- Coffee & Crypto Daily
- ☕️ The New Crypto Tax Law to Watch Out For 🚨 😳
☕️ The New Crypto Tax Law to Watch Out For 🚨 😳
🏦 Your crypto trades aren't ready for this major change... 🤬
Nobody likes taxes. Americans hate taxes so much that we once threw a bunch of tea in the harbor about it.
Benjamin Franklin once said that, “In this world nothing can be said to be certain, except death and taxes.”
Seeing as crypto has already had it’s share of near death experiences, it was only a matter of time before the tax man came to rear his bespectacled head.
☕️ The Nakamoto Transfer 📈 🤑
A mysterious, $1.2 million transfer of BTC was sent to the wallet of Bitcoin’s pseudonymous founder, Satoshi Nakamoto.
The transfer has prompted speculation across the space, with many wondering if this isn’t some sort of publicity stunt associated with the Bitcoin Spot ETF applications.
Others have suggested that this is some sort of celebration of Bitcoin as the transfer took place just days after the fifteenth anniversary of the Bitcoin Network.
Though we believe this transfer is the result of the ancient tradition of honorable Japanese number suicide known as “Sudoku.”
☕️ Visa Releases Web3 Customer Loyalty Platform 💳 👀
Visa is piloting a new program that would reward customers for engaging with on-chain brands.
Visa’s Web3 Loyalty Rewards program will offer gamified giveaways as well as treasure hunts to encourage users to interact with participating brands.
“Our innovative Web3-based loyalty solution empowers brands to reward customers not only for their transactions but for their active engagement, paving the way for secure, seamless and immersive digital and real-world experiences at their fingertips,” said Pierce-Gilmore, Visa’s SVP and Head of Issuing Solutions, as reported by The Block.
Unfortunately, to prove they’re loyal enough for the loyalty program, users will have to cut their Mastercards in half.
Spilling the Beans
A Taxing New Agenda
Where did they come from?
Much like mummies, taxes originated in Ancient Egypt, where the pharaoh taxed the populace 20% of their grain harvests.
Thankfully, nobody is coming for our grain.
But taxes are still one of the most anxiety-inducing times of the year. A feeling that has never been summed up more accurately than in this timeless tweet.
IRS: you owe us money :(
Me: how much?
IRS: guess :)
Me: this much?
IRS: No :( Jail ;)
— Taylor Cox (@ImTaylorCox)
Feb 8, 2021
Unfortunately, it now appears that some of that anxiety is about to reach crypto in a whole new way.
And we thought we were good, for a while.
Crypto up until this point has essentially been taxed in much the same way as other financial assets like stocks.
Meaning short term gains (sold after less than a year) were taxed at a higher level, long term gains (sold after longer than a year) were taxed at a lower level.
All of this could be filed in a single tax document at the end of the year, a document that is often provided to you by your financial trading institution.
But a new rule that went into effect on January 1st looks poised to cause a massive headache for Crypto Traders all over the US.
The rule requires that any crypto trade over $10,000 must be reported to the IRS within 15 days.
Adding to the difficulty, IRS instructions mandate that the report also include the name, address, and social security number of the other party.
Awareness of this piece of tax legislation was triggered by the resharing of a 2021 infrastructure deal which indicated that this new policy would go into effect on the first day of 2024.
And as taxes are wont to do, it caused a great deal of panic, much of it stemming from the fact that the report must include the payer.
With the frequently anonymous nature of crypto transactions, that’s a big ask.
Okay. I pay my taxes. It hurts, and it’s a lot, but I do it.
This wont let me. We don’t know names, let alone SSN, for those who buy our work. 15 days or felony? For selling my art?
Am I seriously going to have to leave the USA for life, liberty, and the pursuit of happiness?
— Claire Silver 🌸 (@ClaireSilver12)
Jan 3, 2024
If you only intended to do a little passive crypto trading, you might be able to scroll by this sanction.
Though for dedicated crypto day traders or artists pushing digital collectibles, this tax legislation would represent an end to their way of life.
But there is some reason to relax, if only slightly.
Though that IRS code does state that it will become effective on January 1, 2024, the IRS may be a very long way from making that proposition an official law.
In fact, the crypto lobby group, Coin Center, is currently in the process of suing the IRS to have that code thrown out.
And regardless of whether or not Coin Center is successful, it’s clear the current IRS language is far from standard operating procedure.
As some have pointed out, the forms for reporting transactions over $10,000, don’t even exist yet.
Based on the current speed with which the government handles crypto regulation… it could be years before any sort of verdict is reached.
It’s always good to be careful and informed when it comes to IRS tax practices, but like global warming and the inevitable ground war with AI, this unpleasant problem might just be another one to punt to your grandkids.
Candlesticks: These are financial charts used to demonstrate the price fluctuations of a given security.
Candlesticks look similar to bar charts and are often red and green and resemble nothing more than… candlesticks.
The body of the candlestick actually represents four distinct factors: the high, low, open, and closing prices of the security.
The Last Sip
Just to clarify, we don’t really think that climate change is a problem for your grandchildren. We were being tongue in cheek. Do your part.
But also, “tongue in cheek” is a great technique to teach your grandchildren, as they’ll inevitably need the excess saliva stored in the lining of their mouths when the world’s oceans turn to dust and the only civilizations left are crypto exchanges and Mad-Max-style road gangs.
Coffee & Crypto Team
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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.