Archive for Digital Asset Reporting

California Digital Financial Assets Law

California Digital Financial Assets Law

On October 13, 2023, Governor Newsom signed into law Assembly Bill 39 and Senate Bill 401, together called the Digital Financial Assets Law (DFAL).

The DFAL provides the DFPI with rulemaking authority and an operative date of July 1, 2025 to ensure the regulatory framework is thoughtfully tailored to provide investor and consumer protections and address the crypto asset industry.

Invitation for Comments by January 12, 2024

The DFPI seeks public comments on topics related to the DFAL license application, licensure requirements, and stablecoin approval. The Commissioner invites interested parties to submit comments by January 12, 2024.

Prior to the comment deadline, the DFPI will host a virtual informal listening session with stakeholders to discuss feedback on this informal invitation for comments on January 8, 2024. Interested parties should email regulations@dfpi.ca.gov with the subject line “DFAL Listening Session RSVP” for an invitation to attend. The DFPI anticipates invitations for comment on additional topics in the future.

Licensing

Beginning July 1, 2025, companies must be licensed by the DFPI or have applied for a license with the DFPI to operate in California. The DFAL prohibits an entity from engaging in digital financial asset business activity unless the entity holds a license from the DFPI. Digital financial business activity includes activities such as exchanging, storing, or transferring a digital financial asset, such as a crypto asset. The new law promotes consumer and investor protection by creating a robust regulatory framework, including supervision and enforcement authority, for certain crypto activities.

Prospective Licensees

If you are a prospective DFAL licensee, or have a question about how the law affects your business, join our email list to receive future updates or email crypto@dfpi.ca.gov.

Kiosks

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Written by | Posted in California • Digital Asset Reporting

Digital Asset Reporting In H.R. 3684 Infrastructure Legislation

Digital Asset Reporting

Late on November 5, 2021, the House passed (228-206) H.R. 3684, INVEST in America – the infrastructure bill that has received a lot of attention this year. It already passed in the Senate on August 10 (69-30).

One of the few tax items here and added for tax gap concerns is to expand the definition of broker under §6045 to require additional reporting for certain digital asset transactions. A few observations:

1. There are much bigger tax gap concerns than misreporting or non-reporting of digital asset transactions such as underreporting and non-reporting by some cash businesses.

2. The text added to §6045 requires actions by the IRS and is confusing and potentially too broad to be administrable (unless the IRS addresses that broadness). The issue is that “broker” is expanded to include: “any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.” While the goal was likely to make virtual currency exchanges such as Coinbase and Kraken be brokers, the reach is potentially wider. For example, what about a company that provides various software for transfers or wallets?

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Written by | Posted in Digital Asset Reporting • HR 3684 Infrastructure Legislation

Digital Asset Reporting In H.R. 3684 Infrastructure Legislation

Digital Asset Reporting In H.R. 3684 Infrastructure Legislation

Late on November 5, 2021, the House passed (228-206) H.R. 3684, INVEST in America – the infrastructure bill that has received a lot of attention this year. It already passed in the Senate on August 10 (69-30).

One of the few tax items here and added for tax gap concerns is to expand the definition of broker under §6045 to require additional reporting for certain digital asset transactions. A few observations:

1. There are much bigger tax gap concerns than misreporting or non-reporting of digital asset transactions such as underreporting and non-reporting by some cash businesses.

2. The text added to §6045 requires actions by the IRS and is confusing and potentially too broad to be administrable (unless the IRS addresses that broadness). The issue is that “broker” is expanded to include: “any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.” While the goal was likely to make virtual currency exchanges such as Coinbase and Kraken be brokers, the reach is potentially wider. For example, what about a company that provides various software for transfers or wallets?

Read More

Written by | Posted in Digital Asset Reporting • HR 3684 Infrastructure Legislation