# Your 'Stay-Out-of-Jail-Free' Card: Navigating the $10K+ Transaction Reporting Law | Amy Kalnoki

- Channel: [Ethereum Denver](https://streameth.org/ethereum-denver)
- Date: 2024-10-09
- Duration: 20:58
- Topics: blockchain, web3, ethereum, Entertainment
- Watch: https://streameth.org/watch/yt-5byWqLn9qLY
- YouTube: https://www.youtube.com/watch?v=5byWqLn9qLY

## Description

Unravel the complexities of the IRS and FinCEN's 6050I rule mandating reporting of $10k+ crypto transactions! 2024 ushers in the new reporting requirements for those receiving payments in the form of digital assets and this session explores the broad implications for trade, compliance hurdles, and strategies for accurate reporting. What does this mean for privacy and the crypto industry? Learn about the challenges of information collection in the decentralized crypto space, the ambiguity in reporting mechanisms, and practical insights to avoid legal pitfalls. Stay ahead in the crypto world by understanding and complying with these pivotal regulations. 

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## Transcript

great all right hi everyone can you guys hear me all right all right let's get started need this a little bit closer all right good sound check okay hi everyone welcome uh to this talk we're going to be covering a very important topic and it'll be your get out of jail free because it actually is a topic and an issue and a a concern in the crypto community that could end up with a 5year jail penalty so we're talking about the 650i reporting requirements that the IRS uh was going to put into effect in 2024 we got a little bit of a stay of execution on that as I'll get into more in my presentation but again we're talking today about the 650i reporting requirement on any crypto transaction over 10K in value so I'm Amy kokei co-founder and COO of bitwave the leading digital asset accounting bookkeeping tax tracking and redre platform um so today we again we're covering 650i what the rule actually says potential places where it might apply to crypto transactions the issues and the ambiguity around how we'll actually be able to comply with this because form 8300 requires a lot of information that might not be available to you if you're on the receiving end of a 10K crypto transaction and brainstorm some ways the community can help um comply with this and address this and what kind of is going on um currently so first a little disclaimer of course this is not a replacement for any sort of legal or tax advice this is not Financial advice um this is really just educational and as you'll see the original date was to start in 2024 but the IRS has actually delayed that until further Clarity and Regulatory guidance can um be figured out um so so none of this is decided for sure exactly ooh the type of transactions that there you go little little like show but um exactly how it's going to apply to the crypto industry so um first just to catch up like why is this going on I mean obviously the the everyone's feeling good about about the blockchain industry at the moment every single large company is thinking about it we have the ETFs and institutions and you see all the great Builders here at the conference uh today and with that growth in the industry comes additional scrutiny from regulators which is a good thing I don't think that we can really see Mass adoptions for businesses or individuals using crypto without really great guidance and Regulatory Clarity uh but what the the IRS is trying to do at the moment is it's a little bit of a a round peg in a or a square peg and a round hole situation they're applying a framework from a 40-year-old law uh to the modern crypto economy and it just doesn't fit and we'll get into all the reasons why it really just does not fit for the moment we are right now um so I've already used a couple terms but I just want to clarify what uh a few things so I'm talking about rule 650i that's the rule and form 8300 so you'll hear me use both of those things but just so you can uh uh keep it in your mind the the provision the rule is 650i 6050 I and the form that is required by that is 8,300 uh all right so let's go back in time so this originally happened in 1984 and it's actually was controversial from the beginning um but what it says is any individual involved in trade or business uh that gets more than $10,000 in cash in a single or related series of transactions must report that to the IRS within 15 days on form 8300 um and so what's changed actually part of the infrastructure bill from a few years ago the same one that included the broker deal rules that were very you know controversial and didn't really make a lot of sense or unclear for the crypto industry it also included updating crypto transactions uh in that definition of cash um and if you think about it in 1984 if you were making a a business transaction or any sort of transaction with 10K in cash like that is a big stack of money and actually inflation adjusted I looked it up yesterday that was about $30,000 equivalent to today's dollars in $ 1984 so think about just like walking around with big stack of cash it was likely or maybe more likely than you know other types of transactions to be a little shady and so perhaps it made a little bit of sense that the IRS would want to have you report on why you were just walking around with a big stack of cash to do business transactions because even in 1984 people were doing wires and ACS and writing checks um and and so perhaps it made a little bit of sense but you fast forward now to the digital asset economy and you can think of all the different types of transactions in the crypto World purchasing nfts mining or staking rewards airdrops you name it it's quite reasonable and quite normal to have a transaction sorry sorry for that technical stuff um a transaction that is over $10,000 um and so the only kind of good part in my mind is that this is actually the first time a regulator or an agency or someone has recognized the value of cash a uh I'm sorry the value of crypto as a means of exchange uh and so it's really it is great to see that that there is recognition that there is value in exchange and that it is like cash but it also shows that there's still misconception that uh people might think the primary use case of a crypto or digital asset transaction is somehow to fund some sort of illegal or illicit