What’s Changing In The Crypto Regulation Landscape?
OECD Aim To Introduce Crypto Reporting By End Of 2021
On the 6th of May, the OECD announced at the CFE’s 2021 Forum, that there will be an expansion of the crypto reporting obligations under the Common Reporting Standards (CRS). The recently confirmed update, stipulates that cryptocurrency and digital assets will now be within the scope of CRS reporting with the IRS expected to follow suit and expand their tax reporting standards to include crypto assets.
Under CRS crypto trading platforms and crypto exchanges will need to perform due diligence on accounts, collect and exchange financial information with other jurisdictions, certify customers, collect documentation, execute withholding to meet CRS 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 crypto regulatory controls?
The Digital Shift Effect Crypto Reporting Regulations
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 reporting requirements such as tax documentation. In turn, regulators such as the IRS and OECD published reporting 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 crypto regulatory controls. This is specifically highlighted from a tax perspective especially pertaining to whether cryptos businesses should be included in the scope of CRS reporting.
There are no direct links that tie the digital shift to the new crypto regulatory changes, however we can see the events that unfolded after COVID-19 lead to the increase in regulations worldwide with a specific focus on regulating crypto.
Are The 2021 Crypto Regulations A Blocker Or Opportunity For Growth?
In 2021 Crypto is 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 regulation 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 regulatory technology platform that helps to ensure your crypto organisation's CRS and tax reporting 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 W8, W9 and CRS 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 crypto regulation and FATCA and CRS compliance.
For more information on how our fully automated FATCA and CRS Validation platform can add value to your business, get in touch or request a demo to see it in action.