IRS team director talked about crypto taxes, including Korea
IRS cybercrime director Jarod Koopman offered his views on cryptocurrencies during the Geneva Blockchain Congress last week. Koopman told JoinD that while several countries are considering categorizing cryptocurrency as “other income,” some caution is in order when it comes to taxation. IRS working with 2,000 experts During the Jan. 20 conference, Koopman made a speech on illegal trade and counterfeiting. He talked about the IRS as an organization and its achievements. In the speech, he said the IRS plans to track down financial crimes related to cryptocurrency through investigation and research. According to Koopman, the IRS is investigating financial crimes, including those related to cryptocurrency, while working with 2,000 industry experts. Cryptocurrency better than cash The IRS director said that aside from cryptocurrency-related financial crime, digital assets have their strengths. He said he personally favors cryptocurrency over cash. He considered blockchain as a “good technology,” adding that one of the distinctive trends today is that institutions and big companies are entering the blockchain industry. KYC is important Koopman, however, noted the flaws of the cryptocurrency system, such as the possibility of financial crimes, including money laundering. He said the IRS has been continuously studying related cases to address such problems. Examples include the atomic swap and the dark web. The atomic swap allows for peer-to-peer cryptocurrency transactions without having to go through exchanges. This makes money laundering possible. He also said one project is tracking down transactions made on the dark web, which is not easy. He said one of the ways to solve this problem is the establishment of official know your customer KYC verification systems. He said the U.S. regulators are continuously working on relevant systems. Take care on taxation Koopman in the interview with JoinD said he wasn’t surprised that the Korean government may categorize cryptocurrency as “other income.” He said other countries may do the same. Even the U.S. has had similar discussions. But Koopman said it is not easy to manage the flow of capital and establish the taxation system. He said the taxation policies have to be approached with caution. That means listening to the opinions of the private sector, including industry officials not only in Korea but also in other countries. Koopman said the IRS is closely monitoring the cryptocurrency taxation policies of other countries. A Jan. 20 news reports indicated that the Korean Finance Ministry has assigned the income-tax department to cryptocurrency taxation rather than the property-tax department. This suggests that that cryptocurrency will be taxed as other income. Currently the tax rate on other income in Korea is 20 percent.