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Home » Comment Letter: Tax Treatment of Digital Assets

Comment Letter: Tax Treatment of Digital Assets

byJi Kim
September 9, 2023
in Comment Letters
Aspects of the proposed digital asset tax regulations do not take into account the unique nature of digital assets and the industry.

Summary

  • The Crypto Council appreciated the opportunity to respond to the Senate Finance Committee’s request for policy input on the taxation of digital assets.
  • Read a PDF of the official submitted comment letter and read other CCI comment letters.

RE: Request for Input to Address Uncertain Tax Treatment of Digital Assets

Dear Senate Finance Committee Chairman Wyden and Ranking Member Crapo:

The Crypto Council for Innovation (CCI) appreciates the opportunity to submit this letter in response to your request for policy input on the taxation of digital assets. By way of background, CCI is an alliance of crypto industry leaders with a mission to communicate the benefits of crypto and demonstrate its transformational promise. CCI members span the digital asset ecosystem and share the goal of encouraging the responsible global regulation of digital assets to unlock economic potential, improve lives, foster financial inclusion, protect national security, and disrupt illicit activity. CCI believes that achieving these goals requires informed, evidence-based policy decisions realized through collaborative engagement. 

As an initial matter, CCI has reviewed the IRS and Treasury Department’s recently released proposed regulations that include information reporting requirements for certain digital asset transactions. CCI is concerned that certain aspects of the proposed regulations do not adequately take into account the unique nature of digital assets and the digital asset industry, especially to the extent that they impose obligations on individuals, technologies, or entities that practically cannot comply with tax reporting obligations–not because they do not want to, but because they do not have the requisite information to do so. The overbroad proposed definitions of “broker” and “digital assets” would include certain decentralized finance (DeFi) protocols, self-hosted wallet products, nonfungible tokens, and also not differentiate between digital assets used as payments and digital assets used as investments. CCI plans to submit comments on these and other issues within the 60 day comment period and respectfully requests that the Senate Finance Committee consider enacting legislation to clarify the scope of sections 6045 and 6050W to the extent final Treasury regulations are overly broad and inconsistent with Congressional intent. 

With regards to the Senate Finance Committee’s request for input, CCI and its constituent members support a fair and sensible income tax reporting framework and believe that greater clarity on the taxation of digital assets will help foster compliance, consumer use-cases, and ongoing industry development. We appreciate the Senate Finance Committee’s efforts and leadership to address uncertainties surrounding the tax treatment of digital assets and your solicitation of input from stakeholders and digital asset taxation experts. We welcome the opportunity to share our members’ knowledge and expertise and to that end, CCI makes the below recommendations.

Recommendations 

Marking-to-Market for Traders and Dealers (Section 475) 

As an initial matter, CCI recommends that digital assets1 be added as a third category of assets that may be marked to market at the election of a dealer or trader in those assets, in line with the recent Biden Administration Greenbook proposal (the “Biden Greenbook Proposal”).2 Assets in this third category should be actively traded digital assets and derivatives on, or hedges of, those digital assets under rules similar to those that apply to actively traded commodities. For this purpose, the term “actively traded” should be defined by reference to section 1092(d)(1) (similar to the rule currently in place for commodities). We would also recommend that any future legislation implementing this recommendation make clear that it is not creating a negative inference with respect to taxpayers’ positions regarding the application of section 475 to digital assets under current law (i.e., future legislation should provide that the proposed changes should not be interpreted as creating an implication that digital assets are not commodities (within the meaning of section 475(e)(2))). 

This recommendation is grounded in several policy considerations, many of which were cited as reasons for the Biden Greenbook Proposal. Mark to market accounting generally provides a clear reflection of income with respect to assets that are actively traded. For market-valued assets, mark to market accounting imposes few burdens and offers few opportunities for manipulation. Exchange-traded assets typically have reliably determinable values if they are actively traded. For financial accounting purposes, taxpayers may already be required to mark inventory or trading positions to market. Therefore, allowing taxpayers to use their financial accounting valuations for tax purposes may reduce tax compliance costs. 

To the extent that the wash sale or constructive sale rules are expanded to apply to digital assets (see discussion infra), allowing traders to elect into mark to market accounting would enable them to comply with these anti-abuse provisions without going through the onerous analysis that is often required for taxpayers that are not on a mark to market method of accounting.3 

Notwithstanding the various reasons why mark to market accounting might be beneficial, CCI does not believe that mark to market accounting should be mandatory for digital assets. Currently, mark to market accounting under section 475 is only mandatory for dealers in securities. Traders in securities and dealers and traders in commodities may elect mark to market accounting, but are not required to do so. It is CCI’s position that digital assets are not securities both as a general matter and within the meaning of section 475(c)(2). Thus, allowing elective mark to market accounting would position digital asset traders and dealers similarly to traders and dealers in commodities – the asset class to which digital assets either belong or most closely relate. 

If a separate category is not created for digital assets under section 475, CCI recommends that future legislation expressly provide that digital assets qualify as commodities for this purpose (such that they would be eligible for mark to market treatment if they are actively traded). 

