EY Financial Services: New taxes on cryptocurrencies are being prepared in the US

The management of EY Financial Services, which provides tax services in the United States, warned clients aboutthe imminent implementation of new legislation on the taxation of cryptocurrencies.

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EY Financial Services CEO Thomas Shea said authorities are preparing new legislation that would require reporting for at least some cryptocurrency transactions.

“When these rules go into effect, there will be significant changes,” Shi explained.

He noted that amid the growing popularity of cryptocurrencies, lawmakers are exploring opportunities to generate income through taxation and regulation of cryptoassets:

“We see that some jurisdictions are developingmodes, rates and reporting unique to digital assets. In the US, digital assets are subject to regulations and reporting is usually limited to securities, not property.”

According to the CEO of EY Financial Services, it is important for crypto investors to understand the principles of taxation:

“Although not many people can calculate income tax, understanding the changing tax implications associated with the digital asset market is more important here. This is critical."

The lawyer recalled that the purchase or saleCryptocurrency affects whether a transaction is taxable or not. The purchase of cryptocurrencies with fiat and any unrealized appreciation is tax-deductible. However, the sale of cryptocurrency is a taxable event. Shi added that "gain or loss is usually capital in nature" and may be taxed:

“Even if the owner exchanges his cryptocurrencyon other assets, such as bitcoin or ether, the transaction is taxed, and the holder of the cryptocurrency is required to report profits or losses as a result of the transaction."

Shi added that this rule also applies to the non-fungible token (NFT) market.

“If you purchased NFTs with fiat, it is tax-free. However, buying NFTs with cryptocurrencies is similar to exchanging cryptocurrencies for other cryptocurrencies – taxed.”

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