Liquifi’s Post

Successfully launching your token requires flawless execution in the days leading up to launch. 8 tactical considerations to remember before launch: 1️⃣ Handle token tax planning for your employees Token tax treatment and calculation will vary on 2 main vectors: 1. The specific type of token agreements you issue 2. The jurisdiction/country in which you operate Examples of agreements include: RTUs, Restricted Tokens, Token Options, and others. Common jurisdictions that you might need to navigate include: US, UK, Canada, Switzerland, and others. 2️⃣ Understand strategies for domestic AND international hiring Consider regulations & tax implications when hiring domestically vs. internationally. Some countries restrict crypto payments or have unique tax considerations. Also, depending on your project's needs determine whether you need FTEs or contractors. Always stay current on tax withholding rules & timing of taxable income. 3️⃣ Select the right custody partner This is ESSENTIAL for ensuring your token security prior to launch. Some options (non-exhaustive) 👇 1. Multi-signature wallets — Gnosis Safe, Squads 2. MPC — Fireblocks, Copper 3. Qualified Custodian — Anchorage, Coinbase Prime, BitGo Important: Remember to ensure that your internal distribution system (or external distribution system) integrates seamlessly with your chosen custody provider. 4️⃣ Prepare for token liquidity Based on your long-term goals, decide between: - CEX (centralized exchange) - DEX (decentralized exchange) - Launchpad Consider engaging market makers to handle early volatility. Some options include: Gradient, Amber, Caladan, Wintermute, Jump, GSR, CLS, Skynet, Keyrock, Aquanow Understand the fee structure of each ☝️ — flat-rate, subscription, percentage, or based on call options. 5️⃣ Prepare for token distributions Gather wallet addresses, test transactions, & sign legal agreements. Set up necessary tools, including: - Payroll provider for taxable income & withholdings - Multi-sig wallets or custody accounts - Employer of Record (EOR) for international workers - Vesting & lockup mechanisms - Airdrop or token distribution solution - Crypto accounting tools Track employee tax obligations. Finalize all eligibility criteria, KYC/KYB, 83(b) elections, & CEX listing details (if applicable). 6️⃣ Choose the Right Payroll/PEO/EOR Partner The right partner will have: - Experience in crypto + token compensation across jurisdictions - Ability to calculate taxable amounts from token FMV & support real-time pricing for wage taxes - Ability to integrate with your distribution tech & knowledge of country-specific nuances. 7️⃣ Final Airdrop Preparations - Finalize eligibility criteria - Gather wallet addresses and conduct KYC/KYB checks - Consider geofencing requirements - Decide between token claims OR airdrops - Plan for custom parameters, redistributions, & vested airdrops Continued in the comments!

So many projects stumble in the final days leading up to token launch — do NOT let that be you! Here's 8 specific, tactical considerations to think through in the last days leading up to launch. (Full deep dive blog post in the comments) 👇

Stablecoins are one of crypto's "killer apps." In the push for discovering / deploying real-world application - the biggest is staring us right in the face. Stablecoins. They enable faster, cheaper, global payments. This is game changing in so many ways... from treasury teams managing the global cash needs of an international organization, to the immigrant sending money to their family back home. And by the way... cheaper and faster also applies to all those payments that are not crossing international boarders. Watching how the world of payments evolves in the years ahead will be fascinating! But there's an accounting catch... First, let's touch on the "faster, cheaper" point: On average, sending USDC on Base, Coinbase's Layer 2 network, costs less than a cent. Compare that to the $44 it costs to send an international wire transfer. This all sounds great, so what's the catch? Accounting for stablecoins isn't as straightforward as you'd think. 𝗧𝗼 𝗶𝗹𝗹𝘂𝘀𝘁𝗿𝗮𝘁𝗲, 𝗹𝗲𝘁'𝘀 𝗳𝗼𝗹𝗹𝗼𝘄 𝘁𝗵𝗲 𝗹𝗶𝗳𝗲𝗰𝘆𝗰𝗹𝗲 𝗼𝗳 𝗮 𝘀𝘁𝗮𝗯𝗹𝗲𝗰𝗼𝗶𝗻 𝗽𝗮𝘆𝗺𝗲𝗻𝘁. 1️⃣ Send USD (or native fiat currency) to exchange. 2️⃣ Sell USD for USDC. Accounting: Record the cost basis of USDC. Depending on materiality, you may need the exact USD value at transaction time—even minor price deviations (e.g., $0.9989). 3️⃣ Send USDC to vendor's wallet to pay outstanding invoice. Accounting: Reconcile payment to invoice. Track the live price of USDC, calculate the realized gain/loss on the crypto disposition, and recognize a $.001 gain/loss on the effective "sell" of USDC. Again, while some might treat the stablecoin as a 1:1 peg to USD, many auditors and regulators will require monitoring this for materiality. The vendor would follow this same process on the receivable side. Multiply this by thousands, even millions, of transactions, and you have an astronomical accounting burden. The takeaway? Make sure you have the right accounting tools in place before adopting stablecoins. -- 📌 @TaxBit's accounting platform: - Processes millions of transactions with flexible valuation options between 1:1 peg or market value tracking. - Automatically categorizes transactions and applies accounting rules for gains, losses, and fees with its AI-powered engine Find out more here: https://lnkd.in/eFDgFzGg

