Crypto Taxes are complicated, but changes might come

February 08, 2022

Crypto taxes have been, and continue to be, a major obstacle to the wider adoption of investors, traders, and users of cryptocurrencies.

Since in the United States the only regulatory agency to have issued and consistently enforced direction as it relates to cryptocurrency is the Internal Revenue Service (IRS), which is the regulator that continues to set the tone around the crypto policy.

Prior to very recently, the tax treatment for crypto as complicated as crypto has become has been that each transaction, exchange, trade, or change will incur a tax reporting and payment obligation.

Despite public resistance to changing this stance, and no indication that formalized changes are coming on a broader basis, there is a sign that the attitude might be evolving, albeit slowly.

Before this case, many tax advisors and practitioners who are all well and good were advising clients to practice conservative tax reporting. Even with the fact of this case indicating that a shift in policy may be coming, it is still prudent for practitioners to advise clients conservatively and do so based on the facts and circumstances of that specific situation.

While the following pertains specifically to block rewards, and staking activities, the implications might potentially pertain to a broader array of crypto acitvities.