The Cryptocurrency Informer

In the big news of the week, just about every crypto AND financial news outlet is reporting on Coinbase. These reports indicate that Coinbase is planning on becoming the first major US crypto exchange to be listed on the stock market. The report seems to originate on Reuters, who cites three unnamed sources.

According to the report, “Coinbase could pursue the listing later this year or early next year, the sources said, cautioning that the plans are still subject to change. The company has not yet registered its intention to go public with the SEC, but has been in talks to hire investment banks and law firms, the sources added.”

Neither Coinbase or the SEC have provided a comment on this matter, according to the report.

Some more interesting pieces of information in the report relate to Coinbase’s 2018 valuation of $8 billion and the nature in which they are potentially going to be listed – the report states that Coinbase “is exploring going public via a direct listing instead of a traditional initial public offering (IPO).

In a direct listing, a company does not sell new shares as it does in an IPO and existing investors are not bound by lock-up restrictions on when they can divest their holdings following the market debut.”

Just a day before all of this information was released from the floodgates, Coinbase announced via Twitter that they were adding a former US Magistrate Judge, named Paul Grewal, as their Chief Legal Officer. Grewal’s bona fides also include being the Vice President and Deputy General Counsel at Facebook. In a blog post accompanying the announcement, Coinbase explained Grewal’s role as one that “will oversee all legal functions of the global business and… will also lead the team’s continuing work to partner with financial services regulators, contribute to the development and rollout of innovative, regulated products and services, and support the company’s global growth and regulatory strategy.”

Certainly an interesting addition to the team prior to the news leaking of Coinbase’s potential (and understandably likely) foray into becoming a publicly traded company. The Reuters report states that this could occur as early as 2020, but that 2021 is a possibility as well. There is likely a lot needs to happen regarding the SEC in order for this to occur, but if there’s a cryptocurrency exchange that has the enough name-recognition, capital, and overall resources in the space to do so, it’s probably Coinbase. Inevitably, something like this would be a good thing for adoption – but as most things we discuss on this show, only time will tell!

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Up next – let’s talk about the IRS. According to Bloomberg Tax senior reporter Allyson Versprille, The IRS Criminal Investigation division (which we’ve discussed a number of times on the Bitcoin Taxes podcast) are attempting to find tools that will assist them in tracing some of the more anonymous cryptocurrencies, including Monero and Zcash. However, due to the nature of these cryptocurrencies, the IRS is reportedly not having a ton of success. Monero uses stealth addresses to mask transactions between users and Zcash uses Zero-Knowledge Proof to hide transaction addresses and transacted amounts.

The interesting takeaway from this story is that although the IRS may not be the quickest agency to release cryptocurrency taxation information, their CI division is certainly attempting to stay on top of popular and emerging technologies in the crypto space. The report, and the corresponding Request for Information (RFI document), allude to the fact that by design, these cryptocurrencies are more likely to be involved in illicit activities compared to a pseudo-anonymous crypto like BTC.

If you are interested in learning how the IRS CI division is attempting to address this issue, check out the Request for Information document that was provided in the original Bloomberg Tax report, and that we’ve provided on talk.bitcoin.tax.

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On the topic of the IRS, our last story is that the US tax deadline is QUICKLY approaching! Originally the deadline was April 15th, but due to the pandemic, the IRS extended the deadline to file until July 15th, 2020. This means there are only a few days left to file your cryptocurrency taxes.

Last year, the IRS sent out “educational letters” to many cryptocurrency traders, reminding them that they need to be including their crypto capital gains and losses on their tax forms. In addition, the new 1040 Schedule 1 for 2019 now includes a specific crypto question, “At any time during 2019, did you receive, sell, send, exchange or otherwise acquire any financial interest in virtual currency?”.

If you didn’t already know this, there are several websites that will calculate cryptocurrency taxes for you – you upload your trading data from exchanges and add any spending you might have done on various wallets, and then they calculate the capital gains for each cryptocurrency and provide a downloadable report. Bitcoin.Tax has been a trusted service for crypto users since 2014, and has already imported over 100 million transactions. It offers various different calculation methods and can create an exportable 8949 form or integrates with tax software, such as TurboTax. It’s free to upload your data and paid plans start at $39.95. As a “thank you” for listening to the Cryptocurrency Informer, you can use the code “INFORMER” for 10% off of ANY plan up until Tax Day.

Bitcoin.tax also has a full-service tax option, where one of our tax partners will do all the hard work for you, including your 1040 and any necessary schedules as well as optional state tax forms. Returns are submitted and signed by the tax attorney, CPA or enrolled agent. If you sign up for the full-service between now and July 15, we are also offering a FREE filing of your extension form while your final tax forms are being prepared.

That’s it for this week’s episode of The Cryptocurrency Informer. Don’t forget – if you want to read more about each of these stories, go to talk.bitcoin.tax and click on The Cryptocurrency Informer link. Every episode is accompanied by a number of relevant links for each story, so you can do your own in-depth research on the topics that interest you.

Be sure to stay tuned every Friday for a new episode, and don’t forget to subscribe.

Have a great weekend everyone!