More “good” news for cryptocurrencies!
According to a draft of the G-20 communique that Bloomberg got their hands on after getting drunk with Kuroda (I’m just kidding – although that would be fucking hilarious), finance ministers are set to adopt a consensus view that cryptocurrencies are not in fact “currencies”, but rather assets, opening the door for them to be taxed as such.
Cryptos “lack the traits of sovereign currencies,” the draft says.
To be sure, the rhetoric out of Buenos Aires hasn’t been particularly encouraging if you’re the crypto crowd.
“Crypto is more an asset than a currency,” said French Finance Minister Bruno Le Maire, who added that “if we want to move on and protect citizens from any kind of speculations or money laundering or terrorism financing, we need rules.”
Yes, “we need rules” and currently, there are none, a setup which we and others have long said is not only dangerous, but completely unsustainable. That’s part of the bear thesis for cryptocurrencies and isn’t well understood by people who view them as an “investment” or as a “store of value” rather than as what they are: a medium for speculation. The myth in the cryptoverse is that governments are somehow powerless to crack down on these things and that’s being exposed for just what it is: a myth.
“The first function of a currency is to serve as a stable medium of exchange, and experience today with various crypto assets in circulation are not at all satisfactory in this regard,” Saudi Arabian Monetary Authority Governor Ahmed Alkholifey said on the sidelines of the G-20.
In a note applauding the Trump administration’s decision to ban purchases of Maduro and Tareck El Aissami’s laughable “petro“, Cowen’s Jaret Seiberg writes the following:
The biggest short-term threat to crypto in the potential for a rapid enactment of legislation, with draconian consequences, while Congress still knows little about digital currencies/ICOs.
In other words: whether or not you think “a rapid enactment of legislation” is desirable or even fair, it might be coming and when it does, you’re probably fucked if you’re holding crypto “assets”.
Obviously, the tax issue has been simmering for quite a while now. Late last year, Coinbase was ordered to turn over customer data to the IRS. As the Wall Street Journal wrote last week, “by March 16, the IRS will have data on about 13,000 Coinbase account holders who bought, sold, sent or received digital currency worth $20,000 or more between 2013 and 2015 including the customer’s name, taxpayer identification number, birth date and address, plus account statements and the names of counterparties.” That portends legal action.
According to Credit Karma, fewer than 100 people out of the 250,000 who had filed federal taxes this year through February 12 reported a cryptocurrency transaction. That seems awfully low.
In any event, you’ll want to watch closely to see what comes out of the G-20 on this, because it certainly looks like they’re laying the groundwork for sweeping changes to the way these “currencies” (which most assuredly are not “currencies”) are taxed.