Cryptocurrency’s association with financial asset classes and its recent adoption drive resulted in a wide variety of concerns for the governments related to taxes, fraud, and its fiat currency’s stability. David Kemmerer, the co-founder & CEO of CryptoTrader.Tax, a crypto tax reporting platform, featured in an Off the Chain podcast to provide clarity into the landscape.
Citing IRS’s latest tax guidance, Kemmerer suggested that the decision to treat every cryptocurrency as property has added to its complexity due to its “transferability.” For example, Bitcoin can be treated as a property as people tend to use it as an investment, while stablecoins are designed to perform as a medium of exchange. As a result, cryptocurrency’s position as an “investment” will not be suitable for the U.S. merchants.
“Cryptocurrency takes on so many characteristics: digital money, an investment, utility tokens. There’s so many use cases. It is challenging that the IRS blanketly treats everything as property, but that is how it’s handled right now.”
Owing to the above factors, the entrepreneur suggested that the IRS should instead implement a De Minimis tax exemption “wherein the first $1,500 of capital gains is tax-free and users don’t need to be necessarily reporting that.”