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Luxembourg flags crypto companies as high risk for money laundering  

Luxembourg flags crypto companies as high risk for money laundering  

Luxembourg classified virtual asset service providers (VASPs) as high-risk entities for money laundering in its 2025 National Risk Assessment (NRA), highlighting concerns over the crypto industry’s exposure to financial crime.According to the report, the inherent risk level of VASPs is deemed “High,” driven by factors including transaction volume, client reach, distribution channels, legal structures and the international scope of operations.The NRA identified VASPs as an emerging risk in its 2020 report after “a detailed assessment of ML inherent risks emerging from virtual assets.” This was followed by a 2022 NRA report deeming “the risks associated with crypto assets and virtual currencies as very high,” because, among other things, they are internet-based and cross-border.Related: Blender and Sinbad operators face US money laundering chargesEU’s evolving crypto regulationThe EU, of which Luxembourg is a founding member, has been working to regulate the cryptocurrency industry. A key part of this effort is the Markets in Crypto-Assets (MiCA) framework, which is designed to unify crypto regulation across all 27 EU member states.Since January, crypto asset service providers have started acquiring licenses to operate legally within the EU. This includes cryptocurrency exchange Kraken launching regulated derivatives trading and competitor Crypto.com securing a license allowing it to do the same, both this month.MiCA also establishes a new set of requirements for stablecoins. The stablecoin market leader behind USDt (USDT), Tether, refuses to comply with the new rules and was delisted on Crypto.com, Coinbase and leading crypto exchange Binance on their EU platforms.Related: French prosecutors probe Binance over money laundering, fraud allegations: ReportMoney laundering with cryptoAs the role of cryptocurrencies in the broader financial ecosystem increases, so does their popularity for money laundering. Earlier this month, Hong Kong police arrested 12 people involved in a cross-border money laundering scheme that relied on crypto and over 500 stooge bank accounts to launder 118 million Hong Kong dollars ($15 million).Crypto value received by illicit addresses per year. Source: ChainalysisAccording to reports this month, European law enforcement arrested 17 suspects of a “mafia crypto bank” for allegedly laundering over 21 million euros ($23.5 million) in crypto for Middle East and China-based criminal entities. As a result of the proceedings, 4.5 million euros ($5 million) worth of items were seized, including cash, crypto, 18 vehicles, four shotguns and several electronic devices.Magazine: Chinese Tether laundromat, Bhutan enjoys recent Bitcoin boost: Asia Express

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Pakistan creates Digital Asset Authority to regulate crypto  
Pakistan creates Digital Asset Authority to regulate crypto  

Pakistan’s Ministry of Finance has reportedly endorsed the creation of a dedicated body to regulate blockchain-based financial infrastructure in the country.The Pakistan Digital Assets Authority (PDAA) will serve as a regulatory body to oversee licensing, regulate exchanges, custodians, wallets, tokenized platforms, stablecoins and decentralized finance applications, according to a May 21 report from the state-owned broadcaster, PTV.Muhammad Aurangzeb, federal minister for finance and revenue, told the broadcaster, “Pakistan must regulate not just to catch up, but to lead” in the industry.“With the PDAA, we are creating a future-ready framework that protects consumers, invites global investment, and puts Pakistan at the forefront of financial innovation,” he said.Muhammad Aurangzeb, Pakistan’s Federal Minister for Finance and Revenue. Source: Pakistan Ministry of FinanceThe PDAA will also be tasked with tokenizing national assets and government debt, facilitating monetization of Pakistan’s surplus electricity through regulated Bitcoin mining, and helping startups build blockchain-based solutions at scale.The new regulatory body was part of a recommendation from the Pak­istan advisory body, the Cryptocurrency Cou­ncil, which was launched on March 14 and has former Binance CEO Changpeng Zhao as an adviser.“This is not just about crypto — it’s about rewriting our financial future, expanding access, and creating new export channels through tokenization, digital finance and Web3 innovation,” said Bilal Bin Saqib, CEO of Pakistan’s Crypto Council.Pakistan’s Federal Investigation Agency previously proposed a regulatory framework for digital assets designed to address terrorism financing, money laundering provisions, and Know Your Customer concerns, according to am April 10 report from local newspaper, The Express Tribune.Pakistan crypto market rises despite early skepticism  In May 2023, former Minister of State for Finance and Revenue Aisha Ghaus Pasha said that Pakistan would never legalize cryptocurrencies due to the potential for digital assets to circumvent regulations created by the Financial Action Task Force, the supranational organization that polices finance for money laundering. Related: Pakistan Crypto Council proposes using excess energy for BTC miningHowever, the following year, Pakistan ranked highly in Chainalysis’ 2024 crypto adoption index, coming in ninth, mainly due to strong retail adoption and transactions at centralized services.Pakistan ranked highly in Chainalysis’ 2024 crypto adoption index, coming in 9th. Source: ChainalysisMeanwhile, the online data platform Statista shows Pakistan’s crypto market is “experiencing rapid growth” and estimates the number of crypto users is expected to amount to over 27 million by 2025, out of a population of 247 million.At the same time, revenue in the Pakistan crypto market is projected to reach $1.6 billion in 2025. The United States still leads the pack, with its crypto market generated an estimated revenue of over $9.4 billion, according to Statista data. Magazine: How crypto laws are changing across the world in 2025

