The Future of Crypto Taxes: How Regulation Shapes Financial Planning

Regulations and taxes are an unavoidable part of the crypto experience - as a CFO I know this far too well. In fact, part of my role is to not only follow the updates in regulations but also to think ahead for any possible upcoming changes as well. That’s why in this post, I’d like to analyze the emerging tax regulations trends and what implications they could have for crypto users and exchanges alike.

Global Shift in Crypto Taxation

As the use of cryptocurrency is becoming more widespread and governments are recognizing it worldwide, tax authorities are implementing financial regulations as they would with traditional assets such as fiat money. Countries like the USA, Germany, and South Korea have already implemented detailed crypto tax guidelines and continue to adjust them as time passes.

The United States IRS, for example, treats cryptocurrencies as properties for tax purposes, which means transactions are subject to capital gains tax. These regulations apply to individual crypto holders and exchanges alike, like our upcoming exchange Nordom, meaning we too are required to follow the strict systems, processing and reporting transactional data with required regularity. This, on the other hand, ensures the legitimacy of our exchange and the fact that our users are able to trust us, which is essential when working on a project of this scale.

Amidst Regulatory Uncertainty

One of the greatest challenges I, Giga Zukhubaia, face as a financial officer, no doubt alongside many of my colleagues is the volatile nature of the crypto sphere - which also involves unpredictability of tax regulations. This means that it is complicated enough to comply with the regulations of one country - if you want to expand your exchange globally, you would have to take into account the laws of all markets you wish to engage with. This volatile environment requires us to adapt continuously. Effective tax planning in this context means preparing for multiple scenarios and being ready to pivot as new regulations come into effect. 

Implications for Users and Exchanges

Of course, crypto tax regulations are relevant to individual users and exchanges alike, just for different reasons. For crypto users, understanding the tax implications of buying, selling, and trading cryptocurrencies is crucial first and foremost for awareness and calculated trading decisions. Therefore, there is a great need for education on crypto taxes to not only be able to navigate the complexities of the market but also the tax liabilities incurred by their activities.

Exchanges require knowledge of the crypto tax regulations for more technical purposes.  We have the responsibility of being not only facilitators of transactions but also key informants of tax regulations for our users. Implementing systems that provide detailed transaction records and issuing annual tax documents to users are part of our commitment to transparency and regulatory compliance.

That’s about it for now - I’ll be commenting on any major updates in the future if something comes up. As we continue to adapt and plan for these changes as an upcoming exchange with great ambitions, our goal remains to safeguard the interests of our users and ensure the long-term sustainability of our platform.