Govt asks companies to disclose crypto transactions and holdings

Govt asks companies to disclose crypto transactions and holdings

In a first, the ministry of corporate affairs has asked all companies in the country to mandatorily disclose any dealings in cryptocurrency or virtual currency in their balance sheets. This is a major step towards regulating crypto assets in India and is expected to bring in a lot of transparency in reporting or filing of crypto investments.

According to the latest amendments to the Schedule III of the Companies Act, 2013, the companies have to disclose profit or loss on transactions involving cryptocurrency or virtual currency, amount of holding and details of deposits or advances from any person for the purpose of trading or investing in cryptocurrency or virtual currency. The latest requirements will be applicable from the upcoming financial year.

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“The intent seems to include and regulate cryptocurrencies. While the authorities are preparing a regulatory framework, they are looking for information on how many companies are doing cryptocurrency trading or are holding them on their balance sheets," said Pallav Narang, partner at CNK RK & Co Chartered Accountants.

While there are estimated to be around one crore individual crypto investors in India, the number of companies having exposure to this avenue is not known.

“The government’s move is expected to boost institutional adoption of crypto assets. We are eagerly waiting for positive regulatory guidelines from the finance ministry and the Reserve Bank of India for more clarity around crypto regulation in India. It is important to note that Indians have already invested around $1.5 billion into crypto assets, which clearly shows their intent towards embracing digital assets," said Shivam Thakral, chief executive officer, BuyUcoin, a cryptocurrency exchange.

Globally, major companies such as Tesla and MicroStrategy have been holding big amounts of bitcoin on their balance sheets.

Despite the MCA making it official for companies to hold and report crypto assets in their books, experts feel that there is still a disparity on how these assets will be taxed.

“Whether it is going to be taxed as business income, capital gains or speculative income, it is still to be tested. But it is certain that this information will be mined by the income tax authorities to verify whether people have paid taxes on this particular income or not," said Narang.

Meanwhile, the government on its part is in the process of bringing in a Bill on cryptocurrencies. While the contents of the Bill are not yet known, the Centre in February had said that the Bill would seek to ban all private cryptocurrencies such as bitcoin and ether. However, in the recent past, it had hinted that it would take a calibrated approach towards digital assets.

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Women Prove They Belong in the Crypto World

Long gone are the days when women played a back-seat role on Wall-Street, or in investments as a whole. Since 2009, the birth of Bitcoin has made financial investment more accessible, not just for the few, but for all. Women, as much as men, are curious to understand crypto and are ready to invest.

Traditional Finance

In our traditional system, there are countless challenges alongside levelling the investment playing field and achieving financial freedom. In 2020, the national gender pay gap in the United States was roughly 18%, with not a single US state paying females higher than males (on average). This resulted in increased difficulties for women attempting to build their 401k’s and plan for retirement in a way as effectively as men could. Due to the large disparities in active income, more women are looking for ways to invest in forms of passive income…cue cryptocurrencies.

How Crypto Supports Females

Decentralised finance allows for transactions to occur without passing through a third-party intermediary, granting individuals complete control and freedom over their own assets. This not only increases efficiency and affordability but provides a sense of security that is often overshadowed when interacting with third-party sources. Gemini conducted a survey that found among those planning to invest in crypto, 40% are women. Additionally, 39% of millennial women would be more interested in crypto if they knew it could make finance more accessible. Proving the intense need for women to feel empowered by their financial options and decisions.

Women in Crypto

Stats published by eToro showed only 15% of Bitcoin investors were women, however, this number had increased from 10% in 2020. Though only a small increase, this does show more women are becoming investors and this could be in part to the influence of women like Elizabeth Stark, and Katie Haun.

Elizabeth Stark redefined the cryptocurrency marketplace for women. This double-ivy league graduate co-founded the company Lightning Labs in 2016, a “second layer” protocol that helps run the blockchain more efficiently. One of Stark’s famous quotes is “Welcome to Bitcoin, you can’t tell people what to do.”

When speaking to Karen Hao of Quartz, Stark said “The perception that there are no women in bitcoin discourages women from getting involved.”

