Are The 2021 Crypto Regulations A Blocker Or Opportunity For Growth?
OECD Announce Crypto Regulations based on CRS
In 2020 the Organisation for Economic Cooperation and Development (OECD) released the SECRETARY-GENERAL TAX REPORT TO G20 FINANCE MINISTERS AND CENTRAL BANK GOVERNORS with a focus on strengthening the legal and regulatory crypto framework. The focus was on creating clear regulatory guidance for tax treatments of crypto assets and virtual currencies, with the hopes that it would ultimately result in improving the consistency, transparency and compliance of crypto tax reporting.
The OECD Inclusive Framework will be based on the architecture of the Common Reporting Standard (CRS). Both the OECD and the IRS are expected to publish final crypto tax reporting rules in 2021.
What should you know about the 2021 crypto regulations and CRS reporting obligations?
A report published by the OECD identifies that there will be an expansion of the crypto reporting obligations under the CRS. This change includes the valuation of virtual currencies and reporting of the total market value to participating countries. The IRS is also expected to publish new crypto FATCA reporting requirements on the proper FATCA reporting of crypto currencies and digital assets.
This has many crypto companies and crypto compliance professionals asking;
1.How will this major change in the crypto regulation landscape affect crypto trading platforms and exchanges?
2.What exactly are the CRS reporting obligations for cryptos?
3.Will the new OECD Crypto Regulations be a threat to their businesses growth?
We are here to help answer these questions.
In short the answer is; that crypto trading platforms and exchanges would be required to to perform due diligence on accounts, certify customers, collect documentation, and execute withholding and meet their FATCA and CRS reporting obligations.
Are Crypto CRS Regulations a Threat or Opportunity?
Let’s simplify this, take a simple SWOT analysis. Generally, when we think about regulation changes we think of them as a threat to our business. Complex regulations like the CRS regulations can become something that if we don’t get ahead of or adapt to, could result in us becoming liable or left behind. Above this if we do not have a clear understanding of the latest 2021 crypto regulation changes and our reporting obligations under them, how can we put in place the necessary compliance processes? This can inevitably result in us being left behind and become a significant weakness.
At TAINA we challenge you to look at things differently. Using regulatory technology crypto businesses can turn the threat of crypto regulations into an opportunity for growth and turn a possible weakness into a competitive advantage. By using regulatory technology you can take a proactive approach to the OECD and IRS 2021 crypto regulations, both by putting in place cost-effective and time-efficient CRS validation and reporting processes and by providing your customers with a painless, seamless customer experience during their onboarding and tax documentation customer journey.
Using regulatory technology crypto business can turn this threat of the inevitable Crypto FATCA and CRS regulations into an opportunity to create a competitive advantage that puts you ahead of your competition from both a compliance and customer experience perspective.