Trading Safe Harbor (Section 864(b)(2)) 

Section 864(b)(2) encourages capital investment in the U.S. by providing a “safe harbor” under which traders in securities and certain commodities are not subject to U.S. net basis taxation. As a general matter, the digital assets markets, like the securities and tangible commodities markets, provide an important source of capital to the U.S. To qualify for the commodities trading harbor, the trading activities must generally involve “commodities of a kind dealt in on an organized commodity exchange and the transaction is of a kind customarily consummated at such place.”4It is not entirely clear under current law whether digital asset trading qualifies for the commodities trading safe harbor, although such trading activities should, from a policy standpoint, be treated similarly to trading in other liquid and fungible asset classes (e.g., commodities). 

Prior guidance from the IRS has often looked to the regulatory classification of an asset for purposes of determining whether the asset qualifies for the commodities trading safe harbor.5 As previously mentioned, CCI believes that the majority of digital assets are not securities and therefore do not qualify for the securities trading safe harbor. Indeed, the CFTC has previously indicated that bitcoin and certain other digital assets are commodities,6 such that there is significant support for treating digital asset trading activities as commodities under present law.7 With that said, due to an ongoing lack of clarity, many foreign investors may be unwilling to make investments in the absence of a higher degree of certainty on the U.S. tax consequences of the investment. 

To address this uncertainty, CCI recommends creating a trading safe harbor specific to digital assets. We believe that this is in line with the broader goals of providing greater tax certainty to taxpayers and attracting foreign investment into the U.S. CCI does not believe the additional requirements imposed under section 864(b)(2)(B)(iii) for commodities trading should apply in the case of this new safe harbor because digital asset transactions do not involve the provision of goods and merchandise in the ordinary channels of commerce (i.e., the types of transactions these restrictions were intended to exclude). If a separate safe harbor category is not created, then, in the alternative, we recommend future legislation clarify that digital asset trading qualifies for the commodities trading safe harbor.8 Any amendment to the section 864(b)(2) safe harbors should be coupled with “no inference” language expressly stating that the changes are not intended to imply that digital asset trading did not previously qualify for the commodities trading safe harbor. 

Treatment of Loans of Digital Assets (Section 1058) 

Digital asset loans come in a variety of forms, but generally there are two types of loans: loans on decentralized exchanges and loans not involving decentralized exchanges. 

In a decentralized exchange loan, the borrower is generally required to return digital assets identical to those borrowed, plus an interest-like return that is paid in kind (i.e., in additional units of the digital assets in which the loan is denominated). These loans can be fully secured by collateral posted by the borrower (in the form of another digital asset). In certain cases, decentralized exchange participants are borrowing one type of digital asset and lending another type of digital asset. However, decentralized exchange participants may have the option to simply lend, for example, if their primary goal is to generate a return on their digital assets. Deposits on decentralized exchanges can be immediately withdrawn provided the lender has sufficient other assets posted as collateral on any borrowings, thus creating an implicit loan of the withdrawn digital assets (even if not documented as such). 

While there are varying forms of loans not undertaken through a decentralized exchange, in such a typical digital asset loan, the borrower receives digital assets at the outset of the loan and is obligated to return identical digital assets to the lender, along with an interest-like return (typically paid in the same type of digital asset that was borrowed). Digital asset loans are similar to other common lending arrangements, including stock and securities loans, and may be intermediated by an entity situated between the borrower and the lender. 

Under current applicable law, stock and securities loans meeting certain requirements are afforded nonrecognition treatment under section 1058. Proposed regulations under section 1058 would require that securities loans agreements provide that the lender may terminate the loan upon notice of not more than five business days in order to qualify for nonrecognition treatment.9 Section 1058 specifically applies only to stock and securities and consequently does not currently apply to digital assets (which are neither stock nor securities). Section 1058 was enacted as a “clarification” and many view it as a safe harbor provision rather than the sole means of achieving nonrecognition treatment.10 Under this view, digital asset lending transactions may be nontaxable under the IRS guidance and judicial authorities predating the enactment of section 1058. 

CCI would recommend that section 1058 be amended so that it applies to digital assets and further provide that fixed-term loans are generally afforded nonrecognition treatment (i.e., nonrecognition treatment should not be limited to demand loans).11 We further suggest that any new guidance explicitly provides that no inference is intended as to the historic treatment of digital asset loans or fixed term loans. 

These recommendations are in line with the recent Biden Greenbook Proposal and would place digital assets on equal footing with other financial assets. As noted in the Biden Greenbook Proposal, the current scope of section 1058 is narrow (it only applies to stock and securities as defined by section 1236(c)) and could be interpreted as excluding many commonplace transactions). Loans of traded assets are important to price discovery and creating liquidity. The lack of specific nonrecognition rules for digital assets and the potential inability of fixed-term loans to meet the requirements of section 1058 creates unnecessary tax-uncertainty and undue “friction” in the capital markets. Amending section 1058 to take into account developments in the financial markets since it was enacted would alleviate these issues. 

