Tax and the Blockchain

With a deep understanding of blockchain and digital currency, Steptoe's tax attorneys are uniquely positioned to advise on blockchain and digital currency related tax issues. Because of the breadth of applications of blockchain and the current uncertainty surrounding the tax treatment, applications will need to be evaluated on a case-by-case, jurisdiction-by-jurisdiction, basis. Steptoe develops practical and creative solutions in this complex regulatory environment.

We advise clients on conducting digital currency transactions and conversions, the tax implications of different investment and entity structures, and the tax implications of digitizing assets.

In 2014, the IRS determined that bitcoins are property, not currency.  However, their guidance is limited and without any further direction many tax issues remain unanswered. Unlike dollars, changes in the value of digital currency from acquisition to disposition will result in gains or losses.  Further, basis, as well as gains and losses, will need to be tracked and recorded, which can be burdensome.  Thus, Steptoe helped create, and serves as counsel to, the Digital Assets Tax Policy Coalition, a coalition of the leading companies in the blockchain space that is engaging directly with the IRS and policymakers to develop workable policies at an industry-wide level. These policies will enable the IRS to perform its tax administration function without undue burdens on the industry or undue risks to customer privacy.

For more resources about the blockchain and to learn more about our Blockchain Team, please visit Steptoe’s Blockchain Team site.