Charles Rettig, commissioner of the United States IRS, stated that NFTs are becoming a means for tax evasion in the country, due to the “difficulty” of tracking transactions.
In a participación before the Senate Finance Committee, cited by CNBC, Charles Rettig, commissioner of the United States Internal Revenue Service (IRS), stated that the non-fungible tokens, known as NFT, are helping users and investors to evade their taxes in the country. According to the figures revealed by Rettig, the United States has stopped receiving nearly 1.000 billion dollars in taxes, due to the transactions carried out with cryptocurrencies, and digital assets, and where NFTs have more to do with each day.
Rettig assures that many investors, collectors and buyers of NFTs are not aware that they have to declare and pay taxes on the capital gains they obtain when they use cryptocurrencies and digital assets to purchase this type of tokens.
“They don't know that they have to pay capital gains tax when they use cryptocurrency to make a purchase.”
In his opinion, NFTs are being “replicated” as a means of tax evasion in the country, although to date, there are no regulations that specifically force investors in this asset class to declare taxes. However, the IRS tax form includes a general question that asks users and taxpayers for information about business transactions, profits or financial interest in “virtual currency.” Rettig alleges that most investors use ether to fund NFT purchases and are therefore subject to paying taxes.
NFTs have become a million-dollar market in less than a year, after the boom that this asset class sparked in mid-2020. Since then, the frenzy and demand for these tokens has been increasing. NFTs emerged as a new class of digital assets, with extraordinary potential to represent physical and digital objects in a unique, original, exclusive, immutable, reliable and secure way. These tokens are finding uses and applications in video games, sports collectibles, works of art, and even for companies and organizations such as the New York Stock Exchange (NYSE) and the United States Postal Service (USPS), which use NFTs to commemorate a company's entry into the stock market, or to certify documents with unique and unrepeatable digital stamps that provide a high level of reliability and security for the service.
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Greater control over cryptocurrencies
For years, government organizations in the United States have been interested in exercising greater control over commercial operations carried out with cryptocurrencies and digital assets.
As this medium reported, since 2019, the IRS modified its form to request payment of taxes to cryptocurrency holders, and has been sending a series of letters to request payment of taxes to US citizens. And he has even threatened to audit those who he considers are hiding their funds.
The IRS has also been working hand in hand with intelligence and analysis firms blockchain for the design of tracking tools that allow you to identify and follow transactions made with cryptoassets, especially Monero (XMR), to exercise its authority over the owners of these assets and force them to pay taxes in the country.
In addition to the IRS, other government organizations are also very eager to track transactions carried out with cryptocurrencies, citing that these assets encourage illicit acts and tax evasion. Last year, the Treasury Department and Financial Crimes Enforcement Bureau (FinCEN), attached to the Department, made public their intention to regulate the cryptocurrency industry, including transactions made from self-custodial or self-hosted wallets. According to the regulator, the proposal would seek to close the regulatory gaps that currently exist between transactions with cryptocurrencies and digital assets, and avoid the risks of common financial crimes, such as money laundering or money laundering with these assets within the country.
A victory for the crypto community
The proposed regulation presented by the Treasury and FinCEN He received numerous criticisms, both for its enormous demands and its haste, so different representatives of exchanges, cryptocurrency companies, analysis firms like Chainalysis and even legislators spoke out to avoid the hasty approval of these regulations, which would undermine the global leadership of the United States in the growing cryptocurrency industry and would put the safety of users at risk.
However, despite the fact that the crypto community managed to get the regulator to postpone the new regulations, to carry out an in-depth analysis of these and all their implications, US regulators continue in their eagerness to impose new regulations on the crypto industry.
Recently, Jay Clayton, former chairman of the SEC, and analysts at Goldman Sachs, pointed out that new regulations are coming for the crypto industry, although they did not give further details about it.
NFT Frenzy Draws Regulators' Attention
In addition to the IRS, the offend, the Financial Action Task Force, made mention of NFTs in the draft Guidance Guide on Digital Assets. The regulator is making small adjustments to its terms and definitions that point towards decentralized finance ecosystems (DeFi) and NFTs.
The frenzy that these tokens and the crypto industry in general are awakening is drawing the attention of regulators around the world, who hide behind the fact of ensuring and protecting the interests of investors.
Cryptocurrencies have become a multi-billion dollar industry of more than 2,2 trillions of dollars, in just 12 years of history. While NFTs exceeded sales of more than $550 million in the month in February. Although the craze for these tokens has died down a bit in the last month, more artists and celebrities are joining this nascent sector of the digital industry.
Recently, Edson Arantes Do Nascimiento, known as Pele, the best soccer player of all time, announced that will collect your best plays and immortalize them on the blockchain through an NFT. Also, Edward Snowden, former employee of the United States NSA, auctioned an NFT on the Foundation platform, where he sold his digital artwork for $5,4 million (2.224 ETH). Popular HollyWood actress and businesswoman Paris Hilton also declared herself “obsessed” with NFTs.
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