The exchange views incoming crypto tax laws as too strict and confusing
During a Unitize panel on July 7, Coinbase chief tax officer Lawrence Zlatkin shared information about the company’s point of view regarding taxation and the global currency market. The biggest US cryptocurrency exchange considers that other countries are more open-minded in terms of crypto regulation than the US, and Zlatkin and other speakers participating in the panel stated that there is a lack of clarity around cryptocurrency taxation in the US. This poses a big challenge for tax agencies due to the complex nature of this technology, and is pushing companies to find better opportunities outside of US borders.
Zlatkin was joined on the panel by Fidelity’s senior tax counsel, Jessica Reif-Caplan, and Deloitte’s global tax leader, Rob Massey. Among the topics that were discussed, tax experts at Coinbase and Fidelity attribute this uncertainty to the nature of the digital assets that come in a huge variety, as well as different types and features of different coins. For instance, stacking – the act of allowing the company to use your digital assets in exchange for rewards – is just one of those activities that represent a challenge when it comes to applying the tax legislation. “There are so many differences between various digital assets and staking alone is such a complicated thing to understand if you are not that close to digital assets,” Reif-Caplan noted.
The Internal Revenue Service (IRS) has been making efforts in recent years to push US citizens to include crypto on their tax reports, yet it has failed in providing guidelines to do so.
According to Zlatkin, this crypto tax uncertainty is causing an “outflow of capital towards those jurisdictions that have a more mature view on digital technology and digital assets overall.” This means that more companies currently focusing their businesses on the US market, like Coinbase, are turning their eyes to international locations and customers. As such, Coinbase itself is looking into expanding its operations beyond the US market.