Canada Adopts International Crypto Tax Reporting Standard
Canada is aimed at having the OECD standard for crypto asset tax reporting in place by 2027, as agreed with 46 countries.
After the crash of three major crypto-friendly banks, cryptocurrency firms are harder pressed to find legitimate banking options.
Crypto firms are already facing a unique challenge when it comes to accessing traditional banking services. With regulatory pressure, perceived risks associated with the industry, and crypto seen as an alternative to traditional finance, banks are often reluctant to work with cryptocurrency exchanges and firms. This leaves crypto companies with limited options for managing their finances.
Will crypto need to turn to ‘shadow banks’?
Molly White, a software engineer suggests crypto firms might have to consider more dubious alternatives for banking services. As a crypto critic and opponent to Web3 development, White spoke at a panel, named “Popping the Web3 Bubble” at the South by Southwest conference in Texas. In this, she offered that crypto firms might be forced to work ‘underground’:
“There were only a handful of US banks that were really game to take crypto clients. With Signature and Silvergate both out of the picture, I think that’s going to be very impactful on the crypto industry, which still really needs access to traditional finance and to US banking rails.”
She continued:
“Without [these banks], I think the crypto industry is going to be having a tough time. They’re either going to have to find other banks that are willing to work with them, which was already tough, and will probably only be tougher after the collapses of these banks, or they’re going to have to turn to some of the sort of shadier shadow banks.”
What can crypto firms do without banking options?
If crypto firms can’t access banks, there are a few options they might consider; not just suspicious alternatives. They could work with smaller, regional banks or credit unions. Smaller banks tend to be more likely to take on the ‘risks’ associated with the industry. A drawback is that regional banks often don’t have the same level of understanding of cryptocurrency as larger institutions.
Crypto firms could also work with specialised financial companies that focus specifically on serving the cryptocurrency industry. These businesses offer a range of banking services. These “crypto banks” have custom solutions to serve the needs of cryptocurrency firms, such as custody, trading, and lending.
Taking banking out of the equation entirely
Cryptocurrency firms might also consider turning to decentralised finance (DeFi) platforms. They offer a range of financial services without the need for traditional banks, built on blockchain technology. DeFi platforms offer services such as lending, borrowing, and trading without the need for third-parties such as banks.
Cryptocurrency firms might also look at working outside of the traditional banking system. This would entail using cryptocurrency exclusively for all financial transactions. While this approach has the benefit of offering a high degree of independence and control, it can be challenging to implement in practice. While more and more vendors are starting to accept crypto for payment, there is still a way to go before mass adoption makes this option ideal.