The IRS is hiring crypto industry professionals!! For those who think the IRS "doesn't get it" or writes rules that the digital asset industry just can't comply with, well . . . they are trying. Sulolit "Raj" Mukherjee J.D. and Seth Wilks will lead the IRS Digital Asset Initiative Office. Both have been around the industry for years and certainly know the space. Hopefully they will bring a bit of practicality and loads of industry knowledge to the rulemaking process. From the vantage of the Treasury department, writing rules to allow IRS visibility into receipts and the prevention of money laundering within the digital asset sector is amazingly hard. So kudos to Treasury for trying. Best of luck Raj and Seth, we're all pulling for you!! The KPMG digital asset tax practice looks forward to working with everyone at the Digital Asset Initiative Office to bring sensible and administrable tax rules to the community. If you work with digital assets, you should be working with KPMG. https://lnkd.in/gNZViErx

IRS finalizes controversial tax reporting rule for brokers, punts decision on DeFi - The Internal Revenue Service released late Friday the latest version of its controversial “broker rule” guidance. The tax agency first published new proposed regulations on tax reporting requirements for cryptocurrency brokers in August 2023, stoking fears that ambiguous language could harmfully impact many parts of the crypto industry from wallet providers to decentralized exchanges. “Good news: They agree that custodial brokers are, well, brokers,” Coin Center Chief Communications Office Neeraj Agrawal said in a post on X. “Our concern is whether or not a self-custodial application (like a DEX) that is just code with no central authority would be considered a broker too.” In other words, exchanges like Kraken and Coinbase will be subject to the new rules, which will go partially into effect in 2025. However, rules that would have imposed potentially impossible and privacy-invasive reporting and KYC requirements on decentralized, non-custodial protocols will wait and see. “The Treasury Department and the IRS would benefit from additional consideration of issues involving non-custodial industry participants,” the filing reads. Coin Center was one of several firms that pushed back against the IRS’s initial expanded definition of a broker that appeared to rope in non-custodial, self-executing crypto platforms. Just last week, the Blockchain Association also complained about the potential for hefty compliance costs of the rule. The proposed regulations — which build on efforts to expand IRS regulation over crypto transaction tax reporting in the Infrastructure Investment and Jobs Act from 2021 — would not only have expanded the number of entities treated as brokers but also vastly expand the type of entities obligated to report under 1099 tax reporting requirements (and crypto-specific 1099-DA form). In its public letter, the Blockchain Association estimated the law would add 8 billion 1099-DA tax forms to process and compliance costs of $254 billion. This is, in part, because nearly any trade involving a blockchain-based asset — from NFTs to stablecoins — would fall under the 1099 reporting umbrella, Bitwave CEO Patrick White wrote in a recent op-ed for The Defiant. Agrawal notes the IRS seems to have taken note of the pushback and delayed making final determinations regarding crypto. It was a point echoed by Consensys Senior Counsel and Director of Global Regulatory Matters Bill Hughes, who clarified the guidance “does NOT finalize rules pertaining to unhosted wallets and related non-custodial software offerings.” “They say those offerings are still under review as possibly being brokers, and they will finalize their status later,” he added. #cryptocurrency #crypto #tax #irs #defi https://lnkd.in/eBFJdJZE

