How Tax Authorities Are Responding to Cryptocurrency

Article from Law360 | Co-authored by Mark Rush, Joseph Valenti, and Simone DeJarnett

The features that make cryptocurrencies attractive to their users — relative anonymity and mobility — have created heightened concerns with regulatory agencies in the United States and abroad. Recent enforcement actions highlight a growing focus by regulatory agencies on cryptocurrency businesses and an increased number of enforcement actions and prosecutions. In addition, there are reasons to expect that the scope and character of the violations alleged as part of these government actions may increase. While the vast majority of cryptocurrency-related enforcement actions have been related to anti-money-laundering and securities violations, both American and non-U.S. authorities have signaled that they are deeply concerned about the tax implications of greater adoption of cryptocurrencies without greater accountability procedures and transparency.

Topics covered in this article include:

  • Background on Cryptocurrency
  • Cryptocurrency Red Flags
  • U.S. Federal Income Tax Compliance and Cryptocurrency
  • Swiss Bank Program
  • Lessons from the Swiss Bank Program
  • Cryptocurrency Beyond the United States
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