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Last year, the Financial Accounting Standards Board (FASB), announced new rules to allow certain digital assets to be measured at fair value on corporate balance sheets, marking significant departure from the previous cost-less-impairment model. As of this week, the Accounting Standards Update (ASU 2023-08) rules have taken effect so it's worth reminding ourselves of the implications of fair value measurement and associated disclosures. Firms will be permitted to measure crypto assets at fair value each reporting period which will provide a more accurate depiction of an entity's financial health. Of course, the shift from recognising only impairments to reflecting both gains and losses in net income could lead to more volatile earnings reports but offers a truer picture of asset value fluctuations in line with market conditions. In order to be able to do this, corporates wanting to carry crypto assets will be mandated to submit enhanced disclosures which include details about significant crypto holdings, changes in holdings, and any contractual sale restriction etc.,which are all designed to help investors make "more informed risk assessments" for companies with crypto treasury holdings. So what are the implications? To keep it simple, we can boil it down to three points: 1️⃣ 𝗜𝗻𝗰𝗲𝗻𝘁𝗶𝘃𝗶𝘀𝗶𝗻𝗴 𝗰𝗼𝗿𝗽𝗼𝗿𝗮𝘁𝗲 𝗮𝗱𝗼𝗽𝘁𝗶𝗼𝗻: by allowing companies to reflect unrealised gains without selling assets, the new guidelines will incentivise corporate adoption of digital assets balance sheets. The previous model discouraged long-term holding due to its one-way impairment recognition so being able to show appreciation means it actually makes sense to add bitcoin and other qualifying crypto assets to strategic holdings. 2️⃣ 𝗩𝗼𝗹𝗮𝘁𝗶𝗹𝗶𝘁𝘆 𝗺𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁: While the new rules might boost investment, earnings volatility will rise, so companies engaging in the cryptofication of their treasuries will need robust risk management strategies to handle the potential swings in net income. 3️⃣ 𝗥𝗲𝗽𝗼𝗿𝘁𝗶𝗻𝗴 𝗰𝗼𝗺𝗽𝗹𝗲𝘅𝗶𝘁𝘆: The complexity of determining fair value of crypto assets means companies will need to evolve in-house expertise accordingly, this also applies to managing book-tax differences that arise from these new standards (IRS will still govern tax reporting). In other words, there will be costs to bear for companies wanting to leverage the new standards. --- Bottom line: the FASB's new rules will encourage crypto adoption on corporate balance sheets and accelerate the appeal of digital assets among institutional investors. However, companies will need to navigate the new complexities this brings, particularly in terms of volatility management and compliance with both accounting and tax regulations. #Digitalassets #Bitcoin #Cryptofication #FASB

📢 Our deep-dive analysis at Ledgible is live on the final US #DeFi #TaxReporting regulations and their application to only "Trading Front-End Services". ⚡ Shockwaves sent through the DeFi ecosystem last week were followed by an immediate lawsuit against the IRS and US Treasury. Let's have a look inside the final regulation package 🔎 💡 Key highlights include... 📌 Broker Definition for #DigitalAsset Middleman (“DeFi Brokers”): the broad definition of Digital Asset Middleman has been significantly reduced from the proposed regulations to only apply to “Trading Front-End Services” with further clarity and examples provided. This removes from the definition of broker: #Blockchain application layers, blockchain protocols, internet service providers, and other kinds of possible providers in decentralized sales of digital assets that are not a Trading Front-End Service (a newly defined term detailed in the blog). The IRS estimates that between 650 and 875 digital asset providers will meet the definition of being such a Digital Asset Middleman. 📌 Not Just for DeFi: while it is convenient to call these the “DeFi Broker regs”, the terms “DeFi” and “decentralized" are not used in the regulations themselves. While these “Middleman” regulations were designed to capture the DeFi industry, they can more broadly apply to non-DeFi providers that did not find themselves captured in the broker definition by the final regulations package from July 2024. 📌 Timeline: a deferred timeline and penalty relief for reporting gross proceeds is introduced which delays the application to these DeFi Brokers by two years compared to other broker types (e.g. centralized exchanges). First reporting will happen in 2028 over 2027 sales transactions. We have compiled a comprehensive timeline comparing the requirements for DeFi to centralized exchanges. 📌 Tax Withholding: though DeFi providers do not have custody of their customers' funds, the IRS remains steadfast in their requirement for any broker to withhold taxes when it is required. In the IRS view, these DeFi providers can change their software code to be able to withhold taxes. Phased in backup withholding requirements give brokers more time to document their customers on certified W-Forms. 📌 Applicability of Cost Basis Reporting: there is no exemption from the reporting of cost basis information specifically carved out for DeFi. However, in most cases these DeFi providers (i.e. Trading Front-End Services) will not be providing custodial services and therefore the sales that they need to report are not covered assets. Only gross proceeds reporting will be required in these cases. 💫 The collection of personal data about customers, tax withholding, and tax reporting to the IRS is a landmark moment for the DeFi industry which will have huge implications through its fabric of existence. #Crypto #CryptoTax #CARF #IRW #TIR #GIR https://lnkd.in/eJs2xKxi

