@dandabek, @Ivana First of all I’d like to say thank you to Dan Dabek, Ivana Tudor and the rest of the Safex Team for their great work on the Blue Paper and the new Website! I’d also like to shout out to the Safex Community for their valuable feedback and support of this project.
I’d like to discuss a topic that I don’t believe was addressed in the Blue Paper but that more recently has become a concern of mine. It is the dreaded topic that has to do with TAXES. While the IRS has said that virtual currencies don’t have legal tender status in the U.S., they have acknowledged that virtual currency can be used to purchase goods and services, or be bought, held and sold as an investment. As such, the IRS is requiring U.S. taxpayers to accurately report capital gains and income generated from cryptocurrency transactions. Depending on how long a cryptocurrency was held at the time of any transaction would determine whether short-term capital gains (less than twelve months) or long-term capital gains would apply. Short-term capital gains will be treated as ordinary income for tax purposes. What also complicates the picture is the new tax law that went into effect at the start of 2018, and the fact that the SEC wants cryptocurrencies to be treated as securities.
My accountant has informed me that I do need to report to the IRS my cost basis for the cryptocurrencies that I hold or received so that a determination can be made whether there was a profit or a loss.
Bitstamp and Bittrex provide the ability to download transaction information to a spreadsheet as (.csv) file. While this is somewhat helpful, they obviously don’t provide any information regarding profit or loss calculations, or even what my cost basis is. To determine my cost basis for Safex, as an example, I have to start by determining the cost of Bitcoin at the time that I used to purchase Safex. Fortunately, I discovered that Coindesk has a feature where I can get the minute to minute cost of Bitcoin for any date, and compare this to the date of Safex purchase by viewing the transaction in OmniExplorer.info.
But these considerations will most likely get much harder once I start receiving Safex Cash and spending it. Do you think Dan and Ivana that it will be possible for the new marketplace to have a mechanism in place so that U.S. taxpayers can easily track any and all transactions for tax purposes? I’ve read that U.S. exchanges such as Coinbase now are required to provide such mechanisms to their members, and that Coss exchange in Singapore will also be providing a mechanism for U.S. taxpayers due to the fact that the Coss exchange is in a foreign territory.