IRS intensifies enforcement efforts against cryptocurrencies

Author: Olly Jackson | Published: 28 Aug 2018

The Internal Revenue Service (IRS) has joined tax authorities from the UK, Canada, the Netherlands and Australia to create the Joint Chiefs of Global Tax Enforcement, a sign regulators are getting serious about cryptocurrencies. But an additional layer of regulation could create confusion.

Cryptocurrencies in the US are regulated by the Commodities Futures Trading Commission (CFTC), the Office of Foreign Assets Control, the Financial Crimes Enforcement Network, the Securities and Exchange Commission (SEC) and the IRS. The sheer number of regulatory bodies that have the power to regulate digital currencies muddy the waters as its unclear whether these will be taxed as a commodity, a security, as currency or as property. This gives way to a conundrum: if cryptocurrencies are considered as securities – the SEC’s position - this incentivises investors to spend them, yet tax rules that regard them as property encourage investors to hold onto them.

Investors without clarification...