Agent Audit: Mr. Max Chill? Your 2023 tax return has flagged some... interesting accounting choices. Max: (Jumps) Whoa! Uh, hi there? IRS? What's up? Agent Audit: I see you've claimed HIFO for your crypto, while your records show a, shall we say, a different picture of your assets. Coinbase, Binance, cold wallets... it's like a crypto scavenger hunt! Max: (Chuckles nervously) Haha, yeah, gotta diversify, you know? Spread the love! Agent Audit: Your reported HIFO trades clash with your actual on-chain activity and the actual movement of funds across wallets and exchanges. This mismatch raises serious concerns about income and cost basis accuracy. Max: What do you mean, I optimized my portfolio? Agent Audit: Optimization is great, Max. But your app seems to be playing a different game. It says you sold some Bitcoin on Coinbase, but magically claims it came from your Binance wallet for some sweet HIFO tax savings. Did those Bitcoins teleport across platforms? Because let me tell you, Max, the blockchain doesn't forget. And neither do we. We can see every transaction, every hop, every skip across every exchange and wallet. Max: (Stammers) Well, uh, the app optimizes my portfolio! It just, uh, connects the dots... very creatively. And, uh, maybe there was a transfer I missed? Agent Audit: (Raises an eyebrow) There's no transfer on the blockchain linking your Coinbase sale to your Binance holdings. Max: (Stammers) Well, the app optimizes my portfolio! It just, uh, connects the dots... creatively. Agent Audit: Creative accounting in the IRS world often raises red flags, Max. Especially when it involves moving assets around like a shell game to manipulate costs. Specific identification requires knowing the exact origin of each sold asset, not some AI-powered guessing game. Max: (Deflated) But... tax benefits! Can't a guy maximize his gains honestly? Agent Audit: Absolutely, Max! Honesty requires transparency, not smoke and mirrors. While I understand the appeal of potentially minimizing your tax burden with HIFO, it's crucial to remember that specific identification comes with strict documentation requirements and even stricter management of your funds on-chain. Max: Requirements? Like what? Agent Audit: To claim specific identification, you need detailed records of every single crypto transaction, including the on-chain transaction ID for each movement of each unit between wallets and exchanges. Max: (Eyes widen) On-chain... transaction IDs? But that means I need to... manage my funds exactly how I report them, all the time? Agent Audit: Bingo, Max. You can't claim you sold a specific Bitcoin from Binance if you actually sold one from Coinbase and shuffled them around later. The blockchain remembers, and so do we.

DeFi compliance in 2024, and new SEC rules set to be challenged: Finance Redefined Experts say the SEC’s new rule impacting DEX liquidity providers has attracted much criticism and may be challenged in court. Welcome to Finance Redefined, your weekly dose of essential decentralized finance (DeFi) insights — a newsletter crafted to bring you the most significant developments from the past week. In an interview with Cointelegraph, Ripple’s president stated that 2024 could be the year of DeFi regulations. Meanwhile, the United States Securities and Exchange Commission (SEC) has introduced a new definition for a “dealer” and “government securities dealer,” targeting liquidity providers in DeFi. But, experts believe stakeholders will challenge the new rule in court. The top 100 DeFi tokens had a bullish week, following the footsteps of broader market gains, and the total value locked (TVL) in DeFi protocols crossed $63 billion. DeFi compliance to be a top industry trend in 2024, says Ripple’s president According to its president, Monica Long, global payment network Ripple expects compliance in decentralized finance (DeFi) to be the industry’s “biggest breakthrough” of 2024. In an interview with Cointelegraph, Long said previous hype cycles fueled by initial coin offerings and nonfungible tokens would be replaced by real-world utility at scale, which requires compliance, usability and integration with existing systems. For more please visit: https://lnkd.in/d_qzwKnP

✨ Today In Tech #052 - June 30th 2024✨ 💡Topics💡 1️⃣ Crypto => IRS and Treasury Finalize Crypto Reporting Rules, Decentralized Platforms Exempt Until 2026 2️⃣ Law => Detroit Police to Implement Stricter Facial Recognition Policies in Legal Settlement with ACLU 1️⃣ Crypto => IRS and Treasury Finalize Crypto Reporting Rules, Decentralized Platforms Exempt Until 2026 🛈 Source : https://lnkd.in/g7DAmTFM The Internal Revenue Service (IRS) and the U.S. Department of Treasury have finalized new regulations implementing a provision of the Biden Administration's Infrastructure Investment and Jobs Act. Starting in 2026, crypto platforms must report transactions to the IRS, while decentralized platforms that don't hold assets themselves will be exempt. Gains from selling crypto and other digital assets are taxable even without these new regulations, but there was no real standardization around how those gains were reported to individual investors and the government. Starting in 2026, crypto platforms must provide a standard 1099 form, similar to those sent by banks and traditional brokerages. The IRS is also working to crack down on tax evasion by ensuring digital assets are not used to hide taxable income. However, after lobbying from the crypto industry, decentralized brokers that don't take possession are excluded from these rules. The Treasury Department and IRS will cover these decentralized brokers in a separate set of regulations.

