her strategy for the growing market. On the other hand, Republican candidate Donald Trump has expressed support for the cryptocurrency market and is expected to appear at the Bitcoin 2024 conference on Saturday.

However, some expect Harris or the Democratic Party to mention the sector in the coming weeks, which could impact price action.

“While he has not yet received the official nomination, there is consensus that last night’s development is in line with current Democratic strategy,” cryptocurrency trading firm Wintermute said in a Monday note emailed to CoinDesk. “Keep an eye on Democrats’ comments on this issue in the coming days.

“The prevailing assumption is that Harris will win the nomination and any deviation from this expectation could cause market volatility,” the firm added.

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Top 30x Cryptocurrency and Coin Presales Today: Artemis Coin at #1, Others Are: BlockDAG, 99Bitcoin, eTukTuk, and WienerAI

Blocksight Staff

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Top 30x Cryptocurrency and Coin Presales Today: Artemis Coin at #1, Others Are: BlockDAG, 99Bitcoin, eTukTuk, and WienerAI

The cryptocurrency market has seen a lot of growth and imagination lately, with new ventures popping up regularly. A critical pattern in this space is the rise of crypto pre-sales, which give backers the opportunity to get involved with promising projects early on. Artemis is a standout option for crypto investors looking to expand their portfolios amid the many pre-sales currently underway.

Cryptocurrency presales, commonly referred to as initial coin offerings (ICOs), allow blockchain ventures to raise capital by offering their local tokens to early backers before they become available on open exchanges. Investors can take advantage of these presales by purchasing tokens at a lower price. If the project is successful and the token’s value increases, investors stand to receive significant returns.

>>> Explore the best cryptocurrency pre-sales to buy now <<

The Ultimate List of the Top 5 Cryptocurrency Pre-Sales to Invest In

  1. Artemis: The aim of Artemis (ARTMS) will become the cryptocurrency equivalent of eBay or Amazon. The upcoming Phase 4 will see the launch of the Artemis Framework, which will serve as a stage for digital money exchanges where buyers, sellers, specialized organizations and those seeking administration can participate in coherent exchanges.
  2. DAG Block: uses Directed Acyclic Graph technology to increase blockchain scalability.
  3. 99bitcoin: operates as a crypto learning platform
  4. WienerAI uses AI-powered trading bots for precise market analysis.
  5. eTukTuk focuses on environmentally sustainable transportation options, such as electric vehicle charging infrastructure.

We have determined that Artemis is the best new cryptocurrency presale for investment after conducting extensive research. It presents itself as the unrivaled cryptocurrency presale choice currently open.

>> Visit the best cryptocurrency pre-sale to invest in now <<

Top 5 Crypto Pre-Sales and Best Cryptocurrencies for Investment Today

Artemis (ARTMS) is attempting to establish itself as the cryptocurrency version of eBay or Amazon. The Artemis Crypto System, which will act as a platform for cryptocurrency transactions, will be launched in Phase 4. Buyers, sellers, service providers, and requesters will all benefit from seamless trading with this system. Customers will be able to purchase things, such as mobile phones using digital money, as well as sell products such as involved bicycles and get paid in cryptocurrency. Additionally, crypto money can be used to pay for administrations such as clinical consultations, legitimate care, and freelance work. Artemis Coin will act as the main currency of the ecosystem, with Bitcoin and other well-known cryptocurrencies from various blockchain networks backing it.

Artemis Coin has increased in price from 0.00055 to 0.00101 from 0.00094. Artemis may be attractive to individuals looking to recoup losses in Bitcoin, as predicted by cryptocurrency analysts. At this point, it seems to present an interesting presale opportunity.

>>> Visit the best cryptocurrency pre-sale to invest in now <<

The world of digital currency pre-sales is an exciting and exciting opportunity that could open the door to game-changing blockchain projects. Projects in this article, like Artemis Coin, offer the opportunity to shape the future of various industries and the potential for significant returns as the industry develops.

However, it is imperative to approach these investments with caution, thorough research, portfolio diversification, and awareness of the risks. You can explore the digital currency pre-sale scene with greater certainty and increase your chances of identifying and profiting from the most promising venture opportunities by following the advice and methods in this article.

>>> Join the best cryptocurrency pre-sale to invest in now <<

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