activity so what does the the rule actually say so the threshold is 10K like I've said and um I've used the term series of related transactions that's actually very important you can as so it's 10K or cumulative series of transactions you can just imagine some sort of like a dgen thinking like okay I'm going to do one 9,999 transaction and then a dollar transaction and it's not going to you know trigger a form 8300 that's not the case so if it's reasonable that this series of transactions is a related business they are grouped together so not for $2,500 can't get around it cumulative value of 10K um compliance for this it's it's not just a you know a little form it's actually like I mentioned at the top of the presentation it can carry up to a 5year jail sentence for non-compliance so it is really important um that once the rule does go into place in whatever form the IRS has the final version that you do comply because it can be a fine of up to $2,500 for the first time or $100,000 for multiple and up to a 5-year jail sentence uh and so on it the timeline 15 days that's actually a very quick timeline so from the point of transaction you have 15 day 15 days to file 8,300 here's the the kicker for the crypto industry the form in its current uh iteration requires things like the social security number or t for the sender things like the physical address um of course the amount and nature of the transaction date things like that but a lot of things that might not be readily available to you um when you're doing a a crypto transaction and so again this is why we're trying to apply a framework that really just doesn't make sense because you might not have the details that are required for the form and that's that's pretty normal in in a crypto transaction um it was supposed to go into effect in January because of all the confusion and the uh basically inability for the current state of us to be able to comply with it it has been delayed so we are waiting on the final version um but like staking rewards like you don't you don't get a W9 from like a blockchain how are we going to address these things in the crypto industry so uh like I said it's it hasn't got to effect and we'll brainstorm a few ways that um the industry can can address it so where will it apply also to be determined likely it will be applied to any U receipt of goods or services so if you're getting paid in crypto will likely trigger it if you're getting token compensation or something like that for more than 10K likely trigger it again we don't know this is speculative at this point till the final version comes out uh no validator activity staking rewards um certainly sales of nfts or Ico kind of tokens or any sort of token sale I think it will probably apply aird drops as well if you're on the receiving end of something more than 10K uh it could the one that I think is most unclear is whether just regular crypto trading activity will will apply to it uh we don't know we'll have to wait and see what can you do now I would recommend being proactive and being very careful and detailed on your tracking your transactions so that when the rule does go into place you have accurate records that you've kept in know and you have a good process in place for maintaining these records um you know folks in the audience who do like retail uh trading I'm sure something like a coin tracker on the realt side will help you pull and categorize and and organize your transactions certainly on the business side at bitwave we can help with that as well but accurate recordkeeping of where the transactions are coming from and the value the fair market value at the time you receive them is really really important to get ready for this rule going into effect uh air drops like I said I think that's a really really great example of of why it doesn't make sense in its current form uh because you might not have any of the details required for form 8300 when you get an air drop but you could have a lot of value if you think a few years back um to the Unis swap aird drop people made a significant some people made a significant amount of money um but the details required for the form were not available to them so uh there are a lot of great efforts within the the crypto Community to advocate for the clarity that we need um I think you know if we do do things like publicly posting W or or things that could help people proactively fill out the form um but I think you know we do need to really talk and uh and explain why it's difficult to comply in its current form with the way um people function and do crypto transactions and things like that um uh it's a big privacy issue I think actually um finding people's wallets certainly getting their names and addresses and it's not like Banks and so I've said it's really a 40-year-old framework that doesn't fit into the current um regulation and actually coin Center is suing the treasury over this and they consider it unconstitutional um because people were we're not baned s so in its original form you think about the folks who had to file the 8300s and things like that it was more financial institutions than Banks and um it was found that Banks um should have to have this requirement and partially because they get special access to the Federal Reserve and then it was therefore thought that they had additional burden to be able to ensure that USD the dollar is not used for illegal activities uh so I guess you can get there from a privacy perspective that the tradeoff for the banks and the burden of collecting all this information on any sort of 10K transaction makes sense they extension of the Federal Reserve and the government but like we're not people are not the same burden doesn't really make sense like I shouldn't have to know your social security number when we do a normal business transaction um there's unreasonable burden on us uh and it it is a privacy PR privacy concern for folks uh again I'm Amy from bitwave we do digital asset accounting book you be on tax tracking and I'm happy to take any questions anyone have any questions do people generally agree that it is uh an undue burden or the the complexity of filling out a form at this time would be untenable I mean I'm seeing a lot of nods and a lot of heads so again I really think you should you know write your Congressman or work with one of the groups who are advocating um certainly uh