These amendments should also take into account (i) the fact that digital assets generally do not pay interest or dividends and (ii) the technological and market impediments to making in lieu payments in certain situations. For example, in a hard fork, a single digital asset becomes two digital assets when the blockchain splits. A blockchain split can occur in situations where there is significant market support for the new currency or, alternatively, if a single person decides to create their own digital currency for other reasons with no expectation of market adoption or profit. In the former situation, the new digital asset is likely a valuable asset with ongoing relevance. In the latter situation, the new digital asset is likely to be economically meaningless. We suggest that future legislation require the borrower to pay the lender an amount equal to any digital assets that stem from the digital asset originally loaned if the newly created digital assets are “economically meaningful.” We suggest that this compensating payment should be able to be made in kind or in cash and that any measure of what constitutes an “economically meaningful” digital asset be consistent with prevailing market practices.12 

Wash Sales and Constructive Sales (Section 1091 and Section 1259) 

The wash sale rules currently apply only to stock and securities transactions, and the constructive sale rules apply only to transactions involving stock, debt, and partnership interests. As digital assets do not fit into any of these categories of assets, they are currently not subject to either provision. 

CCI acknowledges that the current state of the law creates a potential for digital asset market participants to engage in tax loss harvesting and constructive sale transactions in a manner that may not be consistent with the policy objectives of these rules. However, as noted previously, CCI believes that digital assets are generally commodities, and commodities transactions are not currently subject to either of these provisions despite presenting similar opportunities for tax planning transactions. If Congress believes that commodity transactions should become subject to the wash sale or constructive sale rules, then digital assets, as commodities, should also be subject to those provisions. However, in the absence of such a change, CCI does not believe that there should be legislative action to apply the wash sale or constructive sale provisions specifically to digital assets (while leaving commodities outside their scope) as this would result in disparate treatment of the same or similar categories of assets. 

If digital assets become subject to these provisions in the future, however, CCI believes that it is even more critical that the availability of elective section 475 mark to market method of accounting be clarified. In addition, a “business needs” exception should be added to the wash sale rules to ensure that tax impediments to ordinary course business transactions are not created.13 

Timing and Source of Income Earned from Staking and Mining 

Background on Consensus Mechanisms 

The process by which transactions on a blockchain are validated and recorded is referred to as a “consensus mechanism.” Generally speaking, there are two types of consensus mechanisms: proof of work (“PoW”) and proof of stake (“PoS”).14 

Under a PoW system, “miners” compete to solve a cryptographic puzzle. The “winning” miner is given the right to validate transactions and add a new “block” to the “chain” of transactions and is given a reward in the form of newly created digital assets. The cryptographic puzzle ties blockchain validation to real world resources and protects the network by making various types of attacks prohibitively expensive. The difficulty of the cryptographic puzzle is adjusted periodically to maintain a consistent transaction cycle time (i.e., if more computing power is attempting to solve the puzzle, the difficulty will increase; if the amount of computing power decreases, so too will the difficulty of the puzzle). The Bitcoin blockchain is the most significant blockchain that employs a PoW model. 

Under a PoS system, the real-world costs imposed by mining are eliminated. Instead, the blockchain requires that validators post or “stake” digital assets in exchange for a chance at being selected to validate the next block and be rewarded with new digital assets (the chances of being selected increase with the size of the stake). PoS blockchains are secured by a “slashing” mechanism whereby stakers may lose their staked assets if they behave in a manner detrimental to the network. 

General Tax Considerations 

The tax consequences of mining and staking rewards are currently uncertain in a number of respects.15 One issue is that it is often difficult to determine the source of staking rewards because there is no clear “payor” (in many situations the “blockchain” is the payor). CCI believes that future legislation should clarify that staking reward income is sourced to the residence of the taxpayer. This treatment would be similar to sourcing rules that currently apply  for a number of financial instruments (e.g., swaps, forwards, options) and would encourage digital asset operations to be located in the U.S. 

Digital Asset Mining Energy Excise Tax 

Under the Biden Greenbook Proposal, digital asset mining would be subject to a 30% percent excise tax on the cost of electricity used. The proposal states that the tax is intended to address negative externalities associated with mining. 

If environmental concerns underpin the excise tax, the tax should be industry-neutral and apply broadly to all industrial energy use.16 With that said, it is not clear that digital asset mining produces the negative externalities that are created by similarly energy-intensive industries. Digital asset mining uses a greater percentage of renewable energy than other industries.17In fact, some commentators have noted that mining could play a key role in renewable energy development.18 Unlike most other energy-intensive industries, digital asset mining has the advantage of being able to easily toggle operations off and on. As a result, mining operations have served as an important “flex” user, that has allowed energy grids to match the demand for renewable energy production to supply (renewable energy sources, such as solar, generally produce the most energy during the day when the aggregate demand for energy is at its lowest). We therefore suggest that rather than impose a punitive digital asset excise tax, policymakers should encourage digital assets miners to appropriately maximize ESG-positive outcomes. 

Furthermore, the excise tax could lead to a dangerous precedent, introducing a first-of-its-kind tax based on what the energy is being used for. Such a tax would also provide no incentives for industries with large carbon footprints to support renewable energy. 

The excise tax, as currently drafted, may be counterproductive. It is not clear that the excise tax would affect the aggregate amount of energy spent on mining activities.19 However, a U.S. excise tax could result in mining operations relocating away from the U.S. (where they rely on comparatively clean forms of energy production)20to foreign jurisdictions (which generally rely on more environmentally destructive forms of energy production).21 Thus, it is likely that the excise tax would increase, rather than decrease, the environmental costs of digital asset mining. 

