The United Kingdom tax authority, HM Revenue & Customs (HMRC), has issued revised guidance regarding the tax treatment of cryptocurrency.
Separate guidance has been published for individuals on the one hand, and businesses on the other.
The revised guidance represents more of an elaboration of the basic principles set out in prior guidance than any significant change in HMRC’s approach to the taxation of the receipt and disposal of cryptoassets.
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On October 9, 2019, the Internal Revenue Service (Service) released Revenue Ruling 2019-24. The revenue ruling considers whether taxpayers should realize gross income under two common scenarios involving cryptocurrency and includes a number of illustrative examples. The Service concluded that a so-called “hard fork” on a cryptocurrency blockchain does not create taxable income if a taxpayer does not subsequently receive new units of cryptocurrency, but taxable ordinary income is generated by “airdrops” following a hard fork that delivers new units of cryptocurrency to a taxpayer.
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The United Kingdom (UK) tax authority, Her Majesty’s Revenue & Customs (HMRC), has taken the first steps toward recovering tax that it believes may be outstanding from UK resident cryptocurrency investors: it has been reported that several crypto exchanges have received demands from HMRC relating to customer details and their transactional activity.
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As reported in the July 26, 2019 Hunton Andrews Kurth LLP client alert, first France and now the United Kingdom have joined the growing number of European countries that have, in recent months, announced they are considering a new form of tax specifically directed at “digital” businesses. The new form of digital services tax is based on the premise that traditional methods of profit allocation between different countries are no longer fit for their purpose and that, in the context of “digital businesses”, a fresh approach needs to be adopted that takes into account the value added by the business’s user base.
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The year 2018 was a busy one for the SEC in the digital asset space, with the agency cementing its role as the primary de facto regulator of crypto finance in the United States.
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The Commodity Futures Trading Commission (“CFTC”) recently published a detailed primer on smart contracts. The Primer discusses their functionality, use cases, regulatory environment and potential risks.
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Ohio is the first state in the United States to accept tax payments in cryptocurrency. Starting today, December 3, 2018, companies operating in Ohio can elect to pay certain Ohio state taxes in Bitcoin.
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As reported on the Hunton Insurance Recovery Blog, in what appears to be a case of first impression, an Ohio trial court ruled in Kimmelman v. Wayne Insurance Group that the crypto-currency, Bitcoin, constitutes personal property in the context of a first-party homeowners’ insurance policy and, therefore, its theft would not be subject to the policy’s $200 sublimit for loss of “money.”
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Interest in the crypto economy continues to grow in Congress with the introduction of roundtables, hearings and new legislation.
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Recently, Canadian investment firm First Block Capital Inc. reported that FBC Bitcoin Trust, which the firm bills as the “first and only open-ended bitcoin fund approved by Canadian regulators,” has achieved mutual fund trust status under Canada’s Federal Income Tax Act.
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