US lawmaker reintroduces bill amid pushback on Trump's crypto ties  
US lawmaker reintroduces bill amid pushback on Trump's crypto ties  

A Democratic representative in the US Congress will support a blockchain bill at a time when many left-leaning lawmakers are blocking crypto-related pieces of legislation due to concerns with President Donald Trump’s potential conflicts of interest.In a May 21 notice, Minnesota Representative Tom Emmer said he had reintroduced the Blockchain Regulatory Certainty Act, a bill that “solidifies that digital asset developers and service providers that do not custody consumer funds are not money transmitters.”Emmer, a Republican, said Democratic Representative Ritchie Torres would co-lead the bill, making it a bipartisan effort in Congress.“The Blockchain Regulatory Certainty Act reflects a thoughtful, bipartisan effort to get digital asset policy right,” said Torres. “While similar language was voted down in markup last Congress, we took that feedback seriously and returned with a smarter, sharper framework that protects innovation without compromising oversight.”Reintroducing the Blockchain Regulatory Certainty Act on May 21. Source: Tom EmmerRepresentatives of advocacy organizations, including the Crypto Council for Innovation, Solana Policy Institute, Digital Chamber, Coin Center, DeFi Education Fund and Blockchain Association, said they would support the proposed blockchain regulatory bill. It was unclear whether Emmer and Torres had a majority of votes in the House of Representatives for the legislation to pass. Torres has supported many bills and policies favorable to the crypto industry since assuming office in 2021. Together with Emmer, he has led the Congressional Crypto Caucus to advance crypto-friendly policies in the House since March.A bipartisan blockchain bill amid memecoin concerns?Other Democratic House members, including Representative Maxine Waters, have suggested they intend to block any legislation related to crypto and blockchain until Republicans address Trump’s connections to the industry, such as his family’s stake in World Liberty Financial and his TRUMP memecoin. The president is planning to host a dinner with up to 220 people holding the most significant amounts of his memecoin on May 22.Related: Interest groups, lawmakers to protest Trump’s memecoin dinnerCointelegraph reached out to Torres’ office for comment but had not received a response at the time of publication.Magazine: Trump’s crypto ventures raise conflict of interest, insider trading questions

Interest groups, lawmakers to protest Trump's memecoin dinner  
Interest groups, lawmakers to protest Trump's memecoin dinner  