Additionally, an excise tax will likely prove unworkable in certain contexts. More specifically, there is currently no excise tax exception for personal mining activities. Individuals may find it very difficult to separate their personal energy consumption from their mining-related energy consumption. Likewise, the IRS may also have difficulty identifying individual miners and administering the excise tax to individuals in a cost-effective manner. 

Nonfunctional Currency (Section 988(e)) 

Many digital assets, most notably bitcoin, were developed to function as a medium of exchange. However, the use of digital assets to pay for goods and services is currently treated as a taxable disposition. A de minimis exception similar to that currently in place for foreign currencies would allow U.S. taxpayers to benefit from blockchain technology without imposing undue tax administration burdens, provide benefits to merchants (for example, the avoidance of costly interchange fees and faster settlement times), and position the U.S. as a leader in digital asset technologies. An appropriately tailored exception would assist in unlocking the benefits of blockchain technology, while ensuring that significant gains are still reported. CCI believes that a yearly exemption for the personal use of digital assets worth less than $10,000 at the time of the transaction is an appropriate threshold.22 This exemption is necessary to ensure that tax administration does not impede the free flow of commerce and the adoption of blockchain technologies, but does not allow for a significant potential loss of tax revenue.

Valuation and Substantiation (Section 170) 

Charitable contributions of property are generally subject to a requirement that the donor obtain a valuation of the property from a qualified appraiser. This requirement is intended to ensure that the deduction claimed is commensurate with the value of the donation. There is an exception from the appraisal requirement for certain types of assets that are readily valued, such as stock and securities that trade on exchanges. 

Similar to stocks and securities, digital assets are exchange traded assets for which value is readily determinable from trading prices on the date of the donation. However, digital assets are not statutorily exempt from the appraisal requirement and the IRS has indicated that it believes an appraisal is required.23It may be difficult to comply with the requirement to obtain an appraisal from a “qualified appraiser” because that designation is subject to technical rules that may be difficult to satisfy in the context of digital assets.24 More fundamentally, professional digital asset valuations are likely to be based on trading values—the same information that taxpayers would use to determine value—and therefore creates an administrative burden on taxpayers (and the IRS) that is unnecessary and contrary to the policy underlying the exception for readily valued property. 

We recommend adding actively traded digital assets to the list of “readily valued property” set forth in section 170(f)(11)(A)(ii)(I). We recommend that assets traded on exchanges which are subject to anti-fraud and anti-manipulation requirements qualify for this exception. 

*** 

CCI appreciates the opportunity to provide these comments and recommendations for your consideration. We would be pleased to further engage on the issues detailed in this letter. Thank you for your leadership regarding taxation of digital assets. 

Footnotes

1 For purposes of our recommendations in this letter, we use the term “digital assets” to refer to fungible digital assets. In contrast, nonfungible tokens, or “NFTs,” are identifiable data units within a data infrastructure environment (blockchain). Each NFT possesses a unique token ID linking to a URL that contains NFT metadata. Due to the unique characteristics of NFTs as opposed to fungible digital assets, NFTs are not the focus of this letter and may warrant disparate treatment in certain circumstances. In addition, the use of the term “digital asset” is not intended to cover tokens that are considered ownership in an underlying asset under general tax principles. These types of digital assets should generally be treated in a manner consistent with the underlying asset. 

2 General Explanations of the Administration’s Fiscal Year 2024 Revenue Proposals, U.S. Department of the Treasury (March 2024), available at: https://home.treasury.gov/policy-issues/tax-policy/revenue-proposals. 

3 Allowing taxpayers to elect into mark to market accounting would also allow them to better manage the straddle rules of section 1092, to the extent those rules apply to digital assets under current law. 

4 26 U.S.C. § Section 864(b)(2). 

5 Commodities are regulated differently from securities in large part because they are not subject to the same information asymmetry inherent in security investments. In the case of securities, a specific management team holds critical information about the enterprise. In the case of commodities, there is not a specific management team with inside information. The notion that digital assets are not generally securities is supported by a recent judicial decision which held that digital assets were securities only in limited situations where the digital asset was part of an “investment contract.” See SEC v. Ripple Labs, Inc., No. 20 CIV. 10832 (AT), 2023 WL 3477552 (S.D.N.Y. May 16, 2023).

6 See, e.g., Complaint at 9, CFTC v. Binance, 1:23-cv-01887 (N.D. Ill. 2023), available at: https://www.cftc.gov/media/8351/%20enfbinancecomplaint032723/download

7 Although the definition of a security under the tax law varies and is not necessarily aligned with the definition of a security under regulatory law, treating digital assets as securities for purposes of the trading safe harbor could create confusion because previous guidance has often looked to the regulatory classification of an asset when determining whether it is a “security” or “commodity” that qualifies for the safe harbor. For example, classifying bitcoin as a security for purposes of section 864(b)(2) would be in direct conflict with the regulatory classification of bitcoin as a commodity (and not a security). 

8In making this clarification, we recommend that future legislation specifically address section 864(b)(2)(B)(iii) and clarify that common digital asset trading platforms are organized commodities exchanges; that digital assets, as a whole, are “of a kind” customarily dealt with on such exchanges; and that both on exchange and off-exchange trades are “of a kind” with trades consummated on such organized commodities exchanges. 

