Friday, February 21, 2020
Stevie D. Conlon, Anna Vayser, & Robert Schwaba recently published an Article entitled, Valuation of Cryptocurrencies and ICO Tokens for Tax Purposes, Est. Plan. & Cmty. Prop. L.J., Vol. 12 Book 1 (Fall 2019). Provided below is an abstract of the Article.
Cryptocurrency valuations have fluctuated wildly. Valuation of bitcoin were dramatically off their peaks throughout most of 2018 and into 2019. This period is referred to as "Crypto-Winter." Recently, valuations have be rising. Is winter nearing its end? Will a "Crypto-Spring" emerge with coin and token valuations shooting up like budding plants?
Moreover, cryptocurrencies and initial coin offering (ICO) tokens and their markets are nascent. The first cryptocurrency, Bitcoin, was launched in 2009, after the last major global financial recession. Day to day, valuations can vary widely from one exchange to another. The validity of process can be suspect due to concerns about particular exchanges or scams.
These factors make valuation of cryptocurrencies and ICO tokens challenging. And yet, appropriate valuation of these instruments is critical for a range of reasons, including federal income, estate, and gift tax purposes.