After the great cryptocurrency sell-off of 2018, investors, banks and businesses around the globe swore off crypto forever, right?
While some of the shine may have worn off, crypto-charisma remains strong. Tax leaders would do well to keep an eye on developments; you can find a useful survey of the current landscape in a new Insigniam Quarterly (IQ) article, Beyond the Cryptocurrency Hype.
David Deputy, director of strategic development and emerging markets at Vertex, weighs in with some reassuring words in the article’s discussion of blockchain, probably the most immediate touchpoint for tax: “The technology is sound … the exchanges have been the weak point,” David notes. Indeed, blockchain creativity continues to flourish. Imagine your customer loyalty rewards – airline miles and grocery store points – encoded in a blockchain, and tradeable. Or, picture the reams of documentation for your next real estate close encoded in a smart contract.
And then there are the banking innovations. The writing may be on the digital wall for the delays, risks and fees around traditional noncash transactions like checks and wire transfers. JP Morgan has already rolled out a prototype of a dollar-backed virtual currency redeemable in any currency the bank holds. Plus, cryptocurrencies could be the key to providing a secure payment system to unbanked populations around the world.
Just like the Web, the crypto wave will become the new normal almost before we’re aware of it. David recommends that companies jump in right now and learn how to exploit it. “It’s a great opportunity to engage with millennials as a marketing play,” he adds. For companies that can navigate the creative chaos of the current environment, the opportunities will be plentiful.
Please remember that the Tax Matters provides information for educational purposes, not specific tax or legal advice. Always consult a qualified tax or legal advisor before taking any action based on this information. The views and opinions expressed in Tax Matters are those of the authors and do not necessarily reflect the official policy, position, or opinion of Vertex Inc.