Democratic leaning organizations and members of Congress have announced plans to protest what they describe as the sale of access to the office of the US president, in reference to Donald Trump’s memecoin dinner on May 22. The event’s attendees are said to have collectively spent over $100 million for the chance to meet with the US president.Since Trump’s memecoin project, Official Trump (TRUMP), announced that its top 220 tokenholders would have an opportunity to apply for an exclusive dinner with the president, many leaders in the crypto industry and US lawmakers have criticized the event, saying Trump was opening his office to potential bribery and corruption. The memecoin dinner prompted some Democratic lawmakers to withdraw support for crypto-related legislation in Congress, including the market structure and stablecoin bills.“Trump collecting gifts from foreign governments is unconstitutional,” a spokesperson for the consumer advocacy organization Public Citizen, which is planning to protest near the memecoin dinner on May 22, told Cointelegraph. “Collecting foreign government investments through his memecoin is not much better. American foreign policy should not be for sale.”Source: Public CitizenCrypto industry figures such as Tron founder Justin Sun, Kronos Research chief investment officer Vincent Liu, Hyperithm co-CEO Oh Sangrok, and Synthetix founder Kain Warwick are among the tokenholders expected to attend the dinner at the Trump National Golf Club outside Washington, DC. The memecoin project said all applicants had to pass a background check and could not be from a “[Know Your Customer] watchlist country.”Related: Democrats seek suspicious activity reports linked to Trump crypto venturesPublic Citizen, in partnership with progressive political organization Our Revolution, will hold a rally near the golf club, which Oregon Senator Jeff Merkley is expected to attend. In addition, the Arlington and Loudoun Democrats will be hosting a separate event to urge US officials to “hold [Trump] accountable,” and Democratic leadership in Congress has scheduled two press events on May 22 ahead of the dinner.“Americans cannot and will not accept President Trump’s view that positions of power exist only to benefit the holder of that power,” Ryan Ruzic, chair of the Loudoun County Democratic Committee, told Cointelegraph. “We have a moral responsibility to speak out against corruption, whatever the result may be.”Pushback on TRUMP memecoin affected crypto legislationSome lawmakers initially cited the memecoin dinner and the Trump family’s involvement with the crypto platform World Liberty Financial in opposing passage of the GENIUS Act, a bill to regulate payment stablecoins. World Liberty Financial began issuing its own USD1 stablecoin in March, prompting concerns about Trump’s conflicts of interest. However, the legislation passed a key procedural vote in the Senate on May 19 with support from Democrats, setting the bill up for debate in the chamber.“Many senators, myself included, have very real concerns about the Trump family’s use of crypto technologies to evade oversight, hide shady financial dealings, and personally profit at the expense of everyday Americans,” said Sen. Mark Warner in a statement before the May 19 vote, adding: “But we cannot allow that corruption to blind us to the broader reality: blockchain technology is here to stay.”Senator Chris Murphy, who voted against advancing the GENIUS Act, called for bipartisan support in amending the bill to specifically bar a US president from issuing stablecoins. He also called on the White House to release a complete list of attendees to the memecoin dinner, suggesting that some or all of them would “try to get something from the president” in exchange for purchasing the tokens. Murphy and Senator Elizabeth Warren will attend a press event with representatives for Public Citizen on May 22. California Representative Maxine Waters, ranking member of the US House Financial Services Committee, announced a separate press conference for the same day, with plans to introduce a bill to “block Trump’s memecoin and stop his crypto corruption, once and for all.”As of May 21, the exact number of attendees to the dinner was unknown. A smaller group of 25 tokenholders also qualified to apply for “VIP tour” and reception — presumably at the White House — with Trump, but the complete list of those planning to attend was also unknown at the time of publication.Magazine: Trump’s crypto ventures raise conflict of interest, insider trading questions

Australian regulator asks High Court to allow appeal in Block Earner case  
Australian regulator asks High Court to allow appeal in Block Earner case  

Australia’s financial regulator will seek the High Court’s permission to appeal a lower court’s ruling favoring fintech firm Block Earner, which found the company’s crypto-linked fixed-yield earning service is not a financial product.The Australian Securities and Investment Commission (ASIC) said on May 21 that it wants to ask the High Court of Australia to clarify what the definition of a financial product is and clarify the circumstances when an interest-earning product and conversion of assets from one form to another are regulated.“The definition of financial product was drafted in a broad and technology-neutral way, and ASIC believes it is in the public interest to clarify this,” the watchdog said.“This clarification is important as it applies to all financial products and services whether they involve crypto-assets or not.”On April 22, Federal Court Justices David O’Callaghan, Wendy Abraham and Catherine Button found that Block Earner’s crypto-linked fixed-yield earning product is not a financial product, a managed investment scheme or a derivative under the Corporations Act.ASIC said the court will consider its application. Special leave is required in an appeal to the High Court, and it’s only granted in cases where it would answer significant legal questions or matters of public interest.A Block Earner spokesperson told Cointelegraph the matter has now escalated to a “broader legal question” around the definition of a financial product, which extends “well beyond Block Earner, and the crypto sector.” “We believe the Full Federal Court’s April ruling was a strong and well-reasoned decision that upheld the integrity of our operations,” the spokesperson said. “We remain confident in the soundness of that judgment and will respond to ASIC’s application through the appropriate legal channels.” Legal saga ongoing since 2022ASIC first launched legal proceedings against Block Earner in November 2022, arguing the company needed a financial services license to offer its yield product which was available from March 17, 2022, until the company shut it down on Nov. 16, 2022.Related: Australia outlines crypto regulation plan, promises action on debankingASIC was arguing Block Earner needed a financial services license to offer its crypto-linked fixed-yield earning product. Source: ASICIn February 2024, an Australian court initially ruled the fintech firm would need a financial services license to operate its crypto yield-bearing products. Another June 2024 ruling in Australia’s Federal Court released Block Earner from any financial penalties because it had “acted honestly” and pursued its legal opinions before launching the products, which ASIC appealed.Block Earner appealed the Federal Court’s decision that it needed a financial services license on July 9, 2024. Magazine: SEC’s U-turn on crypto leaves key questions unanswered