9 Prop. Reg. section 1.1058-1(b)(3).

10 See, e.g., ABA Committee Reports on Securities Lending Transactions, 91 TNT 107–133 (May 15, 1991) (“In general, Section 1058(a) provides that no gain or loss is recognized by the owner of securities when the owner transfers securities for the contractual obligation of the borrower to return identical securities. It constitutes a safe harbor from the recognition of gain or loss where a taxpayer exchanges securities pursuant to an agreement that meets the statutory requirements.”); NYSBA Tax Section Report Addresses Treatment of Securities Loans, 2011 TNT 112–122 (June 10, 2011) (“There is nothing in the language of [section 1058] itself or the history of the statute to suggest that it was intended to be more than a safe harbor. … In our view, section 1058 should operate as a safe harbor.”). 

11 Similarly, we believe that fixed-term stock and securities loans should also be allowed under section 1058.

12 Measures used to determine whether a new digital asset is economically meaningful include: (i) the average hash power mining the new token; (ii) the market capitalization of the new token; (iii) the trading volume of the new token; and (iv) the wallet compatibility of the new token. 

13In the most recent Biden Greenbook Proposal to expand the wash sale rules, the drafters indicated that the expanded wash sale rules “are not intended to apply to ordinary course business transactions.” CCI agrees with this approach, which would be similar to the treatment of dealers under current law (stock and securities dealers’ ordinary business transactions not subject to the wash sale rules). 

14 The actual mechanics of these two systems varies by blockchain. The discussion in this section is intended to be general in nature, but CCI would welcome the opportunity to further explain the mechanics of various blockchains to the Senate Finance Committee, if helpful. 

15 See Treasury-IRS 2022-2023 Priority Guidance Plan, U.S. Department of the Treasury (Aug. 21, 2023), available at: https://www.irs.gov/pub/irs-utl/2022-2023-pgp-4th-quarter-update.pdf (it includes: “guidance concerning validation of digital asset transactions, including staking”). See also Kristen Parillo, Treasury Official Gives Glimpse of Future Staking Guidance, 178 Tax Notes Federal 422 (Jan. 16, 2023) (“Asked what the future staking guidance might cover, Nijenhuis said she thinks ‘it might be considered logical to think about timing, character, and source — in that order.’ Those are some of the key questions that Treasury and the IRS have been asked to address, she added.”). 

16 As noted, we believe that industry-neutral policy is desirable. We also note that Bitcoin’s carbon footprint is negligible compared to virtually every other major industry worldwide. For instance, air conditioners and electric fans emit over 2,300% more carbon than the entire Bitcoin network. The gold and banking industries, two systems that Bitcoin attempts to disrupt, each emits 200% more carbon than the Bitcoin network. See Ashton Cohen, Debunking The Bitcoin Energy Consumption Narrative, GenBiz (Aug. 19, 2022), available at: https://genbiz.com/debunking-bitcoin-energy-consumption-myth. 

17 According to a 2022 report issued by the Bitcoin Mining Council, the percentage of energy consumed by the bitcoin mining community derived from sustainable sources increased to 63.8%. Q4 2022 Bitcoin Mining Council Survey Confirms Year on Year Improvements in Sustainable Power and Technological Efficiency (2022), available at: https://bitcoinminingcouncil.com/bitcoin-mining-council-survey-confirms-year-on-year-improvements-in-sustainable-power-mix -and-technological-efficiency-in-q4-2022/. 

18 See, e.g., Crypto mining can retire fossil fuels for good. Here’s how, World Economic Forum (Aug. 10, 2022), available at: https://www.weforum.org/agenda/2022/08/cleaning-up-cryptocurrency-mining/; Bitcoin’s role in the ESG imperative, KPMG, available at: https://advisory.kpmg.us/content/dam/advisory/en/pdfs/2023/bitcoins-role-esg-imperative.pdf. 

19 The difficulty (and energy intensiveness) of digital asset mining is driven largely by the price of bitcoin. That is, as the price increases, more parties begin mining, and the difficulty of solving the PoW “puzzle” (and the energy costs associated with mining) increases. Bitcoin prices are relatively uniform across the global market and generally driven by factors other than the marginal cost of mining bitcoin in a particular jurisdiction. Thus, increases in the marginal cost of mining in the U.S. will not necessarily translate into a fall in the price of bitcoin or a reduction in the overall environmental cost of securing the Bitcoin blockchain. 

20 See supra footnote 16 (explaining that the percentage of energy consumed by the bitcoin mining community derived from sustainable sources increased to 63.8%). 

21 Mining operations have proven to be remarkably mobile. For example, Kazakhstan and Russia are two popular contenders for relocating miners’ operations because power is more cost efficient in these countries. In addition, these countries have less green energy production than the U.S. and are generally expected to absorb any drop in U.S. mining capacity. See How the U.S. benefits when China turns its back on Bitcoin, NPR (Feb. 24, 2022), available at: https://www.npr.org/2022/02/24/1081252187/bitcoin-cryptocurrency-china-us. 

