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15) So, what happened? Well, a *lot* of feedback of this sort has been given to the Senate, and there are revised versions begin considered.

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16) In particular, versions clarifying that the people solely doing the following don't count: a) "validating distributed ledger transactions" b) "selling hardware or software for which the sole function is to permit a person to control private keys"

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17) c) "developing digital assets or their corresponding protocols for use by other persons" Essentially, the amendment would clarify that building DeFi or blockchain products isn't like being a centralized broker, and wouldn't have to try to find and report on-chain trades.

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18) This amendment successfully clarifies the largest issues, and guides the bill towards the straightforward targets for reporting: centralized US crypto exchanges.

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19) This amendment is *really* important: it is the difference between a reasonable bill that will probably reduce tax underreporting, and one that could cripple industries while failing to raise more tax.

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20) Regulation is coming to crypto, and in some cases has long since come. We're excited to work with regulators to build out frameworks to accomplish their goals; to act as a reference if helpful; and to help give color on how provisions would fit in the industry.

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21) ---------------- An addendum: what's up with your crypto tax basis? Normally, you'd expect a report from FTX like: " 1) Bob buys 10 BTC @ $10,000 each 2) Bob sells 10 BTC @ $12,000 each " In that case, Bob would likely have $20,000 of taxable profit.

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22) But in crypto, you might instead get the following from an exchange: " 1) Bob deposits 10 BTC 2) Bob sells 10 BTC @ $12,000 each " So, Bob sold his BTC for $12k. What was the tax basis of it? How much did Bob make (or lose)?

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23) Well the _real_ answer is, "we don't know". Bob sold his BTC on FTX, but he didn't buy it there! He bought it somewhere else, and then transferred it, on the blockchain, to FTX. FTX has to calculate a taxable income but doesn't all the necessary information to.

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11:26 PM · Aug 5, 2021Twitter Web App

24) You could try to take the price of BTC at the time Bob deposited, but that probably wasn't really when he bought it. Maybe he bought it in 2017 for $4,000 each! Blockchain transfers make it so that each exchange isn't an isolate set of trading; they interact.

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25) So to *really* know Bob's tax basis (or profit, or tax), you'd need to combine his records from *all* exchanges together: Coinbase: 1) Bob buys 10 BTC @ $9k each 2) Bob withdraws 10 BTC FTX: 3) Bob deposits 10 BTC 4) Bob sells 10 BTC @ $12k each --> $30k profit.

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Correct - but my recollection in equities markets is that the brokerage just supplies the sell side to the IRS, 1099, tax payer provides the basis.

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I honestly think this is the reason why all countries are bringing state digital currencies so in order to spend your Cryptocurrency you must convert it to the digital state currency therefore it becomes taxable???

keshav.sol | keshavmeda.eth

@keshavmeda

Aug 9, 2021

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