According to a recent piece written by Alexis Goldstein, a former Wall Street technologist, bitcoin should not be exempt from taxation or further regulation owing to its nature. Goldstein cited threats made by well-known Bitcoin supporters such as Jack Dorsey to relocate overseas if Bitcoin and other cryptocurrency holders are significantly taxed.
According to Goldstein, DeFi exchanges such as Uniswap should assist their users and their coins in getting taxed by distributing taxation papers in the same way that traditional brokerages do. She calls our attention to the UNI coin airdrop that occurred in September of last year. According to Goldstein, the airdrop is worth at least $500 million. Users must go through a laborious procedure of filing forms or paying hundreds of dollars to services that generate relevant taxation forms in order to pay the tax.
Alexis believes that KYC procedures should be made mandatory for decentralized platforms in order to organize taxation processes for their customers. Alexis, for example, employed the Swarm Markets DeFi platform, which established a mechanism for user identification verification. Another example was the Poly Network attack, during which the Poly team issued a letter warning the hacker that law enforcement would pursue him and that he would not be able to extract such enormous sums of money anyway. Moreover, some networks banned the hacker’s IP address, and Tether thwarted a $33 million transfer attempt.
If they can effectively punish a single address, they can also refuse to do business with any address that does not give the information required to issue a tax form.
Goldstein also spoke on the new tax reporting rules enacted as part of the infrastructure plan. The majority of bitcoin market players and influencers saw the new laws as a danger to the cryptocurrency industry’s survival. The author highlighted her concerns about the new laws’ “risks” to the market and believes that appropriate reporting will help law-abiding investors.