What’s Coming in 2023: The OECD’s Crypto Tax Plans!!

As interest rates continue to rise Governments are scrambling to ensure They have enough income to pay the Interest on their trillion dollar debts And in some cases to continue Subsidizing energy costs The main source of income for most Governments is taxation not surprisingly Crypto's incredible growth has attracted The attention of tax agencies everywhere And big changes are coming very soon So today I'm going to tell you about the Global crypto tax plans that were Recently passed reveal when these crypto Taxes will be rolled out where they will Be rolled out and what they could mean For crypto As with most globally coordinated Policies the global crypto tax plans Come from an unelected and unaccountable International organization In this case it's the organization for Economic cooperation and development or Oecd which consists of 38 of the most Developed that is wealthy countries Like most International organizations The oecd's self-stated mission is Extremely vague the oecd website states That its purpose is to quote build Better policies for Better Lives In practice the organization proposes Policy recommendations which become Regulations in its member countries in Contrast with other International

Organizations the oecd doesn't seem to Use its influence to force other Countries to comply with the interests Of Western powers However this seems to be changing as the Oecd has been looking to add almost a Dozen countries to its Club since the Start of this year In any case it looks like the oecd's Interest in cryptocurrency taxation Began in late 2020. this makes sense Given that this was when the previous Crypto bull market was starting to rear Its horns The tldr is that the oecd was upset that There was an inconsistency in tax rules Between its member countries shortly Afterwards the oecd announced that it Would release Global crypto tax Standards in 2021 citing Rising interest By its member countries to tax Cryptocurrencies There seems to have been some delay However since the initial draft of the Oecd's global crypto tax standards was Only introduced earlier this year Regardless this initial draft contained Some concerning stuff most of these Concerns have to do with potential tax Reporting related to D5 protocols stable Coins and nfts there are also concerns About whether compliance with the crypto Asset reporting framework or carf would Price out competition this is because of

What happened with the oecd's previous Global Tax proposal for the traditional Financial system the common reporting Standard or CRS was introduced in 2014 And it was apparently extremely Difficult and expensive for existing Financial institutions to comply with When it went into effect complying with The calf is likely to be even more Difficult and expensive because of all The additional data that the oecd is Demanding from crypto companies and Platforms some would say these Additional requirements were introduced To squeeze the crypto industry but let's Not go there So after taking over 60 comments Totaling 600 pages from different Entities in the crypto industry the oecd Released its finalized Global crypto tax Standards in early October multiple Governments have since confirmed that They will be applying these standards Sometime next year notably that of the European Union now the oecd's Announcement of the finalized calf Specifies that quote entities or Individuals that provide services Effectuating exchange transactions in Crypto assets for or on behalf of Customers would be obliged to report Under the calf in theory this means that The calf only applies to crypto Exchanges and platforms as you'll soon

See however the scope of the calf could Be broader in practice this could have Some serious implications for the crypto Market Note that the link to the full finalized Calf document will be in the description Now what's interesting about the calf is That it includes amendments to the Aforementioned common reporting Standards or CRS for the traditional Financial system this is interesting Because these amendments relate to Central Bank digital currencies or cbdcs This confirms that cbdcs are coming soon More about cbdc's in the description I Digress So the authors start by explaining that The calf consists of four pillars the Cryptocurrencies it applies to the Individuals and institutions that must Report tax related information to the Authorities the types of transactions They will need to report and the due Diligence that is background checks they Will need to do In the introduction the authors seem to Suggest that the calf could eventually Apply to personal cryptocurrency wallets This includes hot wallets I.E crypto Wallets that are connected to the Internet and cold wallets I.E crypto Wallets that are not connected to the Internet such as Hardware wallets now You can find out which crypto wallet is

Right for you using the link in the Description The authors also imply that the Existence of personal cryptocurrency Wallets means that there is a risk of Illicit activity and tax evasion the Authors also note that there will Eventually be amendments to the calf Which will cover things like personal Crypto wallets and D5 protocols When it comes to the cryptocurrencies The calf applies to the authors give a Very broad definition to include any new Crypto technologies that will be Developed in the future They specify that the calf currently Applies to stable coins tokenized Real-world assets and quote certain nfts This is surprising because the financial Action task force or fat F excluded all Nfts from its finalized cryptocurrency Regulation recommendations Some would say the exclusion of nfts Allows the elites to do the same sort of Shady Financial stuff they do with Modern art but that is a topic for Another video Now the authors then explain that there Are three types of cryptocurrencies that Do not fall under the calf the first is Any cryptocurrency that's not used as a Means of payment or for investment the Second is cbdc's and the definition of The third category sounds exactly like

