The IRS has released new guidance on the U.S. tax treatment of cryptocurrency for the first time since 2014. The guidance includes Revenue Ruling 2019-24, which provides guidance on the tax treatment of hard forks. The IRS also released a series of FAQs covering a variety of topics that expand on Notice 2014-21.

Revenue Ruling 2019-24

Revenue Ruling 2019-24 generally concludes on two scenarios involving hard forks. A hard fork occurs when a blockchain undergoes a protocol change resulting in a permanent diversion from the legacy or existing blockchain, which may result in the creation of a new cryptocurrency on a new distributed ledger in addition to the legacy cryptocurrency on the legacy distributed ledger. In the first scenario, the cryptocurrency blockchain experiences a hard fork but the taxpayer does not receive units of a new cryptocurrency, and in the second scenario, the taxpayer receives units of new cryptocurrency “as a result of an airdrop of a new cryptocurrency following the hard fork.” The Revenue Ruling concludes that the taxpayer does not have income in the first scenario. However, in the second scenario, the taxpayer has ordinary income because he has experienced an accession to wealth. The income arises at the time of the airdrop because the taxpayer is, at that time, able to exercise dominion and control over the forked cryptocurrency.


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The Securities and Exchange Commission’s (SEC or Commission) November 16 announcement charging two cryptocurrency companies—CarrierEQ Inc. (d/b/a Airfox) and Paragon Coin Inc. (Paragon)—with conducting an initial coin offering (ICO) in violation of the securities registration rules should not come as a surprise to those in the industry. The SEC has repeatedly emphasized that issuers of securities—even those based on a blockchain or distributed ledger technology—must register such securities or comply with an applicable exemption from registration under the Securities Act of 1933 (the Securities Act). The Airfox and Paragon orders explain when the SEC will determine that a token offering constitutes a security, and the remedial measures that the SEC may require for token offerings that do not comply with the Securities Act. Following the announcement, the Commission’s divisions also put out a public statement outlining their views on digital asset securities issuance and trading. We view these actions as signals that the Commission is likely to ramp up its efforts to enforce the securities laws in the weeks and months to come.
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In a recent Client Alert, Alan Cohn, Jason Weinstein, and Meegan Brooks discuss the impact of blockchain technology in the retail industry, which will likely see more disruption in the next few years than it has seen in decades. What role will blockchain technology play in that disruption?

Instead of completely disrupting the retail

On September 4th, Alan Cohn hosted the 229th episode of The Cyberlaw Podcast.  We took a deep dive into all things blockchain and cryptocurrency discussing recent regulatory developments and best practices for users of exchanges.  Our episode begins with Charles Mills discussing the landmark decision coming out of the New York Eastern District Court in

Steptoe partner Jason Weinstein and of counsel Alan Cohn have been named to The National Law Journal’s list of Trailblazers in Cryptocurrency, Blockchain and FinTech. The list of 50 lawyers is featured in a special supplement in the September issue of the legal publication.

Weinstein and Cohn co-chair Steptoe’s global Blockchain and Cryptocurrency practice

On May 21st, Alan Cohn hosted the 217th episode of The Cyberlaw Podcast. We took a deep dive into all things blockchain and cryptocurrency discussing recent regulatory developments and the current state of play of the industry. Jack Hayes discusses the status of regulation surrounding cryptocurrencies including anti-money laundering and sanctions compliance, the Department of

Government regulators are increasingly focused on blockchain and cryptocurrency activity, a development that some, such as IMF head Christine Lagarde have called inevitable. In the US, the Financial Crimes Enforcement Network (FinCEN), the Commodity Futures Trading Commission (CFTC), and the Securities and Exchange Commission (SEC) have issued statements, enforcement actions, and penalties involving blockchain and cryptocurrency activities, and they are not the only agencies monitoring these activities.  As a result, it is important for industry participants to be prepared to respond to potential regulatory inquiries.

This is why Steptoe has partnered with Thomson Reuters to publish a “one-stop” guide to the regulatory landscape and best practices for responding to blockchain and cryptocurrency-related investigations.
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You know that federal entities like the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), the Financial Crimes Enforcement Network (FinCEN), and the Internal Revenue Service (IRS) have all issued guidance concerning cryptocurrencies.  But get ready to add a new agency to the list—the Department of Defense’s Defense Security Service (DSS).

Standard Form 86 (SF-86), “Questionnaire for National Security Positions,” is the lengthy form that anyone applying for a security clearance from the US government must complete.  Question 20A of the SF-86 asks whether the applicant or immediate family members have ever “had any foreign financial interests (such as stocks, property, investments, bank accounts, ownership of corporate entities, corporate interests or businesses) in which you or they have direct control or direct ownership? (Exclude financial interests in companies or diversified mutual funds that are publicly traded on a US exchange.)”

We know that FinCEN considers cryptocurrency to be currency, the CFTC considers it a commodity, and the IRS considers it to be property, but is it also a “foreign financial interest” for the purposes of the SF-86? 
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Today, Steptoe & Johnson LLP’s Blockchain and Digital Currency practice applauded the Commodity Futures Trading Commission’s (CFTC) decision to propose, through the rulemaking process, an interpretation defining the term “actual delivery” in the context of retail commodity transactions involving cryptocurrencies like Bitcoin.

“We are pleased that the commission has chosen to respond to Steptoe’s petition

Alan Cohn was recently featured on the Future Tech Podcast. In an interview with Richard Jacobs, Editor of Crypto News Insider and Organizer & Host of the Bitcoin, Ethereum, and Blockchain Super Conference 2018, Alan discusses the recent regulatory changes and guidance related to cryptocurrency such as the recent Securities and Exchange Commission (SEC)