Binance, the cryptocurrency exchange, has introduced Binance Tax, a tax reporting tool, in preparation for the tax season.
Binance Tax is a tool that helps users access information on their crypto activity to comply with local regulations. It allows users to download a tax summary report that includes details of their gains and losses throughout the year, including spot trades, crypto donations, and fork rewards.
Currently, the Binance Tax tool is only available for Binance platforms, but the company intends to integrate with other platforms in the future.
Taxes in crypto
The launch of Binance Tax follows recent global regulatory crackdowns on the crypto industry, with regulators focusing on investor protection and compliance with local standards. Currently, only Binance users located in Canada and France have access to Binance Tax. Binance mentioned that are actively working to expand support to additional regions and include support for more networks and wallets beyond Binance.
In the US, the Securities and Exchange Commission has called for firms to disclose their exposure to crypto risks. It has reintroduced a bill to allow companies to apply for compliance agreements with federal agencies.
This move by Binance aims to ensure its users are prepared for the upcoming tax season and stay on top of their tax obligations.
One month prior to the launch of Binance Tax, the exchange joined an association to improve compliance with global sanctions.
In the past year, regulatory agencies worldwide have increased their control over the crypto industry, particularly after the FTX crisis. For instance, the Securities and Exchange Commission in Thailand plans to implement stricter rules for the crypto industry with a focus on protecting investors.
Regulators in South Korea, the Netherlands, and the US have been investigating exchanges for non-compliance issues, with some exchanges, such as Kraken, being forced to settle with the US Treasury’s Office of Foreign Assets Control.
In December 2022, the US SEC asked companies to reveal any exposure to crypto bankruptcies and risks. Additionally, a bill was reintroduced by a House committee chair to allow companies to apply for compliance agreements with federal agencies for crypto innovation.
What happened to the crypto regulatory landscape in 2022?
Regulations in the crypto world were once seen as an obstacle to adoption, but they are now seen as a means to gain global mainstream acceptance. In 2022, crypto businesses saw broader acceptance from regulators worldwide, with many being granted operational licenses and access to new markets. However, the collapse of crypto firms like Terraform Labs, FTX, and Celsius had a negative impact on the industry’s reputation with regulators and investors.
In North America, the US became the leader in crypto disruption after China’s ban on crypto mining and trading in 2021. The US is home to the largest crypto ATM network and is the highest contributor to the Bitcoin hash rate. NFTs received significant attention in US politics, with the FEC permitting their use for political campaign fundraising.
Canada banned crypto leverage and margin trading after the FTX collapse, and the US introduced the Crypto-Asset Environmental Transparency Act to report on the energy use and environmental impact of crypto miners.
El Salvador remains the biggest contributor to mainstreaming Bitcoin, with President Nayib Bukele announcing a new BTC investment strategy. Brazil also saw pro-crypto regulation, with a bill signed into law legalizing the use of crypto as a payment method and a Payment Institution License issued to Crypto.com.
Asia saw numerous regulators soften their anti-crypto stance and allow crypto businesses to operate. China loosened its crypto ban, and the Shanghai High People’s Court recognized Bitcoin as property with the right to compensation in a loan case. India imposed two new crypto tax policies, but during its G20 presidency, it plans to develop standard operating procedures for cryptocurrencies.
Pakistan’s central bank signed new laws to launch a central bank digital currency. South Korea spent much of 2022 tracking down those responsible for investor losses from Terraform Labs, but also saw a reduction in hacking activities after implementing Know Your Customer (KYC) requirements.
The European Union‘s Committee of Permanent Representatives has approved a framework for regulating cryptocurrencies, known as the Markets in Crypto-Assets framework, to ensure consistent regulation among EU member states. The International Monetary Fund, a UN financial agency, has called for greater regulation of African crypto markets. Meanwhile, the Central African Republic has reportedly passed a bill to legalize the use of cryptocurrencies in finance.
In the United Kingdom, the government is seeking to tighten regulation of the crypto industry. In response to the FTX collapse, the country’s HM Treasury has issued guidelines for the Financial Conduct Authority to monitor crypto companies and their advertising. This has further influenced an upcoming 2023 legislation to restrict foreign crypto services from operating in the UK.
In South Africa, the Financial Sector Conduct Authority has updated its 2002 Financial Advisory and Financial Intermediary Services Act to declare crypto as a financial product subject to financial services laws. Nigeria has banned ATM cash withdrawals of over $225 (100,000 nairas) per week to promote the use of its CBDC, the eNaira. African crypto exchange Yellow Card has received regulatory approval to expand its services across Africa.
The Dubai Virtual Assets Regulatory Authority issued operational approvals to crypto businesses in 2022, but had to revoke the Minimum Viable Product license from FTX MENA.
Australia has become the fourth largest crypto ATM hub, overtaking El Salvador, following the US, Canada, and Spain. Australian financial regulators continue their efforts from 2022 to create a regulatory framework for stablecoins.