This infrastructure panel was moderated by Oskars Jepsis, CEO & Co-Founder of ALTER Network. Berken Menges, Head of Marketing of CoinTracking, and Antoine Scalia, Founder and CEO of Cryptio, contributed to the discussion, providing insights from B2B and B2C perspectives.
What Are the Current Tax Regimes in the Crypto Space?
Antoine believes that the current tax regimes in the crypto space are generally clear for trading, capital gains, and swap tradings, but there are still complexity and uncertainty in new use cases such as staking and rewards on lending protocols.
After the FTX collapse in 2022, some media is claiming that the auditing firms stop doing audits for crypto clients, but Antoine disagrees. He mentions that many companies pause Proof of Reserve until they find better ways to do it, but they are still conducting financial statement audits.
Berken shares that even though the tax regulations are relatively complete in Germany, the public is still hesitant to invest in cryptos. His company has been actively communicating with policymakers and educating the public to increase people’s trust. He also believes that making the infrastructure more user-friendly and automated will be crucial in helping the public adopt digital assets.
What Are the Challenges for Enterprises and Retail?
Berken identifies several challenges from the B2C side. Since different transactions belong to different types of taxation, aggregating and classifying all the data is the hardest part. It requires distinct methods to obtain data from centralized exchanges and decentralized finance (DeFi) platforms. Also, Berken acknowledges the importance to keep up with new blockchains and trends while prioritizing.
Complementing Berken’s point, Antoine thinks that the B2B side also faces challenges with coverage and integration with exchanges. It takes lots of time to collect accurate and complete data in an auditable way. Since the existing data analyzing tools, such as EtherScan, aren’t designed to be used for accounting purposes, there are missing features and a lack of consistency.
Antoine points out that, for conducting both Proof of Reserve and financial statement audits, there is an obvious lack of adequate tools. While auditors are normally not familiar with the latest technology, he thinks there are many market opportunities for companies providing tools and infrastructure to ease up the process.
What Is the Future of Web3 Infrastructure?
Antoine argues that the emergence of new use cases is too rapid for regulations to catch up. It’s thus important for enterprises to collaborate with experts in the field to navigate the evolving tax landscape. He emphasizes the need for reliable data infrastructure that can provide clear and easily understandable data for new use cases, in order to rebuild trust in the blockchain systems.
Berken thinks it’s challenging to understand and comply with different tax requirements in different countries. The process of evaluating tax reports and interpreting regulations can be time-consuming and complicated, especially with new use cases. However, he believes that once there is a clearer path and more clarity in tax regulations, it may ease up the challenges for institutional adoption.