in the counting World there are a lot of people who are trying to explain why it's just it's not it is is a regul a proposed regulation that just doesn't make sense and is quite frankly perhaps even unfair um because there are so many reasons why a 10K transaction is for very normal and legitimate business purposes and getting the required information is just a real hurdle for the growth of the industry and uh very normal payment rails in the crypto economy so I think maybe I saw a question up there I quick question um yeah if that applies that the rule goes in effect when does that apply on the reporting on the current tax year or previous year you have to file it within 15 days of the transaction so once it goes to an effect the very next time you have a 10K transaction or a series of related transactions that sum up more than 10K you have 15 days to file form 8300 that's the current framework and that's how it is right now so if you right now went and like bought a car for 10K in cash um somebody is going to file an 8300 like the the the car dealership is going to do that um and so yeah once it goes into effect you have that 15-day timeline that's the currently how it's written yeah hi hi thank you so much for for doing this talk um just uh to touch on what you said before on what can we do to you know help those that are making this decision of wanting us to fill out this form understand that you know maybe this isn't necessarily a viable option for things like airdrops and you know these nuances that happen only in the crypto industry as opposed to cash right specifically yeah I think explaining why perhaps digital asset transactions are more like a credit card transaction or wire or an A that there is that tracking and documentation that it's not just totally Anonymous like dropping a sack of cash off is that there are ways to track these and explaining to folks outside of the industry like why it's a very normal thing to receive a $10,000 Bitcoin payment for your business for consulting services or um for mining rewards if you're part of a large pool for something that um so I think both explaining why it's very common to have 10K plus transactions and the ways that it is traceable and trackable while still maintaining privacy I think that's really important because I think people outside the industry they just don't understand they think like it's you know we're so decentralized that it is just like a random bag of cash and it's really not there are ways to track and to have you know your public addresses and not your name and address and physical location doesn't make sense yeah thank you H yeah thanks thanks for the presentation I came late but anyway uh so question uh let's say say heck with this this form I'm not going to fill out I'm not going to do nothing about it I say hey doesn't doesn't apply to me I don't believe in it have a nice day so what's going to happen what's what's really going to happen I think you said air sorry I'm having just a little hard time but like yeah what if you just get an airdrop that's one of the things that's really unclear like if you just receive something that you didn't ask for um you know I I don't know that's one of the things it really does need to be clarified um because how can you possibly get the details that are required for the form if you didn't even ask for the 10K airdrop and you have no idea who the sender is other than the wallet that it came from okay so let's say I received something and and I just disregard everything I don't I don't comply with with filling out any forms or any think uh I don't care what's going to really happen what kind of um I don't know physical things it can happen to me or not or or this is just a bunch of a a kind of a dust dust fairy kind of thing so the way it is right now and again the IR did put a pause on it while they figured out a lot of this complexity because that's a great example um like if in the current way it's written 15 days you have to comply or you could have the penalties right what do you what are you to do and so that is I think one of the reasons why we have this delay in it actually being rolled out from the original timeline that was outlined um in the infrastructure Bill thank you so sorry uh so this is just for United States uh do you know of any other countries in in this world who actually are trying to do this done this been doing it or is actually happening somewhere else in any other countries I don't have the details for other countries sorry I just know about this one hey there thanks um you talked about this in the context of businesses that's what the rule initially applied to what do individuals need to think about uh like when when do their activities cross the border and become treated like a business right now individuals have the same requirement and again like it doesn't make sense so right now you have the same requirement if you receive it for mining rewards air drops your work Consulting work or something like that you have the same requirement so again it's not fully in effect it was supposed to go in Jan one um by mid Jan they were like pause hold on time out we got to figure this out okay I I just have a few more seconds but I think we can take one if that's okay yeah hey uh hopefully it's pretty quick answer sorry I missed talked about I missed the first part um do both parties in the transaction have to be us-based for this form to apply no you if you're us-based it applies to you someone who's not us-based wouldn't have to uh necessarily unless they are a business operating here I don't think would have to but again it has the final details have not been um rolled out but I wanted to do this presentation today to make people in the community aware that this is likely coming and there are a lot of things that we need to comply with or you can face real penalties but um if you are us-based it's going to so some version of this when it rolls out finally will will likely apply to you again wait and see but it's a really important issue facing the crypto Community none of us want to pay a large penalty to the IRS or go to jail potentially so staying on top of this reporting requirement and advocating for Clarity on it I think is really really important for the community all right I'm at negative times so thank you guys so much I'll just be over here if anyone has any additional questions