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Ireland
On 31 October 2023, the Screening of Third Country Transactions Act 2023 (the “Act”), which establishes a new foreign direct investment ("FDI") screening regime in Ireland, was enacted.
United States | Publication | August 2023
On July 31st, 2023, the Internal Revenue Service (IRS) issued a new ruling clarifying the tax treatment of cryptocurrency staking rewards.
Pursuant to Revenue Ruling 2023-14 (the Ruling), staking rewards—a process whereby cryptocurrency holders can lock up their digital assets to support a proof-of-stake blockchain network's operations and receive rewards in the form of additional digital assets when validation occurs—are now considered to be taxable income.
For purposes of the Ruling, cryptocurrency refers to convertible virtual currency or "virtual currency that has an equivalent value in real currency or acts as a substitute for real currency."
The IRS has previously clarified in Notice 2014-21 that convertible virtual currency is treated as property for US federal income tax purposes and general tax principals should apply.
For the avoidance of any remaining doubt, the Ruling makes clear that crypto investors who are earning staking rewards are required to report these earnings as part of their gross income for tax purposes. The IRS cited as the basis of its determination Section 61(a) of the Code, which provides as a general rule that realized accession to wealth should be included in gross income.
The Ruling explains "the fair market value of the validation rewards received is included in the taxpayer's gross income in the taxable year in which the taxpayer gains dominion and control over the validation rewards." The fair market value of the validation award is determined as of the date and time the taxpayer gains dominion and control over the rewards. The Ruling further clarified that it applies to both taxpayers that stake cryptocurrency directly and those that stake cryptocurrency through a centralized cryptocurrency exchange.
For example, Bob owns 100 tokens of cryptocurrency X. Transactions in X are validated by a proof-of-stake consensus mechanism. Bob stakes his 100 tokens of X and validates certain new blocks on the X blockchain. As a validation reward, he receives an additional five tokens of X. Once Bob gains dominion and control of these five X tokens (meaning he has the ability to sell or dispose of them), Bob must include the fair market value of those X as of such date in his gross income for that taxable year.
Those participating in staking activities should ensure they are properly documenting and reporting any and all validation and reward transactions.
Publication
On 31 October 2023, the Screening of Third Country Transactions Act 2023 (the “Act”), which establishes a new foreign direct investment ("FDI") screening regime in Ireland, was enacted.
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The EU Foreign Subsidies Regulation, or FSR, is intended to prevent or remedy distortions of the EU internal market caused by “foreign” – meaning non-EU – subsidies benefitting companies active in the EU.
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The conventional wisdom is that ‘securitisation caused the great financial crisis’ (GFC). A further piece of conventional wisdom is that this was due to the misalignment of incentives between securitisation originators and securitisation investors . This conventional wisdom in turn drove much of the regulation of securitisation we now have.
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