22 For foreign currency transactions, taxpayers are allowed to exclude $200 of gain on a per transaction basis. CCI’s recommendation uses a digital asset value cap, rather than a per transaction gain exclusion, because this would allow taxpayers to forgo determining gain on a transaction-by-transaction basis, while also ensuring that significant gains are not eliminated by making large purchases using digital assets. The actual benefit of this exclusion could be greater than or less than the benefit provided by the similar section 988(e) rules, depending on a taxpayer’s basis in the digital assets acquired and the size of the transactions. However, because many everyday transactions are for less than $200—including a $10,000 cap on digital asset personal use—transactions could in some ways serve as a more stringent requirement than that in place for foreign currencies. 

23 CCA 202302012 (Jan. 10, 2023). 

24 The Treasury Regulations define a qualified appraiser as “an individual with verifiable education and experience in valuing the type of property for which the appraisal is being performed …” Treas. Reg. section 1.170A-17(b)(1). The education of most valuation experts practicing today did not include the valuation of digital assets. 

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Saskia Seidel

Policy Fellow

Saskia Seidel is the Policy Fellow at CCI, conducting legal and policy analysis on crypto regulations and legislative developments across key jurisdictions. She examines bills and regulatory proposals as well as case decisions, providing insights into the evolving landscape of digital assets policy.

Saskia holds a Master of Laws in International Business and Economic Law from Georgetown University Law Center. Originally from Germany, she earned a Bachelor's degree in Law and Economics and passed the First German State Exam in Law to qualify in the legal system.

Before joining CCI, Saskia worked at various law firms specializing in corporate and international tax law, where she developed a strong understanding of how businesses navigate legal and regulatory challenges in a cross-border context and advising on complex legal matters.

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Krisina Antonio is the Executive Assistant to the CEO and DC Office Manager at CCI. Prior to joining CCI, Krisina has led executive offices in education and finance. She also worked within the pro-sports sales and marketing space for teams within the NFL, MLS, and Minor League Baseball

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Emily Ekshian is the Communications Lead at CCI, working closely with the communications team on branding, marketing and publicity efforts. She holds a Master of Science in Journalism from Columbia University’s Graduate School of Journalism, with concentrations in Finance, Technology, and Human Rights.

She also earned a Bachelor of Arts in Political Economy and Media Studies, with a Minor in Human Rights, from the University of California, Berkeley. Emily is passionate about the intersection of blockchain, digital assets, and global policy, focusing on how emerging technologies can support climate resilience, financial inclusion, and freedom of expression.

Through her work, she explores the transformative potential of Web3 in addressing global challenges and advancing positive social impact.

Renee Barton

Director, Impact Research

Renée leads Impact Research at CCI, documenting real world Web3 use cases to create shared understandings of how Web3 technologies are shaping the future for people and communities. She has ten years of experience examining the policy, economic, and community development implications of technology deployments.

She previously led primary ethnographic research at the Crypto Research and Design Lab (CRADL), where her research helped policymakers and business leaders understand why people are turning to crypto through evidenced-based insights.

Prior to her work at CRADL, Renée advised public, private, non-profit, and philanthropic clients at the intersection of technology, economic development and community-building.

Giles Swan

European Public Police Advisor

Giles has been a regulator, policymaker, the policy lead of a major digital asset service provider and the global policy director of a leading investment fund trade association. Giles advises trade associations, investment funds and asset managers, and web3 and crypto firms, on public policy, licensing, regulation and advocacy. During his time as a policymaker,

Giles was a national expert on the Investment Management Standing Committee of the European Securities and Markets Authority’s (ESMA), a national representative on the Standing Committee on Investment Management of the International Organization of Securities Commissions (IOSCO) and a member of the European Union’s Council of Ministers Financial Services Working Party.

Giles holds a BA in Banking and Finance, first class, from London Guildhall University, an MSc in Finance and Investment from CASS Business School and professional certificates in teaching and learning, and blockchain strategy.

Peter Herzog

Associate Director, State Government Affairs

Peter Herzog is a dedicated government affairs professional, specializing in issues impacting emerging financial technologies. As the Associate Director of State and Local Government Affairs at the Crypto Council for Innovation, Peter oversees initiatives to advance responsible regulation for the digital asset industry across state and local governments.

He has developed a pragmatic approach to building relationships with key decision makers and navigating nuanced policy issues. Before joining CCI, Peter served on the government relations team at the digital mortgage startup Better.com, where he led the organization’s state government relations strategy. He began his career at the Health and Medicine Counsel, a boutique healthcare lobbying firm on Capitol Hill,

where he was one of the youngest registered lobbyists in Washington, DC. His former clients include patient advocacy organizations, trade societies, and pharmaceutical companies. Peter holds a Bachelor’s Degree in Government and International Politics from George Mason University.

Ryan Eagan

Associate Director, Federal Affairs

With nearly 10 years of experience working for Senate Majority Leader Charles E. Schumer, Ryan advised the Leader on a wide array of banking policies and housing priorities. He worked with members in the House and Senate and the relevant Committees to advance legislative priorities.

This includes federal responses to COVID such as the American Rescue Plan,statutory changes to securities law, ESG rulemaking, cryptocurrency policy, and certain appropriations topics.

