TaxProf Weblog

New York State Bar Affiliation Tax Part, Report on Cryptocurrency and Different Fungible Belongings (Apr. 18, 2022):

In recent times, the marketplace for digital property has developed in dramatic methods, together with exponential progress in each the mixture worth of digital property and the quantity of transactions in digital property in addition to the broad adoption of newer digital asset lessons like stablecoins and proof-of-stake cryptocurrencies. On this Report, we now have centered on the areas we consider are most in want of steerage and the place the trail to issuing such steerage is fairly easy. The Report addresses the next matters:

• The final characterization of cryptocurrency for federal earnings tax functions as commodities, securities or a kind of asset class that’s neither commodities nor securities.
• The applying of the commodities buying and selling secure harbors beneath part 864(b)(2)(B) to cryptocurrency.
• The applying of the straddle guidelines of part 1092 to fungible digital property.
• The applying of the mark-to-market provisions of sections 475(e) and 475(f) for commodities sellers and merchants to cryptocurrency.
• The popularity of acquire or loss on lending cryptocurrency.

• The federal earnings tax characterization of sure U.S.-dollar pegged stablecoins.
• The federal earnings tax remedy of “wrapped” cryptocurrency.
• The federal earnings tax remedy of staking rewards obtained in respect of proof-of-stake cryptocurrency.

(Hat Tip: Reuven Avi-Yonah)

https://taxprof.typepad.com/taxprof_blog/2022/04/report-on-cryptocurrency-and-other-fungible-digital-assets.html