Crypto advisers "should brace for accounting, tax, and reporting changes that might not originate strictly from typical government standard setters," Dr. Sean Stein Smith DBA, CPA writes in his latest Bloomberg Tax Insight. https://lnkd.in/gQ2TnDmS

UAE updates VAT Treatment of Cryptocurrencies in Latest Regulatory Change The United Arab Emirates has provided important clarification on the Value Added Tax (VAT) treatment of cryptocurrencies and other virtual assets in its latest regulatory update. Cabinet Decision No. 100 of 2024, amending the Executive Regulation of Federal Decree Law No. 8 of 2017 on Value Added Tax, was issued on September 6, 2024, and will take effect from November 15, 2024 [1]. Key Updates: 1. Definition of Virtual Assets The regulation now includes a formal definition of "Virtual Assets" as: "Digital representation of value that can be digitally traded or converted and can be used for investment purposes, and does not include digital representations of fiat currencies or financial securities." [1] 2. Classification as Financial Services Activities related to virtual assets are now explicitly classified as financial services. These include: - Transfer of ownership of Virtual Assets, including virtual currencies - Conversion of Virtual Assets - Keeping and managing Virtual Assets and enabling control thereof [1] 3. VAT Exemption Importantly, certain virtual asset-related services are now exempt from VAT. Specifically, the regulation states that "Services specified in paragraphs (k) and (l) of Clause 2 of this Article, including services supplied on or after 1 January 2018" are exempt [1]. This covers the transfer of ownership and conversion of Virtual Assets. Implications for the Industry: This regulatory update provides clarity for businesses operating in the cryptocurrency and blockchain space in the UAE. The retroactive application of the VAT exemption to January 1, 2018 for specific services is particularly noteworthy, as it aligns with the initial implementation date of VAT in the UAE [2]. By classifying certain virtual asset services as exempt financial services, the UAE is refining its approach to the taxation of these digital assets. However, it's important to note that while these services are exempt from VAT, this typically means that input VAT incurred in relation to making these supplies is not recoverable, as per general VAT principles. Conclusion: This regulatory update represents a significant development in the UAE's approach to the taxation of virtual assets. It provides greater certainty for businesses and investors in the cryptocurrency space, potentially impacting the UAE's position in the blockchain and cryptocurrency sector. References: [1] Cabinet Decision No. 100 of 2024 – Issued 6 Sept 2024 (Effective from 15 Nov 2024) [2] Federal Decree-Law No. (8) of 2017 on Value Added Tax Aliasgar Poonawalla JRB Chartered Accountants Salman Rafique Muneeb Jalgaonkar Saabith Uwaim Rayhan Aleem Tax Star

The 2024 Schedule 1 introduces a groundbreaking change for cryptocurrency enthusiasts and digital asset investors. For the first time, the IRS has included a dedicated line specifically for reporting digital asset income, signaling a new era of clarity and compliance in the rapidly evolving world of crypto taxation. The IRS is making a change to Schedule 1 for 2024 in the release of its draft form to include digital asset income reporting: https://lnkd.in/g4YJjdAZ The 2024 draft Schedule 1 includes a dedicated section for reporting income from digital assets. This reflects the growing importance of cryptocurrencies, NFTs, and other digital assets in taxpayers' financial activities. The new Schedule 1 is designed to work in conjunction with the Form 1099-DA, which brokers will use to report digital asset transactions in 2025. While Form 1099-DA reporting will not begin until the 2025 tax year, the 2024 Schedule 1 prepared taxpayers with the upcoming change. What crypto income is reported on Schedule 1? ·        Income from airdrops ·        Income from hard forks ·        Income from staking rewards and mining (not subject to self-employment tax) ·        Other crypto hobby income Currently income from crypto has been reported on Schedule 1, line 8z under Other Income with a brief description. Having ordinary crypto income reported on Schedule 1, line 8v, Digital assets received as ordinary income not reported elsewhere, will make it easier for taxpayers to report digital asset income. Attached is a copy of the form: 

