Wednesday, September 20, 2017
ABA Tax Section meetings are fun! Last week I attended a fascinating panel presentation at the Austin meeting titled "Beyond Bitcoin: Blockchain and the Tax System." The panel was moderated by Stow Lovejoy, of Kostelanetz & Fink, LLP and included Amanda Wilkie, CIO of Withum Smith & Brown; Tony Tuths, of KMPG in Short Hills; and Lisa Zarlenga, of Steptoe & Johnson.
My main takeaway from the panel presentation is that the same programming ideas underlying the Bitcoin concept are being used in myriad other financial applications. They raise not only significant tax issues but also regulatory issues, as detailed in this recent report from the SEC dealing with virtual "tokens" issued by a "Decentralized Autonomous Organization" (DAO). DAO's are like something from the Matrix movies. They are a “virtual” organization embodied in computer code and executed on a distributed ledger or blockchain. The SEC report discusses how and why "tokens" function as securities. The rise of the machine? It's all Mr. Smith's fault. No, not Agent Smith. The other one, Adam.