Global fintech and funding innovation ecosystem
December 7, 2022   Blockchain, Crypto, Digital Assets, Tokens, CBDCs, Metaverse, NFTs, FinTech and Alternative Finance, Fintech International, Fundraising, Investing, Trading, Regtech, Compliance, Governance   No comments

According to a Group of Economists, Unregulated Wash Trading is Impacting Tax Revenue

Quartz | Nate DiCamillo | Dec 6, 2022

Unsplash Wance Paleri trading - According to a Group of Economists, Unregulated Wash Trading is Impacting Tax Revenue

Image: Unsplash/Wance Paleri

Crypto traders don’t have to move their funds offshore to evade US taxes, as long as the US government allows wash trading of the nascent asset class.

  • Tax loss harvesting: A group of economists from Cornell University, the University of North Carolina, and Tel Aviv University have discovered that every time the US increases crypto tax scrutiny, trading activity rises at US-based exchanges. That’s because traders are selling crypto, recording losses on their taxes, and buying it back to avoid incurring any actual losses. The economists released their findings this week in a working paper published by the National Bureau of Economic Research.
    • It is illegal for stock traders to engage in wash trading, which occurs when they buy and sell an equity within a 30-day period before or after the sale.
    • This rule doesn’t exist for crypto in part because of the scattered regulatory approach the US has taken towards it, the economists argue.

See:  Crypto Pragmatist: Checkout these free crypto (trading) tools

  • Regulatory confusion: The IRS, for instance, treats crypto as property, while the Commodity Futures Trading Commision, which regulates derivatives markets, treats it as a commodity. Meanwhile, the SEC wants to apply securities regulation to large parts of crypto. The Financial Accounting Standards Board has said that accountants should no longer treat crypto as an intangible asset and should instead adopt fair-value accounting for it.
    • As a result, the US is losing a significant amount of tax revenue. The researchers assumed a tax rate of 30% and paired that with falling bitcoin prices, and then estimated that the US Treasury likely lost somewhere between $10 billion and $16.2 billion.

Continue to the full article --> here

NCFA Jan 2018 resize - According to a Group of Economists, Unregulated Wash Trading is Impacting Tax RevenueThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

Latest news - According to a Group of Economists, Unregulated Wash Trading is Impacting Tax RevenueFF Logo 400 v3 - According to a Group of Economists, Unregulated Wash Trading is Impacting Tax Revenuecommunity social impact - According to a Group of Economists, Unregulated Wash Trading is Impacting Tax Revenue

Support NCFA by Following us on Twitter!







NCFA Sign up for our newsletter - According to a Group of Economists, Unregulated Wash Trading is Impacting Tax Revenue




 

Leave a Reply

Your email address will not be published. Required fields are marked *

one × 3 =