Centralized stable coins When it comes to the individuals and Institutions the calf applies to the Author state that it applies primarily To any intermediary that provides crypto Services of any kind This includes crypto to Fiat trading Crypto to crypto trading crypto custody Crypto ATMs and even some decentralized Exchanges Regarding dex's the authors cite the fat F's finalized crypto regulation Recommendations which state that dexes Which aren't truly decentralized will be Heavily regulated this makes sense and I Would argue that it's a good way of Ensuring the crypto ecosystem stays Decentralized in the longer term The authors then go on to describe a So-called reporting Nexus for the Individuals and institutions that fall Under the calf The tldr is that relevant entities will Need to provide extensive details about All their subsidiaries where their Headquarters are where they operate from And where they're taxed now believe it Or not but this has the potential to be The problematic component of the calf That's because many International Exchanges have yet to establish their Global headquarters if they don't do so Before the calf is implemented in oecd Countries they could be banned by all of

Them Anyways when it comes to the types of Crypto transactions that will be Reported under the calf the authors Reveal that there are three crypto to Fiat transactions crypto to crypto Transactions and of course all crypto Deposits and withdrawals Each type of crypto transaction will Come with its own reporting standard and The crypto intermediary will also have To list crypto transfers by category Crypto transfer categories include Airdrops staking rewards and crypto Loans Four crypto to Fiat transactions crypto Intermediaries will simply have to Report the total amount purchased or Sold For crypto to crypto transactions crypto Intermediaries will have to report the Total price gain or loss in Fiat terms For the trade Four crypto transfers to and from crypto Intermediaries all of them will have to Be reported unless the transfer is Related to a payment for a good or Service In the case of payments reporting will Only apply when the crypto transfer is Related to a payment for goods or Services worth more than 50 000 US Dollars However before you get too excited about

That five-figure threshold I'll remind You that this reporting threshold is not The same as the fat F's Infamous travel Rule for those unfamiliar the fat F will Require crypto transactions worth as Little as 250 dollars to be reported to Authorities in some countries On that note the fat F's finalized Crypto regulation recommendations from Last year hint that the travel rule will Start to be rolled out next year so keep Your eyes peeled and consider refreshing Your memory about the fat F by checking Out our video about it using the link in The description Now when it comes to due diligence the Authors explain that relevant Intermediaries will need to make sure That their users are not only who they Claim they are but are actually located In the tax jurisdictions they claim to Be in details about the extent of this Due diligence can be found in the next Section of the calf which is aptly Titled rules The rules section basically provides Additional details about the four Pillars of the calf most of the stuff Here is predictably mundane but a few Things did stick out to me for starters Relevant intermediaries will need to Collect the following information from Their users name address country of tax Residence tax identification number date

Of birth and place of birth obviously a Tax identification number will not be Required if you live in a place that Doesn't have one What's creepy is that if the relevant Intermediary quote knows or has reason To know that the information being Provided to them is incorrect then the Crypto exchange or platform could freeze Or even shut down your account if Updated information is not provided Within 90 days the reason to know could Be something as simple as a phone number Not belonging to the same jurisdiction Or even the location being logged in From The calf specifies that another red flag To look out for is inconsistencies Between original kyc AML information and The subsequent tax information The problems of this low threshold were Discussed at length by two tax experts In an episode of international tax bytes Which I came across during my research Surprise surprise these two tax experts Noticed a few details about the calf That I completely missed when I read Through it now besides the fact that Crypto exchanges and platforms will have To scrutinize their users info the tax Experts revealed that the calf could be Applied in up to 140 countries This is significantly more than the G20 Countries that the oecd seem to be

Directed towards One of the tax experts also noticed that The oecd's definition of a crypto asset Could potentially apply to Smart Contracts and therefore to dapps and D5 Protocols this is because the definition Focuses on the transfer of value on a Distributed Ledger which is something That smart contracts technically also do If that wasn't scary enough the other Tax expert noted that the calf could be Quote done at a moment's notice as it Could be quote easily slipped into bills Working their way through parliaments And in case you were wondering these tax Experts are based in the UK hmm I don't Recall voting for crypto taxes In all seriousness though the tax Experts also noticed that existing users Of cryptocurrency exchanges and Platforms will have up to 12 months to Complete the tax self-certification form Before being banned the tax Self-certification form will have to be Completed by new users upon registration The tax experts stressed that any Inconsistencies between the information On the self-certification form and any Information the crypto exchange or Platform already has about you could Result in serious issues they also Explained that the threshold for Inconsistency will vary from country to Country

