news Coinbase Exec Says Capital Will Flee US Due to Crypto Tax Laws

[kyoukage01 3181]

If the U.S. prides itself as a (self-proclaimed) center of digital technology, shouldn't they embrace cryptocurrencies as a new technology with a lot of potential? If they are going to spook crypto users by passing measures like harsh tax laws, and crypto companies decide to move their operations elsewhere, those countries they will move in are going to benefit more from what cryptocurrencies has to offer. The U.S. will lose out a lot if it other useful technologies based on crypto (blockchain just one of the many examples) are developed and used exclusively by countries that are more open to crypto.

 

This is what an executive from Coinbase has in view when he made a statement saying that global customers (not residing in the U.S.) are the future. The U.S. has yet to make a definite clarification on its stand on cryptocurrencies and how it will tax its users.

 

Staking was pointed out in this article. It is defined as

"The process of staking involves locking up an amount of a given cryptocurrency in a wallet to participate in the operation of a blockchain in return for rewards." - source here.

If the U.S is going to incur taxes on crypto users who is involved in staking to the point where it is barely profitable, it would make sense if staking itself becomes virtually non-existent in the U.S. and more prevalent in other crypto-friendly countries. Those countries in turn have the option to pass their own tax laws in a way that crypto users are not only given a lighter burden, they are given legal protection as well.

 

And staking is only the tip of the iceberg. There are other grievances over the other aspects of crypto that the U.S. should address soon. Other countries are already gaining ground, and some are even adopting crypto-based technology on their own national currencies, while the U.S. is slowly getting lagged behind.

 

Spoiler

Coinbase Exec Says Capital Will Flee US Due to Crypto Tax Laws

Helen Partz

 

Coinbase’s chief tax officer Lawrence Zlatkin says global customers are the future as non-U.S. jurisdictions are more open-minded.

 

Coinbase, the largest U.S. cryptocurrency exchange, believes other countries are much more open-minded in terms of crypto regulation and taxes than America.

Lawrence Zlatkin, chief tax officer at Coinbase, shared the exchange’s outlook on taxation and the global cryptocurrency market during a Unitize panel on July 7. He was joined on the panel by Fidelity’s senior tax counsel Jessica Reif-Caplan and Deloitte’s global tax leader, Rob Massey.

Lack of crypto taxation clarity

During the discussion, the speakers highlighted the lack of clarity around cryptocurrency taxation in the U.S.. According to the tax experts at Coinbase and Fidelity, the uncertainty is a result of the complex nature of digital assets as well as a huge variety of different types and features of different coins.

 

Staking — the practice of locking crypto to receive rewards — is just one aspect that poses a big challenge from a tax perspective. “There are so many differences between various digital assets, and staking alone is such a complicated thing to understand if you are not that close to digital assets,” Reif-Caplan noted.

Non-U.S. countries have a more mature view

While the Internal Revenue Service (IRS) has been pushing U.S. citizens to include crypto on their tax returns for years, the authority is yet to provide comprehensive guidelines. Zlatkin said there was a lot of uncertainty around the taxation of staking, but he believed the IRS was likely to label staking rewards as taxable transactions.

Zlatkin said that crypto tax uncertainty in the U.S. is essentially causing an “outflow of capital towards those jurisdictions that have a more mature view on digital technology and digital assets overall.” 

 

“Staking is a good example,” Zlatkin noted. As such, Coinbase itself, the largest crypto exchange in the U.S., is planning to expand its operations beyond the U.S. market.

According to Zlatkin, Coinbase sees international customers as the future because non-U.S. jurisdictions are “more open-minded”.

“It’s a growth model for us, just where we operate, accessing more customers, being able to trade more assets [...] Generally speaking, the most customers in the space particularly would be from major jurisdictions like Canada, U.K., the EU, and within Asia.”

Coinbase has been paying attention to developing its foreign markets for a while. In January 2020, the exchange set up a second Irish firm to expand its crypto custody services to European institutions. Coinbase Custody has been serving European clients in the United Kingdom, Switzerland, Germany, Finland and the Netherlands since 2018.

source: https://cointelegraph.com/news/coinbase-exec-says-capital-will-flee-us-due-to-crypto-tax-laws

 

[BTC Future 3946]

It is clear that the US is legislating against cryptocurrencies. They are taxing trades and not profits making trading unprofitable. Although they were correct about ICO's and there are still many dangers involved in the DeFi markets. I hope they won't tax staking as it will make this activity unprofitable for most and will damage the projects that use Proof of Stake to decentralize their networks. Perhaps it may be considered as a test on the stability of PoS.

[rvherrera 137]

USA, fiat, dollar. Well, it will be necessary to understand the opinion and interests of the government and the owners of the dollar as a fiat currency and its real position regarding cryptocurrencies. I really think that by now they already have an adoption plan or an attempt to control the cryptos in order not to lose the business.

[Syedbesharat 5423]

U.S stand on crypto is highly concern where they actions and announcement effect the market of crypto currency.Now they are implying more taxes on users where they have to give more friendly laws for investors to bring more money in market.Their policies should be crypto friendly and make themselves top noch in crypto field.But they are tightening their rope against crypto users.Which will gives more chances to other countries to bring them on their side.

[Honny143 13612]

Few months back USA President already announced he is against cryptosystem, and he don't believe crypto currency is currency so I think now USA government implement this tax paying rule for ctypto user's, I am not sure this implement good are bad but its definitely destroyed crypto users confidence, because crypto is decentralized network.

