Crypto taxpayers get a break as IRS delays implementation of FIFO

According to CryptoQuant CEO Ki Young Ju, President Donald Trump's approach to Bitcoin and other cryptocurrencies will likely depend on the global perception of the United States economy and the strength of the US dollar. Meanwhile, Hive Digital announced that it will move to Texas due to Trump's pro-Bitcoin policies, and Switzerland made significant progress with a proposal to include Bitcoin in its national reserves.

Crypto Investors Get Temporary Relief from the IRS FIFO Rule

The United States Internal Revenue Service (IRS) granted temporary relief to cryptocurrency holders centralized exchanges from a rule that would have mandated the use of the FIFO (First In, First Out) accounting method for tax reasons. Under the original IRS determinationunless investors specifically chose an accounting method, such as HIFO (Highest In, First Out) or Spec ID, brokers would basically report sales using FIFO. This method assumes that the oldest cryptocurrency purchased is sold first, which may result in higher capital gains taxes for many taxpayers.

Tax experts like Shehan Chandrasekerahead of tax at Cointracker, warned that the immediate implementation of the rule could cause serious financial problems for crypto investors during a bull market. Selling old assets first, often at the lowest cost, would inadvertently increase taxable benefits.

Mark Thomascrypto commentator, that FIFO may only be beneficial in certain circumstances, such as when the sale date is more than a year after the earliest crypto purchase but within a year of the latest purchase, which may qualify for long-term capital gains tax. instead of short term.

The temporary relief postpones the implementation of the rule for sales on centralized crypto exchanges until December 31 of 2025. This extension gives brokers more time to implement support for several accounting methods. During this time, taxpayers are responsible for keeping their own records for tax reporting purposes.

This update happened after a legal challenge was filed on December 28 by the Blockchain Association and the Texas Blockchain Council against the IRS. The lawsuit argues that the expanded broker reporting rules, which include decentralized exchanges (DEXs) and require brokers to disclose detailed information about digital asset transactions, violate rights constitutional. The expanded requirements are expected to take effect in 2027, and will force brokers to report taxpayer identities and gross income from the sale of crypto and other digital assets.

Era Trump may shift focus away from Bitcoin

In addition to the latest tax developments, CryptoQuant CEO Ki Young Ju recently is recommended that's President-elect Donald Trump's approach Bitcoin and other cryptocurrencies will likely depend on the global perception of the United States economy and the strength of the US dollar. According to Ju, a source-of-value asset like Bitcoin and gold usually experience price increases when threats are perceived US economic dominance.

However, continued global confidence in the US economy and the dollar as a safe haven currency could reduce the likelihood that the the Trump administration accept Bitcoin as part of a strategic reserve. Ju argued that Trump's focus on exporting US strength and the continued flow of capital into the dollar could strengthen confidence in his leadership, which could lead to a reversal of pro-Bitcoin policies. .

Ju also sheds some light on a broader trend, particularly in emerging economies, where people are increasingly choosing the US dollar or dollar-pegged. stables over gold or Bitcoin as a safe haven. He specifically pointed out examples like Koreans who favored the dollar due to the weakening won and people in regions with hyperinflation using a stable to preserve value.

At the Bitcoin MENA conference, the CEO of Paxos, Charles Cascarilla, said that the financial system is moving forward, with stables ready to improve the utility of the US dollar by combining its reliability with speed and connectivity the internet. He also said that stable has become an essential tool for individuals in affected areas. economic instability. For example, Turkey was involved in a 67% inflation rate in March 2024, and has seen the world's highest rate of stable purchases relative to GDP.

Stablecoin purchases as a share of GDP (Source: Chainalysis)

Chainalysis reported that in 2023 more than 50% of digital assets sent to Latin American countries such as Argentina, Brazil, Colombia, Venezuela, and Mexico were stablecoins.

Trump's Bitcoin vision attracts Hive Digital to Texas

Bitcoin mining the company Hive Digital Technologies (HIVE) announced plans to to move its headquarters from Vancouver, Canada, to Texas due to President Donald Trump's pro-Bitcoin stance. In a statement on December 31, HIVE specifically mentioned the Trump administration's support for innovation and favoritism regulatory environment for Bitcoin miners as influential factors in the decision. Texas was chosen for its supportive business climate, strong energy infrastructure, and access to skilled talent.

HIVE described the US as a global leader in digital currency adoption. The company also sees the depth of the US capital markets, with $40 trillion in market capitalization and $500 billion in daily trading volumes, as critical to its growth strategy. Executive Chairman Frank Holmes believes that a move to the US provides the liquidity, visibility and valuation opportunities necessary for scaling operations.

Texas became a hub for Bitcoin mining by hosting major operators such as Applied Digital, Galaxy, Bitdeer, Cipher, Core Scientific, Hut 8, Riot platforms, A digital marathonand Energy Magazine. The state's appeal to miners aligns with Trump's earlier statements advocating for Bitcoin mining to remain in the US. After a meeting with Riot Platforms executives, Trump shared plans on Truth Social about his desire to own all of Bitcoin in the future. mined at home.

Switzerland Moves Closer to Accepting Bitcoin on a National Level

Meanwhile, a new proposal to ask the Swiss National Bank (SNB) to include Bitcoin in its currency reservations initiated by the Swiss federal chancellor. The campaign launched on December 31st, and aims to collect 100,000 signatures to qualify for a public referendum. Giw Zanganeh, Tether's vice president of Energy and Mining, and Yves Bennaïm, founder of the Swiss non-profit Bitcoin think tank 2B4CH, led the proposal along with eight other Bitcoin advocates.

The idea was first explored in October 2021, and gained momentum as the adoption of Bitcoin by nation states became more plausible. The proposal aims to amend Article 99 Paragraph 3 of the Swiss Federal Constitution to order the SNB to build up reserves that include both gold and Bitcoin. Advocates of the proposal argue that this step will help Switzerland become financially strong and sovereign.

The initiative was officially registered in the Swiss Federal Gazette on December 31, and they have until June 30, 2026 to collect the required signatures. Bnnaïm described the timing as ideal due to Bitcoin's growing presence in global financial systems.

Bitcoin adoption in Switzerland has seen a lot of growth, especially in Lugano, where 260 merchants accept the cryptocurrency. The city also hosts the annual “Plan ₿” Bitcoin conference. However, SNB Chairman Martin Schlegel has he raised some concerns about energy consumption and the suitability of Bitcoin as a payment method.

Globally, other countries also research Bitcoin reserves. In the United States, a bill sponsored by Senator Cynthia Lummis proposes to keep Bitcoin in Treasury reserves. Politicians in Brazil and Poland expressed similar interest.