If you are a regular CoinGeek reader, you will know that we are constantly reporting on new regulations, laws, and requirements related to digital currencies and blockchain technology.
Over the past two years, we have seen massive changes in the way digital assets are treated by governments as they seek to tame the Wild West era of the industry and gain some control over booming technology.
Now, the Organization for Economic Co-operation and Development (OECD) has proposed a new tax transparency framework for digital currencies and opened it up for public comment.
What does the OECD offer and why is it important?
The OECD has recognized that digital currencies pose new challenges to the current common reporting standards used by tax authorities to maintain visibility into both transactions and the location of items such as e-money and other assets. He said digital asset markets posed a “significant risk” to tax transparency around the world and authorities could not maintain “adequate visibility” when dealing with the new asset class.
In its report, the OECD acknowledged that current reporting standards fall short when it comes to “crypto,” and proposed a new tax transparency framework to modernize them. The proposal would impose new reporting obligations on providers of digital asset services such as exchanges. The new framework would require them to better identify users and report on certain transactions.
In addition to this, the OECD aims to modify the current common reporting standards to bring digital currencies and other things such as NFTs into their scope.
Walls are closing in as digital currency crumbles
The OECD joins a growing list of governments and international organizations that have expressed concern about the state of the industry and intend to do something about it.
Earlier this year, the European Union banned anonymous transactions in digital currency, and SEC Chairman Gary Gensler pledged to end the industry’s “Wild West” era. digital currency. Governments are notorious for moving slowly, but this trend is only accelerating, and as international bodies like the OECD join in, it will only accelerate the rate at which the inevitable is happening.
While some in the industry will lament the involvement of these large bureaucratic institutions in crafting rules governing digital currencies and other assets, the truth is that it was always going to happen. Dr. Craig Wright, the inventor of Bitcoin, told us years ago that governments would not sit idly by and allow tax evaders and criminals to use digital currencies to break the law. They may take time to react and adapt, but they react and adapt, and we see that play out in real time.
As the new OECD proposal shows, these institutions can update and modify the rules to adapt them to the challenges of the times. Now that international institutions are getting involved, the rules will only become more synchronized across the world, and there will be nowhere for exchanges and other intermediaries who are subject to them to hide.
Some Bitcoin Misconceptions at the Highest Levels
Yet even the OECD doesn’t seem to fully understand how digital currencies and assets like Bitcoin work. Far from being cloaked in cryptography and transferred in a decentralized way, as their report suggests, the Bitcoin blockchain is in plain text and easily identifiable nodes can be forced by law to freeze wallets or blacklist transactions. The Bitcoin ledger can actually increase visibility into where the money is, where it has moved, and who owns it. This misunderstanding is largely due to the fact that the myths surrounding so-called “cryptocurrencies” have made their way to the top of governments and global institutions.
The OECD and similar organizations should know that Bitcoin, as conceived by Satoshi Nakamoto, can help them achieve their goals of increased transparency and prosperity. It can unify world records on an immutable ledger that can be audited by anyone, at any time, and can usher in a new era of full transparency and increased efficiency.
Bitcoin has nothing to do with popular opinion. It was designed by a career auditor with the specific purpose of ushering in a more transparent and less corrupt world. However, until this is widely understood, adopting new rules to require intermediaries to at least keep records of who has what and where is probably a good idea.
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