Strict rules: OECD wants to intervene against evasion of crypto-tax: How the crypto-industry defends itself | news

The OECD is planning to regulate cryptocurrencies – an eye on tax evasion
The proposal allows for broad regulation – stricter than for banks
Crypto representative warns of over-regulation

Although the crypto industry continues to establish itself and is becoming more and more a part of everyday life in the financial world, there are still many questions about the regulation of digital currencies. This is also due to the fact that there are now many different sub-forms in the crypto sector. In addition to “classic” cryptocurrencies, there are now also NFTs and with DeFi a completely separate digital financial sector. So it is no wonder that regulators are having a hard time finding the necessary guidelines for the various digital applications. It is not just about investor security, but also about preventing tax evasion, which investors seek to do by investing in anonymised cryptocurrencies.

OECD with proposals for more cryptoregulation

To put an end to crypto-tax evasion, the OECD put forward a proposal in March, which was also commented on by various crypto representatives at a further meeting in late May. According to CoinDesk, various international regulators are planning to expand the existing rules for the banking sector to prevent Bitcoin holdings from being used as secret income. However, representatives of the crypto-industry are concerned that the rules in question may be extended even further than is already the case in the banking sector.

Coinbase representative sees plans as “too broad”

Coinbase representative Lawrence Zlatkin called the plans “too broad” because the proposal does not only affect financial assets used as a means of payment or investment. Currently, banks are required by the Common Reporting Standard (CRS) to pass on financial account information to the central competent authority to “detect cross-border issues and combat tax evasion,” according to the Federal Central Tax Office website. But in the crypto area, such regulation is not so easy to implement, especially when it comes to NFTs, as non-fungible token prices are changing. Here, the crypto representatives argue that such a regulation does not apply to the sale of analogue paintings either.

Additional burden on the crypto area is feared

According to Zlatkin, the stricter, broader rules would lead to an additional burden on the still young and emerging branch of the economy. Furthermore, especially in the early days of decentralized finance (DeFi), such regulation may be too hasty: “Perhaps we should wait until this fits better with the parameters. We should focus on what we know.” According to the Coinbase representative, there are also DeFi systems that have no one to control them. Other DeFi applications do not see themselves as companies with customers.

As lawyer Lisa Zarlenga argues to Coinbase, one solution would be to simply consider digital assets as cryptocurrencies that are “actively traded in established markets.” Finally, according to the legal expert, the broader rules for digital assets may also be contrary to the principle of technology neutrality, as only digital assets will be assessed more strictly. According to Zarlenga, “just because they’re digital, does not mean they have to be included.” For example, what causes difficulties when it comes to regulating NFTs is why one buys one – is it an investment or simply for aesthetic reasons?

Does higher risk justify stricter regulation?

Still, Erika Nijenhuis, an adviser to the US Treasury Department, is fighting back over regulatory allegations being leveled against the OECD by crypto officials. Just because something is new does not mean it should not be regulated, she claims, according to CoinDesk. In addition, the cryptocurrency would come with higher risks in the form of tax evasion, which is why stronger regulation is justified.

Concrete guidelines have not yet been set, and differing opinions show that clarification is still needed. So it’s still exciting when it comes to regulation around cryptocurrencies.

Editing finanzen.net

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