On June 30, 2020 the US Senate Committee On Banking, Housing And Urban Affairs heard the testimony of the Chris Giancarlo. Mr. Giancarlo formerly served as Chairman of the US Commodity Futures Trading Commission and now is Founder of the Digital Dollar Project. He made three important observations ‘”you should read” in his testimony to the US Senate:
1) America’s financial infrastructure has fallen behind times
2) The world is entering an era when things of value, such as money, contracts, stock certificates, land records, cultural assets like art and music, our votes and even our personal identities will be managed and stored in a secure way. While the first wave of the internet is known as the Internet Of Information, the new wave is called the Internet Of Value.
3) The third observation is that, unless we act, this coming wave of the Internet will place an enormous strain on our aged, centralized financial systems. If we do act, however, we can harness this wave of innovation for greater financial inclusion, capital and operational efficiency and economic growth for generations to come.
According to a Forbes article written by Tatiana Koffman, several prominent names in finance and business believe that Bitcoin can evolve to become a global market asset. Bitcoin’s market cap is already over 350 Billion and has surpassed the size of global corporations like Mastercard and CocaCola.
Another prominent financial professional to testify during the same Senate Banking Committee hearing is Charles Cascarilla, CEO and Co-Founder of Paxos who also provided his testimony. Mr. Cascarilla testified the digitization of money and payments can address the systematic issues that exist in the antiquated plumbing of our financial and banking system.
Six months later on January 4, 2021, the US Senior Deputy Comptroller & Chief Counsel issued a statement that banks may now validate, store, and record payment transactions by serving as a node on an INVN (Independent Node Verification Network) and use INVN’s and related stablecoins (serve as electronic dollars) to carry out other bank-permissable payment activities, consistent with applicable law and safe and sound banking practices.
Read the US Office Of The Comptroller Of The Currency Report here.
Bitcoin is one of the first digital currencies to use peer-to-peer technology to facilitate instant payments. In 2010, Bitcoin was offered for .05 per coin and today that one Bitcoin is worth $39,710.80. Bitcoin was the wakeup call and FinTech 24/7 services like PayPal, Venmo, Zelle and Circle Pay(used for sending money to other countries) have been advancing the financial system into the next century. The Federal Reserve and Banks have realized the financial system is being taken over by tech and reinvented right in front of our eyes. The US has been behind when it comes to advancing the financial infrastructure but this is fast changing.
Now the US government and private sector are working together to transform the US financial infrastructure. The goal is to catch up with other countries who have already made changes. As a result, many proposals have already been introduced to Congress including: H.R. 6154 Cryptocurrency Act of 2020; H.R. 8153 Blockchain Innovation Act; H.R. 8524 Blockchain Records And Transactions Act Of 2020; H.R. 6154 Crypto-Currency Act Of 2020 and there are many more.
Countries like Sweden are almost entirely cashless. In India, you can use your fingerprint or iris scan to access money. Dozens of central banks have started looking at whether to issue digital currencies. But only a few have run trials and none has gone as far as China, which appears set to become the first country to put a central-bank digital currency (CBDC) into limited use. A report by Modern Consensus reveals the top 10 countries with the highest levels of everyday crypto use. With Ukraine topping the list, the other countries are: Russia, Venezuela, China, Kenya, the U.S., South Africa, Nigeria, Colombia, and Vietnam. Overall, the company said that its findings show “excitement around cryptocurrency as an investment and, especially in the developing world, as a means of value storage and medium of exchange.”
Individuals and businesses holding cash will one day soon discover they can no longer pay bills in cash. Digital dollars greatly benefits governments in tracing taxpayer revenue so government authorities can collect more tax revenue. Businesses that run primarily on cash transactions such as art, bars, restaurants, farmers markets, shoe repairs, dry cleaners, beauty salons, nail salons, designers, drugs, construction, and a cup of coffee will feel the impact.
Individuals and businesses utilizing cash transactions to avoid taxes will no longer be able to do so with the digital dollar financial payment system. Taxpayers will one day need to place cash earnings to a bank account which will convert to digital dollars to pay bills. Every cash transaction in business will be recorded and reported and accessible to the IRS. Once the financial infrastructure for digital dollars is built, it will be an easy revenue capture for tax authorities worldwide.
In the future, expect the Federal Reserve will create digital dollars and they will maintain your “Digital Dollar Wallet Account” most likely called a Fed Account. Eventually cash will stop being circulated and the government will have even more control over your bank accounts. Cash to digital dollars has been in the planning and implementation stages for some time. It is an easy transition from debit cards to digital dollar transactions.
More than ever, taxpayers will need to find a tax professional and ask tax questions of tax experts who can help them. TaxConnections is working with our members to bring educational courses on digital dollars and tax revenue to our entire community.
We encourage tax professionals to become a TaxConnections Member TODAY. We make certain you are seen by a steady stream of taxpayers searching for tax expertise with a wide range of tax expertise through the TaxConnections platform.
Tax Professionals with blockchain and cryptocurrency experience are most welcome to our network as we will refer new business clients and opportunities to you.
Kat Jennings, CEO TaxConnections.com 858.999.0053 X100
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