🚨 Cryptocurrency & Taxes: What You Need to Know 🚨 As cryptocurrency continues to rise in popularity, understanding the tax implications of buying, selling, or using digital assets is critical for both professionals and individuals. 🪙💼 What is Cryptocurrency? Cryptocurrency is a type of virtual asset secured by cryptography. Unlike traditional currencies, it operates independently of governments, central banks, or other authorities. Powered by blockchain technology, cryptocurrencies like Bitcoin and Ethereum enable secure, decentralized transactions. But did you know that cryptocurrency transactions can significantly impact your tax filings? Tax Implications of Cryptocurrency Transactions in Canada The Canada Revenue Agency (CRA) treats cryptocurrency transactions as taxable events. This means that disposing of your crypto can trigger tax liabilities. Common taxable events include: 🔹 Selling or trading cryptocurrency 🔹 Converting crypto to Canadian dollars 🔹 Using crypto to purchase goods or services 🔹 Gifting cryptocurrency Key Tax Categories: Business Income: 🔹 If trading cryptocurrency is part of your business (i.e., regular, continuous trading), the profits are considered business income and taxed accordingly. This also includes buying crypto with the intent to sell for profit. Capital Gains: 🔹 If your crypto transactions are personal (not business-related), profits made from selling or trading crypto may be treated as capital gains, with tax applied to 50% of the gain. Additionally, GST/HST may apply when cryptocurrency is used to purchase taxable goods or services. The tax is calculated based on the fair market value of the crypto at the time of the transaction. Stay Compliant: Record-Keeping is Essential To ensure accurate tax filings, it’s crucial to maintain detailed records of all your cryptocurrency transactions, including: 🔹 Purchase and sale dates 🔹 Amount and type of cryptocurrency 🔹 Fair market value at the time of each transaction Correcting Your Tax Affairs If you’ve missed reporting income or capital gains from cryptocurrency transactions, it’s important to correct your filings to avoid penalties. The CRA's Voluntary Disclosures Program offers an opportunity to amend your returns without facing severe penalties. 💡 How CGPA Canada Can Help: As Chartered Global Practising Accountants (CGPAs), we play a vital role in helping individuals and businesses navigate the complexities of cryptocurrency taxation. Whether you're advising clients on tax-efficient strategies or managing your crypto assets, understanding how these transactions are taxed is key to avoiding unexpected liabilities. 🌐 For more details, check out the CRA's Guide for Cryptocurrency Users and stay updated on the latest tax regulations. 👉 Connect with us: https://www.cgpaglobal.ca #CryptoTax #Cryptocurrency #Blockchain #CGPACanada #Taxation #Bitcoin #Ethereum #TaxCompliance #CryptoAccounting #BusinessIncome #CapitalGains #CryptoEducation

