On the 6th of May, the OECD announced at the CFE’s 2021 Forum, that there will be an expansion of the reporting obligations under the Common Reporting Standards (CRS). The recently confirmed update, stipulates that cryptocurrencies and e-assets will now be within the scope of CRS with the IRS expected to follow suit and expand their reporting standards to include crypto assets under FATCA.
Under CRS crypto trading platforms and exchanges will need to perform due diligence on accounts, collect and exchange financial information with other jurisdictions, certify customers, collect documentation and meet reporting obligations. These changes are set to be introduced by the OECD by the end of 2021.
Has the recent shift to digital caused agencies like the OECD and IRS to think about establishing better regulatory controls?
The Covid-19 Pandemic triggered worldwide lockdowns to reduce the spread of the virus which in turn caused a move towards electronic banking and an increase in the demand for alternative ways to invest and build wealth.
The shift towards online banking, triggered many institutions to start documenting accounts electronically. This included the collection of information to meet regulatory requirements such as tax documentation. In turn, regulators published rules around the digital collection and retention of this documentation.
The increasing demand created a wider market for investment, with a noticeable expansion of additional cryptocurrencies, token coin units and other digital assets and crypto volumes and subscribers doubling. This expansion has caused many agencies to think about whether they need to establish better regulatory controls. This is specifically highlighted from a tax perspective.
Therefore, there are no direct links that tie the digital shift to the new regulatory changes, however we can see the events that unfolded after COVID-19 lead to the increase in regulations.
With Crypto’s now becoming mainstream and the recent crypto market volatility, there is much money to be made (and potentially lost). Especially when a simple tweet can either increase the value by 20% or reduce it by 17% both of which have happened recently.
A new regulatory obligation is always a challenge, and can potentially become a blocker to growth if not met with a proactive response. What you need is a scalable, easy to use tax validation platform that helps to ensure your organisation's compliance.
Differentiate yourself from your competitors by providing your traders and investors with the best digital experience, allowing them to quickly and easily resume trading without any delays of waiting for tax forms to be validated.
By implementing a solution that ticks all your boxes, you can make sure you are leading the pack rather than having to worry about the inevitable knock on the door to discuss regulation and compliance.
TAINA is your premium solution for tax documentation collection, validation and change management, for more information please visit us at www.taina.tech.