Clinton Donnelly interviews David Canedo, Head of Tax and Compliance Strategy at Accointing by Glassnode. They discuss the challenges of calculating crypto gains and navigating tax regulations in the rapidly expanding world of cryptocurrencies and NFTs. (TCDS-09)
Crypto taxes: a necessary evil.
David Canedo kicked off the conversation by highlighting the importance of discussing crypto taxes, even though it may not be the most exciting topic. With a background in accounting and tax, David recognized early on the potential of cryptocurrencies and decided to immerse himself in the subject. He joined Accointing to help users create the best tax solutions and optimize their after-tax cash flows.
The acquisition of Accointing by Glassnode.
I raised the question of Accointing's acquisition by Glassnode and its significance. David explain that the acquisition was a strategic move by Glassnode to provide users with not only crypto tax solutions but also comprehensive data and market intelligence. By combining forces, Accointing and Glassnode aim to offer users a complete crypto journey, from investment decisions to tax optimization.
The growth strategy for Accointing.
David emphasized their focus on retail users and their commitment to delivering user-centric solutions. While the crypto tax space is rapidly expanding, Accointing aims to provide automation and ease of use to retail investors. The company is dedicated to addressing the challenges posed by diverse protocols and decentralized finance (DeFi) platforms. By analyzing total users and key protocols, Accointing seeks to offer scalable solutions that simplify tax reporting for different types of transactions.
Tackling NFT tax challenges.
The discussion then turned to the tax implications of non-fungible tokens (NFTs), an area of growing interest and complexity. David acknowledged the unique challenges associated with NFTs, including the difficulty of connecting buy and sell events on the blockchain. The emergence of gaming NFTs, where tokens can create new tokens, further adds to the complexity. David explained that Accointing's approach involves closely collaborating with the tax team and developers to identify patterns and data sources that can automate and streamline NFT tax reporting.
The IRS's approach to taxing NFTs.
I raised the recent IRS announcement regarding the potential taxation of NFTs as collectibles. David expressed disappointment with the lack of clear guidance from the IRS and acknowledged the complexity of determining which NFTs should be classified as collectibles. He suggested that for NFTs with known counterparties and prices, the reporting aspect is relatively straightforward. However, for more intricate cases, such as NFTs representing ownership of other assets, identifying the underlying assets and determining tax implications will require close attention and collaboration.
The complexity of defining collectibles.
I then highlighted the challenges of classifying NFTs as collectibles and shared concerns about the vague definition provided by the IRS. David questioned the inclusion of intangible items under the collectibles category and the potential complications this may introduce. Our conversation explored the difficulty of distinguishing between true collectibles and short-lived trends or fads. I then emphasized the unworkability and potential court battles that could result from such broad and unclear tax regulations.
The future of crypto taxes and NFTs.
As the interview came to a close, we reflected on the future of crypto taxes and NFTs. We discussed the importance of collaboration between regulatory agencies, the need for clear guidelines, and the challenges of tax classification in a rapidly evolving digital landscape. David highlighted the low profitability of NFTs for retail taxpayers and emphasized the focus on addressing money laundering concerns associated with NFT platforms.
My interview with David Canedo provided valuable insights into the world of crypto taxes and the tax implications of NFTs. The challenges of accurately reporting crypto gains and navigating the ever-changing landscape of decentralized finance require innovative solutions. Accointing by Glassnode aims to provide retail investors with comprehensive tools to optimize their investment decisions and simplify tax reporting. As the industry evolves and regulatory frameworks are established, continued collaboration and clear guidelines will be crucial to ensure fair and manageable crypto tax regulations for all stakeholders.
The full interview.
View the full interview on The Clinton Donnelly Show.
DISCLAIMER: Opinions and perspectives of the author, host, and guests. It should not be construed as U.S. taxpayer advice. There are often multiple interpretations of tax law. Various strategies may be suited to specific individuals and for particular situations. Seek out professional tax, legal, or financial advice from CryptoTaxAudit or from other reputable companies.