He graduated Williams College with a BA in both Political Science and History.

Rashan Colbert

Director, U.S. Policy

Rashan A. Colbert is the US Policy Director for the Crypto Council for Innovation. A seasoned policy leader with extensive experience in government, politics, and the crypto industry, he has served as a senior legislative advisor in the U.S. Senate, led policy efforts for a cutting-edge DeFi protocol, and has amassed a high-powered network across the public and private sectors. As Head of Policy at dYdX Trading, Rashan took the firm’s advocacy strategy and effort from zero to one.

His work involved educating policymakers, advising company leadership on policy risks, and ensuring DeFi’s importance to the future of the United States was well understood in Washington. Before transitioning to the private sector, he spent seven years in Senator Cory Booker’s office, where he led on technology, telecommunications, and commerce issues, with work focused on AI, big tech, social media regulation, and digital assets.

As Booker’s lead staffer on crypto policy for the Senate Agriculture Committee, he developed a deep understanding of fi nancial regulation and the legislative vehicles that will be used to shape it.

Patrick Kirby

Policy Counsel

Patrick is joining CCI as Policy Counsel, and brings considerable experience engaging with policymakers on emerging technology and financial services issues. Before joining CCI, he worked as an attorney in the US Policy & Government Relations group at the law firms Dentons and Squire Patton Boggs.

In those roles, he advised domestic and international clients on a variety of legal, policy, and regulatory issues related to technology, financial services, and digital assets. He assisted clients in developing and executing government relations strategies to further their legislative and regulatory interests before Congress and the Executive Branch.

In prior roles, he served as a legal intern at the Financial Crimes Enforcement Network (FinCEN) and the Office of the Comptroller of the Currency (OCC).

Yele Bademosi

Africa Advisor

Yele Bademosi is the co-creator of Onboard, a community-first onchain neobank designed for creators and builders. Onboard's goal is to expand the onchain economy, making it accessible to anyone, anywhere, and empowering people to live radically better lives.

Throughout his career, Yele has invested in close to 100 startups globally, primarily in the financial services and onchain sectors. His purpose extends beyond geographical borders, aiming to leverage innovation, capital, and policy to create sustainable economic opportunities worldwide.

Sean Lee

Senior APAC Advisor

Sean is an advisor and entrepreneur in Web3 and FinTech, and has been frequently quoted in Reuters, Forbes, Bloomberg, CoinDesk, among others. Sean was previously the CEO of the Algorand Foundation, an MIT incubated Layer-1 blockchain protocol that reached top-10 by network valuation during his tenure.

He is currently leading the efforts at VSFG, a global financial services platform and the first licensed virtual asset manager in Hong Kong, to develop the regulated HKD stablecoin for programmable payment and cross border use cases across Asia and beyond. Before entering into crypto and blockchain, Sean spent 10 years and held global leadership positions in cloud computing and open source software development companies.

Sean also advises crypto startups and engages in mentorship and advocacy programs including the MIT Entrepreneurship & FinTech Innovation Node, the Chinese University of Hong Kong Business School, and the Hong Kong FinTech Association.

Matt Homer

Senior Advisor

Matthew Homer is the Founder & General Partner of The Venture Dept. Previously, he was an investor at Nyca Partners, a $1B+ AUM fintech VC firm, where he remains involved as an Operating Partner in an advisory capacity.

Before venture investing, he was Executive Deputy Superintendent at the New York State Department of Financial Services (NYDFS), where he oversaw the licensing and supervision of major digital asset firms, including some of the largest exchanges, custodians, and stablecoin issuers in the U.S.

Earlier in his career, he worked as a federal regulator at the FDIC, focusing on policy development and new technologies. Matt has also held operating roles in fintech startups, starting at Quovo and continuing at Plaid after its acquisition.

Laura Navaratnam

UK Policy Lead

Laura is a digital assets policy expert, and serves as the UK Policy Lead for CCI. Laura is a fintech policy expert, specializing in digital assets. Laura has worked in financial services policy for over 15 years. She worked at the UK Financial Conduct Authority for 7 years where she ultimately served as the Head of the FCA’s Innovate function,

which included all aspects of cryptoasset policy and fintech (sandbox, firm support, international engagement and strategy). She is also a Director at bespoke fintech consultancy Gattaca Horizons, supporting a broad range of US and UK based fintech clients and leveraging her experience to provide policy, regulatory and strategy advice.

She is also a Non-Executive Director for Zero Hash UK, a leading crypto-as-a-service provider.

Cameron Jones

Director, Strategic Initiatives

Cameron has over 30 years of experience in technology, philanthropy, and civil society sectors. She worked in the nonprofit and private sectors in the U.S., Europe, and Asia.

She developed and scaled strategic social good programs for leading tech companies, including Amazon, Microsoft, Adobe, Intuit, and VMware, leading the development of program delivery and marketing strategies.

At CCI she leads strategic initiatives, manages new partnerships and current members.

Amanda Russo

Director, Communications

She led C-suite media relations and content for IHS Markit research divisions across Europe, the Middle East and Africa. As a strategic communications advisor to CEOs, heads of state, and policymakers, Amanda worked on the World Economic Forum’s Public Engagement leadership team as Head of Media Content. Amanda started her career as a terrorism and intelligence analyst.

