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School
Colorado State University, Fort Collins **We aren't endorsed by this school
Course
ACT 575
Subject
Accounting
Date
Oct 29, 2023
Pages
1
Uploaded by olgabondareva on coursehero.com
The tax implications surrounding cryptocurrencies can also be quite daunting. According to one study, as of 2022, approximately 34 mil. Americans owned some form of cryptocurrency (Insider Intelligence, 2022). However, individual and business tax regimens may not offer guidance that is specific enough. For example, how should the holder of a cryptocurrency classify it? Should it be currency or property (Baer, et al., 2023)? How should we tax capital gains? If property is sold for a profit, it is to be taxed (Baer, et al., 2023). However, if crypto is only a currency, its strength or weakness in financial markets will not lead to any more taxation than a rise in the value of the US Dollar does. Also, the technology employed by cryptocurrencies is somewhat novel. Blockchain architecture creates a marketplace in which transactions and participants are opaque (Baer, et al., 2023). The technology permits a pseudo anonymity that can make vouching for transactions difficult (Baer, et al., 2023). It could be much easier to use cryptocurrency to avoid taxation (Baer, et al., 2023). In my opinion, an audit firm should be wary of engagements that involve significant use of cryptocurrencies. The level of abstraction required to understand the technical, conceptual, and transactional nature of these currencies could lead to very real detection risks (Johnstone, et al., 2019, p. 286). This is a blueprint for audit failure (Thomson Reuters, 2023). As for the future of international finance, I hope that cryptocurrencies are not part of the equation. There is way too much volatility and abstraction. I cannot imagine a scenario in which global commerce could take place under these conditions. Auditors who have engagements in which large, international transactions are conducted in cryptocurrencies could be dealing with fraud that is much more difficult to find (Insider Intelligence, 2022). The regulatory authorities have not created frameworks that provide enough guidance. If I were a part of the audit team, I would not know where to begin. I don't think I would be alone in this status. I really appreciate your research on this topic. It helped clarify my understanding of the issues surrounding cryptocurrencies. Thank you.
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