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Banks are moving into crypto and crypto companies are trying to become banks, so how does it all play out?

Russian public officials will now be required to declare their cryptocurrency holdings, according to a new order President Vladimir Putin signed on Thursday.

According to the document, any public official or individual who wants to work in government must disclose their digital assets, as well as those of their spouse and children. They have until June 30, 2021, to declare the types of quantities of each of those held assets. Details of the presidential order were reported by CoinDesk.

The country’s Ministry of Finance recently proposed a series of amendments on digital assets that would result in fines for public officials if they fail to declare annual digital currency transactions above 600,000 roubles, as reported by Russian news outlet RBK.

However, the Russian parliament, the State Duma, relaxed these rules slightly in November, saying a failure to declare crypto holdings on time will incur a fine of 50,000. If holdings are not reported at all, a fine of 10% of the sum of all carried out transactions will be imposed.

© 2020 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Last year the Internal Revenue Service (IRS) indicated it wanted to know who holds cryptocurrency by asking taxpayers directly on their 1040A forms.

Now, it’s made that form-based question much more prominent to ensure everyone answers.

The IRS announced today that it has formally moved a question — “At any time during 2020, did you receive, sell, or otherwise acquire any financial interest in any virtual currency?” — to the 1040 form. The question sits at the top of the form, right below the boxes that ask for identification. Crypto tax professionals say if it wasn’t clear the IRS meant business before, it’s crystal now.

The 1040A, where the question was originally housed, doesn’t fall into everyone’s hands. It accounts for annual income tax returns. For 2018 and beyond, taxpayers must fill out Form 1040. The IRS has effectively moved the question so that it will be required reporting for all taxpayers moving forward, since most fill out Form 1040.

Joey Ryan, CFO at crypto accounting firm Gilded, said it shows the IRS is on top of crypto, maybe even more on than some would expect.

“If some people weren’t paying attention or not as fully kind of involved in what the IRS has been doing, they may not have known to look at the Schedule 1, which is kind of your extra income schedule, but now it’s just sitting right on the face of the 1040 so nobody kind of has a chance to miss that question or or not understand kind of what is happening,” he said.

The move to Form 1040 will likely increase the compliance rate, catching any stragglers who weren’t as aware of crypto tax burdens. That means a major impact for this tax season, according to Zenledger COO Daniel Hannum. 

“For 2019, there really wasn’t that many people that had a Schedule 1, especially in crypto, and for this year, the fact that it’s kind of that first question on the form, it’s huge,” he said.

Though it acts as further clarification from the IRS, there are still some questions to be answered, according to Hannum.

Some tax professionals have raised concerns to the IRS about the wording of the question, since they say it’s unclear if buying or holding qualifies as transacting in crypto. However, both Hannum and Ryan said the IRS appears committed to continually providing more clarity over time.

As previously reported, voices within the IRS have pushed for more tax guidance on this front.

© 2020 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The guidance is apt to chafe privacy advocates, inside and outside the crypto space, who are already uneasy about the honeypot that FinCEN’s suspicious activity report database has become.

Bitcoin’s price dipped below $18,000 for the third straight day while an increase in active Ethereum addresses is fundamentally positive.

Quick Take

• Bitcoin can trade at wildly different prices across exchanges.
• Blame the immaturity of crypto’s market infrastructure.

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XRP is a digital asset and cryptocurrency issued and partly managed by Ripple, a payment solutions company.