Cryptocurrency trades became taxable in the US

The new US tax code amendment concerns "like kind exchanges" and makes all cryptocurrency trades taxable
26 December 2017   1562

On December 22, President of the United States Donald Trump signed a new U.S. tax code amending IRC Section 1031 (a)(1). The new tax code is concerned with cryptocurrency trading apart from general taxation. 

The amendment concerns a part of the tax code regarding “like kind exchanges,” which used to allow investors to swap assets without paying taxes for that, and have long been used by traders to avoid taxation for the operations. 

The tax act in Sec. 13303 amends IRC Section 1031 (a)(1) to delete “property” and replace it with “real property” … So, you can see that now I can no longer take the position that my Bitcoin to Litecoin exchange was a like kind one under Sec. 1031, and I have to recognize the gain when I do it.

Suzanne Walsh
a partner at the law firm Murtha Cullina

According to the tax code, all cryptocurrency trading, including swapping one cryptocurrency for another, will become taxable starting from January 1 of 2018.

Until now the owners of digital currency had to pay taxes only when they exchanged cryptocurrency for fiat or physical goods, but the new rule now means that all crypto transactions become taxable.

Bakkt to be Launched in December

It is also reported that Goldman Sachs does not plan to create custodial cryptocurrency solutions based on the Bakkt infrastructure
19 October 2018   67

The expected launch of the Bakkt will take place on December 12 of this year. It is reported by The Block, citing informed sources.

Also, the material states that the investment bank Goldman Sachs does not plan to create custodial cryptocurrency solutions based on the Bakkt infrastructure. At the same time, the bank is considering the possibility of trading futures on a new platform.

In a recent Fortune interview with Bakkt, Kelly Lofler said that the cryptocurrency market is on the verge of a revolution comparable in size to the one that occurred on the energy market in the early 2000s.

Greater institutional participation in the digital asset markets requires secure and regulated custody solutions. We are impressed by BitGo’s product, unique services, and the management team. We view our investment in BitGo as an exciting opportunity to contribute to the evolution of this critical market infrastructure.

Rana Yared

Managing director, Goldman Sachs’ Principal Strategic Investments group

Bakkt is a cryptocurrency unit of the Intercontinental Exchange (ICE), which is the operator of the New York Stock Exchange. Giants such as Microsoft and Starbucks are taking part in creating of the new project, which is positioned as an “ecosystem for digital assets”.

The new platform will offer deliverable bitcoin futures to the market (unlike the settlement contracts for CBOE and CME, these are based on the underlying asset). The platform will support multiple fiat currencies.