The Financial Services Agency, Japan (JFSA, 金融庁) has unveiled plans for a comprehensive overhaul of the tax code in 2025, with a particular emphasis on VA's. This development marks a potential shift towards lower tax rates for cryptocurrencies, aligning them more closely with traditional financial assets. As a long-standing cornerstone leader in the crypto industry, Japan's progressive stance is a positive indicator for the APAC Region and international policy trends. The FSA's recognition of VA's as "financial assets that should be an investment target for the public" represents a significant step forward in the underpinning of mainstream adoption. The current tax structure in Japan imposes rates of up to 55% on crypto profits as miscellaneous income, compared to a cap of 20% for stock trading. This proposed reform could level the playing field, potentially making crypto investments more attractive and fostering innovation in the VA space. While similar proposals have been put forward in the past, this official request from the FSA carries substantial weight; it signals Japan's commitment to nurturing growth and innovation in the cryptocurrency sector, which could have far-reaching implications for global markets, as recently touched on during our Global Digital Asset Regulatory Summit, Japan Fireside Chat. As we at the Digital Economy Council of Australia (DECA) and the International Digital Asset Exchange Association (IDAXA) continue to advocate for sensible regulation and policy in the global digital economy, developments like these are encouraging. They demonstrate a growing understanding among regulators of the transformative potential of blockchain and digital assets. The tireless efforts of our counterparts at the 𝐉𝐚𝐩𝐚𝐧 𝐁𝐥𝐨𝐜𝐤𝐜𝐡𝐚𝐢𝐧 𝐀𝐬𝐬𝐨𝐜𝐢𝐚𝐭𝐢𝐨𝐧 (𝐉𝐁𝐀), who continue to demonstrate exemplary industry leadership in such progress, highlight that a collaborative approach between industry bodies and regulators is necessary to foster innovation while ensuring appropriate safeguards within the industry. With some of the earliest VA tax reforms anywhere in the world having been addressed here in Australia almost a decade ago, we appreciate that the path to implementation may be complex––but this move by Japan could potentially catalyse similar reassessments of tax policies in other nations. As always, we'll be closely monitoring these developments and their potential impact on the global crypto landscape. https://lnkd.in/grGNXjwn Keisuke Kimura Hiroki Morita Amy-Rose Goodey Michael Bacina Yuzo Kano Andrew Sommer Michael Hardy GAICD Paul Derham John Bassilios Mel Songco Christopher Brennan Takato Fukui Chengyi Ong Angela Ang Sean Lee Mark S. Gorriceta Julian Louie Singson Rudyard Sunga Chezka Gonzales Gail Concepcion Cruz-Macapagal Eliseo Jojo Prisno CRPC MS Wakyodo Inc. SettleMint Blockchain Council of the Philippines #CryptoRegulation #APAC

How to Handle 2025 IRS Cost Basis Changes in Koinly 🪛 DIY Edition 🔧 A Major IRS Crypto tax change is coming in Jan 2025 👉 Universal tracking is out ❌ 👉 Wallet-based tracking is in ✅ To help you move from universal to wallet-based tracking Koinly has a migration feature that will automatically make the change OR you can setup the migration yourself: 😊 Go to the Cost basis section in your settings. 😇 Navigate to the Migrations tab. 😉 Click on “Add migration.” 😗 Enter the date, migration type and allocation method 🫡 Click Save. 🧐 This will schedule your migration for 1 Jan 2025 See MORE in our detailed step by step guide: https://lnkd.in/djGtpiVR

Get ready for changes in how digital assets are reported on the new Form 1099-DA. Key insights from the Tax Reporting Conference reveal the IRS is coordinating with international frameworks. Stay tuned for the final regulations expected by the end of the year. https://loom.ly/BB0SleU #digitalassets #cryptotax #cryptocompliance #taxregulations

🚨  𝗖𝗼𝗻𝗳𝘂𝘀𝗶𝗼𝗻 𝗿𝗲𝗶𝗴𝗻𝘀 𝗶𝗻 𝗰𝗿𝘆𝗽𝘁𝗼 𝘁𝗮𝘅 𝗰𝗼𝗺𝗽𝗹𝗶𝗮𝗻𝗰𝗲! With new IRS rules like wallet-specific tracking under Revenue Procedure 2024-28 and delayed broker reporting requirements, some could say that the crypto tax landscape has never been more chaotic. Investors and brokers alike are scrambling to figure out: 👉 What’s changing? 👉 What’s staying? 👉 How to stay compliant amidst it all? ⏳ Time is ticking: Mishandling wallet-specific tracking could put you at risk of audits or penalties. 🛠️ The solution? Clarity and strategy from The Network Firm. We’ve created a comprehensive blog and video guide to cut through the noise and help you navigate this evolving landscape with confidence. 🔗 Dive in now and take charge of your compliance journey: 👉 𝗕𝗹𝗼𝗴: IRS Crypto Tax Rules in 2025 – What You Need to Know to Stay Compliant - https://bit.ly/3DX2iN7 👉 𝗩𝗶𝗱𝗲𝗼: IRS Crypto Compliance 2025 | TNF Takes - https://bit.ly/40goUQ1 #CryptoTax #IRSCompliance #DigitalAssets #TheNetworkFirm