[kyoukage01 3181]

On 7/8/2020 at 6:17 PM, BTC Future said:

It is clear that the US is legislating against cryptocurrencies. They are taxing trades and not profits making trading unprofitable. Although they were correct about ICO's and there are still many dangers involved in the DeFi markets. I hope they won't tax staking as it will make this activity unprofitable for most and will damage the projects that use Proof of Stake to decentralize their networks. Perhaps it may be considered as a test on the stability of PoS.

You also mentioned before in another topic here about ETH2 upgrading to include PoS and other coins possibly following suit, even Bitcoin. And just a few hours ago you squeezed this into the main topic post:

On 6/9/2020 at 4:58 AM, BTC Future said:

[EDIT]: While it was announced since the beginning of 2020 that Ethereum 2.0 will be released during this summer, the upgrade is delayed once again and its release will probably happen by the end of 2020.

While I think this may be necessary for the programmers to find and fix any bugs in the code they can find, this will also give U.S. legislators enough time to finalize their stand on crypto taxation, should they prioritize so. If it turns out to be highly disadvantageous to "stakers" (those involved in PoS, for lack of a better term) residing in the U.S., it will surely have an effect not only on the whole crypto community but on other technological fields as well, as other countries will attempt to to turn their own countries into PoS centers or "staking farms" (too much politics involved in this statement, I will not delve further into it 🤐🤐 ). Anyway, it might take a generation, or some very drastic event, before the U.S. change its stance on crypto (too much politics again in this statement) and I think that rather as a test on the stability of PoS, it will be a test of profitability in the face of governments' restrictions for low-end investors.

 

On 7/9/2020 at 12:20 AM, Syedbesharat said:

U.S stand on crypto is highly concern where they actions and announcement effect the market of crypto currency.Now they are implying more taxes on users where they have to give more friendly laws for investors to bring more money in market.Their policies should be crypto friendly and make themselves top noch in crypto field.But they are tightening their rope against crypto users.Which will gives more chances to other countries to bring them on their side.

Some, if not most, of prominent conservative U.S. citizens prefer to have the dollar remain the leading global currency. Since the U.S. government has virtually no direct control of crypto in general, steps are being taken instead that seems to make their own citizens become discouraged to deal with crypto, and as a result, some are moving their assets to other countries. The scary part is when certain countries become centers of crypto to the point where any drastic moves they make can affect crypto prices. This is the case for a certain country who becomes a Bitcoin mining center or its large population size with majority of its citizens dealing with crypto, as a couple of examples.

 

[TimopheyKa 3900]

It seems to me that this is a rather sad situation, which shows us that the US wants to restrict cryptocurrency, it is as if it is available, but it is not particularly capable, and it costs all sorts of taxes. It's sad! I hope that one day this situation will change and we will be able to get a really interesting release!

[cryptovlek 2597]

On 7/8/2020 at 6:13 AM, kyoukage01 said:

"The process of staking involves locking up an amount of a given cryptocurrency in a wallet to participate in the operation of a blockchain in return for rewards."

This is for POS but what about the staking that happens on DeFi where the tokens we stake do not participate in the operation of blockchains but are only transactions. The expected return matters but also these are decentralized products and no ID is asked so can they tax DeFi too some way?

[Captain Karim 0]

Wonderful article, I think that the United States will understand in the end that it lost a lot by delaying the legalization of cryptocurrencies clearly, but I hope that we do not wait long, because the United States has political weight on all countries, and when it legalizes cryptocurrencies, many countries will follow.

[tienda 8776]

USD is the king of all fiat currencies around the world, include all product are valuated according to USD. So today there is one who is opposite to USD and this is cryptocurrency and it is volatile, without border, without control....and reduce the USD value, this is an obstacle for USA. They are doing anything to stop crypto  progression.

Edited October 17, 2020 by tienda

[Shaza Ahmad 1682]

Yes, the United States lags far behind other countries in the field of cryptocurrency legislation, so many countries such as China and the European Union have stated that they will have a national cryptocurrency based on blockchain while we do not find any statement from the United States about the digital dollar project.

[SuperCrypto 7193]

Many countries have recently tightened regulatory measures imposed on cryptocurrency transactions, especially South Africa. These measures are expected to boost the country's income in light of the economic downturn caused by the Corona pandemic.

[Cryptomint 433]

On 7/8/2020 at 3:17 PM, BTC Future said:

It is clear that the US is legislating against cryptocurrencies. They are taxing trades and not profits making trading unprofitable. Although they were correct about ICO's and there are still many dangers involved in the DeFi markets. I hope they won't tax staking as it will make this activity unprofitable for most and will damage the projects that use Proof of Stake to decentralize their networks. Perhaps it may be considered as a test on the stability of PoS.

Yes this will make it unprofitable. If it will be applied and I don't think so this will be applied. Because taxes always give the loss... Thanks....

[Khan 1414]

On 7/8/2020 at 7:38 PM, rvherrera said:

USA, fiat, dollar. Well, it will be necessary to understand the opinion and interests of the government and the owners of the dollar as a fiat currency and its real position regarding cryptocurrencies. I really think that by now they already have an adoption plan or an attempt to control the cryptos in order not to lose the business.

Both currency have their own place and have their own Pros and Cons. Fait can't be able to replace the Crypto and Crypto can't be able to replace the Fait.