US Crypto Tax Rules Under The Lens: Lawyer Raises Tough Questions

Which is which? This is probably the question lingering in the mind of a known crypto lawyer after learning about the proposal of the US government to give tax exemptions to American crypto projects.

Pro-XRP lawyer John Deaton questioned what crypto projects would qualify as US-based and benefit from planned zero capital gains tax.

Questioning The Crypto Tax Policy

Deaton finds it puzzling how the government would implement a proposed tax policy that would give exemptions to US-based cryptocurrency projects, saying that it would challenge to identify which digital assets would qualify for the proposed zero capital gains tax.

The crypto lawyer added that the planned new tax crypto policy would also impact crypto companies with global operations.

In an X post, Deaton raised the possible complications that the prospect of granting tax exemptions on US-based crypto projects would bring, asking the government how it will evaluate the projects that will qualify for the tax exemption, considering that some firms have international affiliations.

Finding It Ambiguous

Deaton said that there are so many unanswered questions about how the government will implement the tax policy, including what constitutes a US-based cryptocurrency project.

“Legitimate questions: Which Crypto Projects are considered US-Based? What requirements constitute US based?” Deaton said in a post.

For the pro-XRP lawyer, identifying which can be considered as US-based can be tricky.

As an example, Deaton asked if it would meet the criteria of being US-based. “Although Solana Labs is headquartered in San Francisco, the Solana Foundation is based in Geneva, Switzerland,” he noted.

XTZ, which was developed by Arthur Breitman, also has a similar situation. “While the Breitmans are based in the US, the Tezos Foundation is headquartered in Switzerland,” he said in a post.

To complicate matters further, the crypto lawyer asked if American companies are also classified as “crypto projects.”

“Does Ripple, Gemini, Consensys and other US companies [would] benefit?” he added.

Clarity Needed

Deaton’s questioning of the proposed tax exemption only highlights the need for clarity in any crypto regulation, considering that the digital asset space is a complex landscape.

For Deaton, one of the major issues to resolve is whether strictly US-based crypto projects would qualify for the new tax policy and whether that would result in US projects being at a competitive disadvantage over their international counterparts.

Another important question is whether global crypto firms will have different tax regulations dependent on their international presence, a situation that might further complicate their operations and investment strategies.

Overall, Deaton is pointing out whether this new tax exemption rule would foster innovation and growth for American crypto companies, or whether the new tax policy would become a hindrance for crypto firms with global operations.

Featured image from Pexels, chart from TradingView