For most financial operators in web3, routine often feels like using a map without landmarks. One moment, it’s reconciling blockchain transactions. The next, it’s interpreting regulatory changes that aren’t always straightforward. Uncertainty can slow progress and complicate decision-making. In the Cayman Islands, regulatory clarity is becoming increasingly essential. Clear rules help foster trust, and trust enables growth. That’s where the Virtual Asset Bill, 2024 comes in. The Virtual Asset (Service Providers) (Amendment) Bill, 2024, recently introduced, represents a key step forward in enhancing the Cayman Islands’ regulatory framework for virtual assets. It introduces sharper definitions, stronger safeguards, and more efficient processes. These changes aren’t just updates—they’re steps toward a regulatory environment that balances oversight with flexibility. For operators, it’s an opportunity to move forward with more confidence. Here’s what you need to know about the latest changes: - Sharper Definitions New terms like “convertible virtual asset” and “supervised person” create clear boundaries for compliance, reducing guesswork for operators. - Enhanced Governance Virtual asset service providers (VASPs) must appoint at least three directors, including one independent director, to boost accountability and investor confidence. - Empowered Oversight The Cayman Islands Monetary Authority (CIMA) now has greater powers to impose conditions, demand audits, and revoke licenses if compliance falls short. - Client Asset Protection Segregation of client assets from proprietary ones is now mandatory, safeguarding trust and minimizing risk. - Streamlined Licensing Licensing overlaps are being eliminated. If your operations fall under multiple categories, CIMA will help streamline registration, saving you time and resources. - Sandbox A refined sandbox framework allows startups to test their ideas with regulatory flexibility, making it easier to grow while staying compliant. AML Alignment This bill was developed after extensive consultations earlier this year, the amendments highlight the jurisdiction’s commitment to fostering transparency, supporting innovation, and maintaining high standards of regulatory oversight. https://lnkd.in/ddYfDBrc Thanks, Paul Muspratt and Haymond R. for the collaboration on this article

Undisclosed Funding Round The IRS recently released a proposed draft of Form 1099-DA, a significant step in the tax reporting landscape for digital assets. This new form is designed for digital asset brokers to provide crucial tax information about digital asset transactions to the IRS and their clients. Digital asset brokers need to focus on several operational adjustments: Transaction Dates and Asset Identifiers: Unlike Form 1099-B, Form 1099-DA requires transaction dates and times to be reported in UTC and splits the reporting of asset type and units into separate boxes to accommodate the variability in digital asset identifiers. Type of Proceeds: The form distinguishes between cash and non-cash types of proceeds, necessitating internal systems to capture and report the nature of each transaction accurately. Enhanced Data Requirements: Additional transaction-level details are required, especially concerning non-hosted wallets and the specifics of digital asset transactions recorded on distributed ledgers. NICHE TO MAINSTREAM As governments progress toward finalizing the digital assets regulations, enterprises and digital asset brokers need to understand the implications and prepare accordingly. Understanding how to navigate and prepare for upcoming changes in digital asset taxation has created a need for specialized tax compliance and accounting software designed for the cryptocurrency market. One of the startups providing support to ensure that your data aligns with the latest IRS guidelines, simplifying the compliance process and reducing the risk of errors is TaxBit. TaxBit is a startup that is providing tax and accounting compliance solutions for enterprises, financial institutions, and government bodies. It acts as your crypto currency accounting subledger that aggregates your data and integrates it with the rest of your financial stack in a secure and auditable manner. Founded by Lindsey Argalas, TaxBit streamlines compliance while ensuring accuracy with its premier end-to-end compliance and reporting solution for the Digital Economy. Their single API-powered platform for tax and accounting reduces manual work improving operational efficiency and more. You can automate information collection and validation from onboarding to form generation, delivery, and filing to effortlessly stay compliant with an ever-changing regulatory landscape. TaxBit has received an undisclosed amount of strategic investment. The company intends to use the funds to accelerate the development and deployment of its commercial and government accounting solutions and digital asset technologies, including uses for tax filing, audit, asset seizure, and financial reporting. This also includes new critical features like GAAP and FASB reporting and IFRS support for international customers. #funding #tech #startup #tax #accounting #compliance #platform #digital #assets #vc