Now to give you an idea of just how Cumbersome compliance with the calf will Be crypto exchanges and platforms will Have to provide a detailed report of Relevant transactions for every single Coin and token they offer For what it's worth the tax experts Think that this information gathering Can probably be automated Another important detail that the tax Experts took note of was that Cryptocurrency exchanges and platforms Will have to store information about all Crypto transactions to and from user Wallets for at least five years and that Reminds me it sounds like crypto Transactions to and from other calf Entities won't be tracked Now if you're wondering when the calf Could come to your country the tax Expert said it could start being rolled Out in some countries by the end of the Year meaning it would apply starting Next year for most countries the rollout Will likely be 2023 or 2024 meaning it Would apply from 2024 or 2025. the tax Experts warned that if crypto exchanges And platforms don't start preparing now Some of them could be in serious trouble In the same way that some financial Institutions were with the CRS back in 2014 they also explained that penalties Are calculated based on the number of Users not violations so if the penalty

For late calf reporting is one thousand Dollars per day and a cryptocurrency Exchange with 1 million users reports to Tax authorities one day late it would Not be a one thousand dollar fine it Would be a one billion dollar fine one Thousand dollars for each of the one Million users for every late day that is Terrifying now if you have reason to Believe that the calf could apply to you I strongly suggest checking out what These tax experts had to say about it The link to the video will be in the Description and yes it should be up to Date as it was published in mid-november Kudos to them for making that video by The way Now this brings me to the big question And that's what the oecd's calf could Mean for the crypto Market once it's Introduced The short answer is that it would Ultimately depend on whether Cryptocurrency exchanges can set up Their infrastructures to be compliant With the calf before it's rolled out as I mentioned earlier this will be much More difficult for so-called offshore Cryptocurrency exchanges it may be Easier to do for cryptocurrency Exchanges such as coinbase but the thing Is that many of these so-called onshore Exchanges are already being squeezed by The bear Market call me crazy but I

Honestly think that this was the reason Why the oecd waited until the end of 2022 to announce the calf it was Precisely because its constituents knew That the cost of calf compliance would Further compress cryptocurrency Exchanges and platforms already getting Wrecked by the bear market after all Tens of billions of dollars flowed out Of the traditional Financial system into Cryptocurrency exchanges and platforms Most of this money came from the big Banks and this is why many banks started Offering their own in-house crypto Trading services in 2021 they wanted to Stop all the capital flight At the same time governments around the World will soon be rolling out their Cbdcs I reckon the aforementioned Edition of cbdc's to the CRS makes that Clear enough the last thing they want is Competition from other digital Currencies which explains the inclusion Of stable coins in the calf As such the calf could do some serious Damage to the crypto industry now the Caveat is that most of this damage would Be done to centralized elements of the Crypto industry which could potentially Be bullish for decentralized Alternatives such as dexes This ties into another implication of The calf and that's the continued Erosion of on-chain privacy reporting

Every single transaction to and from Personal cryptocurrency while it's two Tax authorities is a dangerous precedent That could result in the de-listing of Privacy coins for tax compliance reasons Requiring exchanges and platforms to Keep track of these transactions is also Arguably Overkill if you watched our Video about blockchain analytics Companies you'll know they're already Tracking every single one of your crypto Transactions and Reporting them to the Relevant authorities in my mind this is Just more evidence to the idea that the Cuff was created to encumber Cryptocurrency exchanges and platforms Then again it's quite possible that the Blockchain analytics companies were Pushing for the oecd to include this Requirement so they can make even more Money in a bear Market What's almost certain however is that Traditional financial institutions will Not be subject to the same requirements As crypto firms that's because there Were additional amendments to the CRS Which allowed tradfi to offer crypto Services without having to comply with The calf really makes you think in some Then the calf is going to be a pain in The backside for the crypto industry as Well as the everyday crypto holder the Silver Lining is that it could Incentivize the development of

Decentralized Alternatives but it won't Be long before the oecd and others come After those too the tragedy is that we Will never see the same scrutiny applied To the entities that will spend all the Tax money coming from crypto games some Would say it's time for a change to the Way taxation works that is not a Conversation the people in power are Ready to have but mark my words it will Happen eventually Foreign

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OUR TAKE

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