Katie Haun, a general partner at Andreessen Horowitz was introduced to Bitcoin in the currency’s early days, utilising blockchain’s capabilities to investigate criminal activity. Haun was interviewed by Grace Hong from Business Today, where she was asked about how she got involved in crypto: “I was looking for something different, away from violent and organised crime, so my chief asked me to work on Bitcoin. I quickly realised it wasn’t something that could be prosecuted—that would be akin to saying ‘Let’s prosecute the internet’ or ‘Let’s prosecute cash.’ It’s not possible nor desirable. Instead, I set about looking at some of the cases that involved nefarious uses of cryptocurrencies.”

Haun then went on to tell Hong about the crypto task force she created in the Department of Justice, “I realised there’s a real need for bridges to be built between the crypto ecosystem on one hand, and the government, policymakers, and regulators, on the other hand. We discussed it within the Justice Department and decided we would create a task force in San Francisco.

“One purpose of the task force was to bring and investigate cases involving criminal uses of cryptocurrency. Another very important purpose was to help educate and facilitate understanding on all ends: government regulators, technologists, developers, entrepreneurs, and thought leaders in the crypto ecosystem. There was a liaison function and mutual cooperation.

“A third purpose was having a point of contact—a lot of times, the government’s first line of defence against the criminals in the community would be the people at crypto companies, and naturally, crypto companies also wanted a point of contact to go to. And finally, the task force was the training ground to keep prosecutors and other government agents up to speed with developments in the sector.”

Flashforward a decade and Haun is serving as an independent director on the board for the billion-dollar company, Coinbase. Her crypto advice reads, “Don’t let yourself think ‘Oh, it’s too complex, I don’t want to go dive deep in it.’ You don’t need to dive deep into it, just go learn something about it that you didn’t know.” Haun encourages all individuals to be patient with the crypto space as it is ever-changing and evolving. Having seen the success that Haun has had, it is likely many more women will be inspired to get involved in crypto.

Crypto Exchange Coinsquare Ordered to Hand Thousands of Customers’ Records to Canadian Tax Agency

Canada’s tax authority, the Canada Revenue Agency (CRA) has prevailed in a court battle for access to a trove of high-value customer data held by cryptocurrency exchange Coinsquare. And the CRA seems to be coming for more.

Under a federal judge’s March 19 order, Coinsquare must hand over detailed information on its Canadian customers, their crypto trading activity and identifying information to the Canada Revenue Agency (CRA).

Coinsquare told CoinDesk that it will disclose information on an estimated 5% to 10% of its 400,000 customers to the CRA, which had originally sought to secure the lot. Court documents indicate only high value accounts will be caught in the sweep.

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The first of its kind ruling hands CRA a win just seven months after it began pursuing Coinsquare’s customer data in court. CRA argued it needed the data to check if taxpayers were meeting their crypto reporting burdens and the federal court agreed.

Today, CoinDesk also learned that the tax authority is “currently in the process of serving” Coinsquare with a further request for customer information by means of an “Unnamed Persons Requirement” (UPR). According to a spokeswoman for the CRA, the agency needs Coinsquare’s customer information to verify compliance with Canada’s Income Tax Act (ITA) and Excise Tax Act (ETA).

Coinsquare will have 15 days to comply with the order once it is received.

Echoes of Coinbase vs the IRS

Five years ago, the Internal Revenue Service, CRA’s southern peer, launched a similar effort against Coinbase, using a parallel argument for access. Though Coinbase at first lambasted the IRS’ “fishing expedition” it ultimately acceded to a judge’s order, handing over records on some 13,000 customers.

Related: The Real Problem With Crypto

At the time, Coinbase called the outcome a “partial victory” because it said it had pared down the scope of the IRS’ demands to include only accounts trading more than $20,000.

Story continues

Coinsquare echoed that sentiment on Tuesday as it touted the pared-down order secured through negotiations with CRA as a win.

Coinsquare’s final bargain will compel the crypto exchange to hand over at year’s end exhaustive data on accounts that held $20,000 CAD in crypto from 2014-2020 or cumulatively in their history, as well as the 16,500 largest accounts from each year.

“Coinsquare negotiated to protect its clients’ privacy, and limit any disclosure to only what was absolutely required by the CRA under Canadian tax law,” Coinsquare told CoinDesk.

“Instead of providing the CRA with all client data dating back to 2013 as was initially requested, Coinsquare and the CRA have agreed that information relating to 90-95% of Coinsquare’s clients will not be disclosed.”

The CRA spokeswoman said the agency “reserves the right” to mount future taxpayer data collection efforts against Coinsquare and “other sources.” However, she said the pared-down court order “appears sufficient to verify compliance with the ITA and/or the ETA.”

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