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Advanced Crypto -- Get Comfortable with Complexity
Experts deconstruct the intricacies of cryptocurrency at "The Latest on Crypto" conference held at Expert Dojo in Santa Monica.
Thursday, March 29th, 11:25am
Santa Monica, CA
After the Crypto 101 panel taught the basics at "THE LATEST on Crypto" conference, the crowd was primed for deeper analysis.
The panel consisted of Amy Wan, Cory Klippsten, Anita Motwani, Mark Schwartz, and Wendy Coggins, featuring Joanne Park as the moderator.
The crowd contained those already invested in cryptocurrency, some considering investment, and others who wanted to create their own currency.
Questions arose relating to how one should view different currencies in terms of tax bases, and different opinions among the panelists shined light on ambiguities present within the undeveloped crypto world.
Amy called these uncertainties an unfortunate truth, describing the current situation as “an alphabet soup of regulators fighting for jurisdiction,” and expanded by saying that “all coins act in different ways, and will be regulated on a case-by-case basis.”
A crowd member then wondered if they would hypothetically be able to declare a loss on a 1099 form if their investment depreciated over the course of the year. Cory responded by saying that his accountant told him that no, since getting paid in crypto is considered “income,” he could not declare a loss.
Wendy, an IRS agent, disagreed, and relayed, “If you’re treating it as an investment, we treat it like capital gains.” This would mean that yes, one could declare a loss on a 1099. Cory commented that he would be searching for a new accountant, which was met with laughter from the crowd and panelists alike.
Due to the confusion, some crowd members expressed fear over regulation. Amy responded by saying, “Novelty is expensive, and you have to be okay with vulnerability.”
It seemed that some of this vulnerability may be combated with changes in terminology. Anita, when working with clients in cryptocurrency, said, “I call them contributors, not investors, as technically we’re a foundation. I have to call them this to make sure we don’t get in trouble.”
The next question was whether crypto should be considered as cash or a security. The panel agreed that the most conservative approach would be to consider all crypto as a security, and not a token.
This led to a discussion over whether the IRS and SEC said that tokens would be traded as securities or if this would only be in relation to ICOs. Wendy maintained that crypto could be considered property. Anita claimed information suggesting that the third largest financial institution on the planet said it will recognize crypto as currency.
Apparently the only agreement is that everyone wants to escape US regulation.
The panel concluded with cautionary words. Investors should be careful and get multiple opinions. The more money one is dealing with, and the bigger the entity one deals with means the more careful one should be. As cryptocurrency stands, everything is open to interpretation. As with any investment, crypto raises risks, especially as it remains in its fetal stages.