Yaya J. Fanusie

Director, Policy, AML & Cyber Risk

He spent seven years as an economic and counterterrorism analyst in the CIA, briefing federal law enforcement, military personnel, White House-level policy makers and the President. After government service, he joined the think tank world and as Director of Analysis at the Foundation for Defense of Democracies’ Center on Sanctions and Illicit Finance led research on sanctions evasion and terrorist financing threats.

In 2016 he began tracking the illicit use of crypto and wrote some of the first public analysis on a terrorist crypto crowdfunding campaign. He later published a major study on efforts by Russia, Iran, Venezuela, and China to build national blockchain infrastructure. Yaya is currently an Adjunct Senior Fellow at the Center for a New American Security (CNAS) and Visiting Fellow at Georgetown's Psaros Center for Financial Markets and Policy.

He is a frequent media commentator and has testified before Congress multiple times on illicit financing issues. He is considered a leading expert on China’s CBDC.

Annie Dizon

Chief Operating Officer

With more than 20 years of tech, operations, and marketing experience, Annie has held several senior executive positions at the global social impact nonprofit TechSoup; most recently serving as Vice President of Customer Experience. Prior to TechSoup, she led marketing communications programs for leading Fortune 500 companies in the financial and professional services sectors.

Ji Kim

President and Acting Chief Executive Officer

Ji Kim is the President and Acting Chief Executive Officer of the Crypto Council for Innovation - the premier global alliance for advancing the promise of this new technology through research, education and advocacy. Prior to this role, he served as the Chief Legal & Policy Officer for CCI. Before joining CCI, he was General Counsel and Head of Policy & Regulatory Affairs at Gemini, a global digital asset exchange and custodian.

In his role, Ji led the legal, policy, and regulatory affairs teams and also set and implemented Gemini’s global strategy for engaging with regulators, policymakers, and the government. Prior to that, he was a senior attorney at Kraken, another global digital asset exchange. In prior roles, he was an attorney at Willkie Farr & Gallagher LLP and served as Federal Judicial Law Clerk to the Honorable Robert D. Drain of the Southern District of New York, U.S. Bankruptcy Court.

Sheila Warren

Senior Global Policy Advisor

In 2023, Sheila was voted one of the most influential women in DC by the Washingtonian. Prior to the Crypto Council, she founded the World Economic Forum’s blockchain and digital assets team and was a member of the Executive Leadership Team. She oversaw tech policy strategy across 14 countries and regularly briefed ministers, CEOs of the Fortune 100 and Heads of State.

She spent significant time as a lawyer and executive in the nonprofit sector helping companies work with emerging technology to solve problems and increase efficiency. She was on the leadership team at TechSoup and built NGOsource, an online service that helps US foundations reduce costs on cross-border grants.

Sheila began her career as a Wall Street attorney at Cravath, Swaine & Moore LLP after earning her J.D. at Harvard Law School. She graduated magna cum laude from Harvard College with a degree in Economics. She is the co-host of Money Reimagined, a CoinDesk podcast.

Senator Cory Gardner

Senior Political Advisor

Senator Gardner honorably represented the state of Colorado from 2015 to 2021 after two terms in the United States House of Representatives. During his tenure, Cory was consistently recognized as one of the most bi-partisan members of the Senate, sponsoring and passing milestone legislation like the Great American Outdoors Act,

America COMPETES Act, the Asia Reassurance Initiative Act and the 988 Suicide Prevention Hotline. He served on the Senate Committee on Foreign Relations, Senate Committee on Energy and Natural Resources, and the Senate Committee on Commerce, Science, and Transportation.

Mark Foster

EU Policy Lead

Mark has over 20 years of experience advising public and private sector entities on EU policy and politics. He started his career in Brussels as a European Parliamentary Assistant from 2003 to 2007. He later developed expertise in EU financial services as a Senior Official in the UK Permanent Representation.

In 2011, he moved to Kreab, a global public affairs and consultancy firm, where he became Partner in the financial services practice. He has held elected roles in trade associations including vice-chair at the financial services committee of AmCham EU and he retains a role as vice-chair for the EU/UK task force at the British Chamber of Commerce to the EU.

Mark was VP of Government Relations at Barclays from 2019-2021 before establishing his own business – Strategic Advisory Management - at the start of 2022.

Alison Mangiero

Senior Director, Staking Coalition & Industry Affairs

Alison Mangiero is the Executive Director of Proof of Stake Alliance (POSA), a CCI project that advocates for clear and forward-thinking public policies that foster innovation in the rapidly growing, sustainable, multi-billion dollar staking industry.

Alison began working in the industry in 2018, when she founded the Tocqueville Group (“TQ”), an entity that created open-source software and other public goods for Tezos, one of the first proof-of-stake blockchains to launch. Before founding TQ, she spent a decade in public policy and academia, and has broad experience fundraising and growing membership associations.

A passionate advocate of the liberal arts, Alison also teaches courses on leadership at the College of the Holy Cross and is on the Executive Board of Advisors for the University of Richmond's Jepson School of Leadership Studies.An alum of the University of Richmond and Boston College, Alison lives in the New York City suburbs with her husband and two young daughters.