Thompson Reuters has recently partnered up with a blockchain firm Verady in order to develop and launch a crypto tax audit system which will help not only crypto investors but also accounting professionals to calculate and deliver accurate estimates of due taxes to the Internal Revenue Service or any tax agency in the world.
The announcement was made on December 19th by Reuters themselves and focused on what the new system will introduce for both individual traders as well as large companies delving into the blockchain industry.
How the new project works
According to the announcement, the system will be designed to integrate any and all cold and hot wallets available in the blockchain market. This means that traders who utilize both crypto exchange platforms, as well as private transactions, will be able to track their transactions using the system.
Naturally, the new software will try to keep all of the transactions as neutral as possible, meaning that the identity of the sender, as well as the receiver, will be protected as much as possible. However, in order to help the IRS determine the due tax on an individual trader, some information will have to be distributed.
One thing for sure about the new system is that it makes the tax-paying process much easier. For those who were already honest about their due taxes, it's just going to save a lot more time.
But, that might be the only advantage that the new system has to offer.
Can personal info be entrusted to this system?
As already mentioned, in order for the new system to work it will have to have access to the personal information of traders. Things such as cold wallet addresses, hot wallet locations and the overall capital that a specific trader possesses will most likely be compromised.
Considering that Reuters is a large corporation it will be extra hard for them to resist any government regulation that could follow the launch of this new platform. This could mean the clean disclosure of customer data whenever requested, as well as the delivery of monthly information to the relevant government authorities.
But, as I've already mentioned, the system is designed for people who are already paying their due tax on cryptocurrencies, and not for those trying to avoid the regulation.
It's also going to be extra helpful for institutional crypto traders that pour in millions of dollars worth of funds on a monthly basis and try to make a profit. A dedication of capital gain tax from the trading profits will most likely save these firms millions in tax avoidance fees, therefore it could be said that it's relevant.
The government may pay more attention to cryptos
All of these taxation policies may seem like something scary for crypto investors in the long run, but the actual deduction of the situation is that it will help the market grow. Why? Well, there is one very important reason.
The government will finally start seeing some serious cash flow.
Much like any corporation, the government is usually oriented on profit so that they can stockpile for a rainy day. It's just how most economies work and it's not necessarily something immoral or wrong. A strong reserve is always required to handle a crisis should one occur.
Seeing that the crypto industry will start dedicating millions if not billions of dollars to a local economy in the form of tax dollars, the government will become a lot more lenient towards lightening the regulation or investing in the technology themselves.
We've seen this precedent in multiple countries as government took more control. Places like China and the European Union are moving towards a blockchain future, while the United States is lagging behind due to this regulatory uncertainty.
Having guaranteed income from these companies would mean effortless re-investment into the crypto industry, thus spiking the growth even further for the future.
It's a real possibility that Reuters is delivering onto the doorstep of corporations. All they have to do is comply and bite the bullet for a few years.