Summary
- Passage of the CLARITY Act alone would not provide sufficient regulatory clarity for the digital-asset industry, and tax reform is also needed.
- Singh said the current tax system is complex and inefficient and does not adequately reflect DeFi and non-custodial wallet activity.
- Complex tax filing procedures could limit participation in the crypto market by retail investors and companies, underscoring the need to pursue tax reform in parallel.
Forecast Trend Report by Period
Passing the CLARITY Act alone will not bring sufficient regulatory clarity to the US digital-asset industry, and tax reform is also needed, according to a growing view in the market. Discussion is expanding over the need to overhaul the tax framework for digital assets.
CoinDesk reported on May 26 that Robin Singh, chief executive officer of crypto tax platform Koinly, called the CLARITY Act a turning point for the digital-asset industry. Even so, the current tax regime remains complex and inefficient, he said.
Some tax systems do not properly account for factors such as cost basis and holding periods, making it difficult to calculate investors’ actual tax liabilities accurately. The framework also does not adequately reflect activity involving decentralized finance, or DeFi, and non-custodial wallets.
As a result, users are left to reconstruct their transaction histories themselves, Singh said. He added that complex tax filing procedures could limit participation in the crypto market by retail investors and companies.
The US Congress has recently been discussing crypto market-structure regulation centered on the CLARITY Act.
But some in the market say tax reform should be debated in parallel if the industry is to grow and deepen its integration into the regulated financial system.
JH Kim
reporter1@bloomingbit.ioHi, I'm a Bloomingbit reporter, bringing you the latest cryptocurrency news.