VanEck to launch Avalanche ecosystem fund  
VanEck to launch Avalanche ecosystem fund  

VanEck plans to launch a private digital assets fund in June targeting tokenized Web3 projects built on the Avalanche blockchain network, the asset manager said in a statement shared with Cointelegraph.The VanEck PurposeBuilt Fund, available only to accredited investors, aims to invest in liquid tokens and venture-backed projects across Web3 sectors, including gaming, financial services, payments, and artificial intelligence. Idle capital will be deployed into Avalanche (AVAX) real-world asset (RWA) products, including tokenized money market funds, VanEck said.The fund will be managed by the team behind VanEck’s Digital Assets Alpha Fund (DAAF), which oversees more than $100 million in net assets as of May 21. “The next wave of value in crypto will come from real businesses, not more infrastructure,” Pranav Kanade, portfolio manager for DAAF, said in a statement.RWAs are among crypto’s fastest-growing segments. Source: RWA.xyzRelated: Tokenized stocks could top $1T in market cap — ExecsThematic crypto fundsVanEck’s PurposeBuilt Fund is the latest in a series of funds from the asset manager and rivals designed to offer exposure to projects and companies in fast-growing segments of Web3. On May 14, VanEck launched a new actively managed exchange-traded fund (ETF) to invest in stocks and financial instruments providing exposure to the digital economy.In April, VanEck launched another ETF investing in a passive index of companies operating in the crypto space. Asset managers such as VanEck are requesting the US Securities and Exchange Commission’s (SEC) permission to list upward of 70 crypto ETFs. The wave of ETF filings is in response to US President Donald Trump softening the agency’s regulatory stance toward crypto after Trump took office in January.Avalanche TVL as of May 21. Source: DefiLlamaAvalanche RWA ecosystemAvalanche has emerged as a hub for real-world assets (RWAs) and other institutional-oriented crypto projects. Its interrelated networks, called subnets, allow institutions to run Ethereum-style smart contracts in a controlled environment. On May 16, Solv Protocol launched a yield-bearing Bitcoin token on the Avalanche blockchain, targeting institutional investorsAvalanche has around $1.5 billion in total value locked (TVL) as of May 21, according to data from DefiLlama. “We’re seeing a shift away from speculative hype toward real utility and sustainable token economies,” John Nahas, chief business officer at Ava Labs, said in a statement.Magazine: Danger signs for Bitcoin as retail abandons it to institutions — Sky Wee

Texas House passes strategic Bitcoin reserve bill  
Texas House passes strategic Bitcoin reserve bill  

The Texas House of Representatives has passed the third reading of SB 21, a bill that seeks to establish a strategic Bitcoin reserve in the state. The bill passed via a 101-42 vote and will now go to Texas Governor Greg Abbott’s desk for either a signature or a veto.SB 21, authored by state Senator Schwertner, establishes a Bitcoin (BTC) reserve that is managed by the state’s comptroller. The legislation allows the comptroller to invest in any cryptocurrency with a market cap above $500 billion over the previous 12-month period. Currently, the only cryptocurrency fitting the requirements is Bitcoin.Rep. Capriglione presenting SB 21. Source: Bitcoin LawsBefore the vote, state representative Capriglione said to the chamber that the bill was a “pivotal moment in securing Texas’s leadership in the digital age with the passage of our strategic Bitcoin reserve. Now, we embrace a modern asset with traditional properties for future promise.”This is a developing story, and further information will be added as it becomes available.

CFTC exodus: Fourth commissioner to depart 'later this year'  
CFTC exodus: Fourth commissioner to depart 'later this year'  

Kristin Johnson of the US Commodity Futures Trading Commission (CFTC) has announced that she plans to depart the agency before 2026.In a May 21 notice, Johnson said she planned to step down from the CFTC “later this year,” having completed her term, which ended in April. The commissioner filling a Democratic seat at the financial regulator had served since March 2022 after being nominated by former President Joe Biden.In her farewell message, Johnson cited her work as a sponsor of the Market Risk Advisory Committee, which dealt with “nascent issues that arise with the introduction of decentralized financial products such as digital assets or cryptocurrency and other emerging markets.” CFTC Commissioner Kristin Johnson. Source: CFTCJohnson on XHer departure could come before US President Donald Trump nominates a replacement and has them confirmed by a Senate majority. Commissioners Summer Mersinger and Christy Goldsmith Romero previously said they would step down on May 30 and May 31, respectively, and acting CFTC Chair Caroline Pham said she planned to move “to the private sector” if Brian Quintenz were to be the next Senate-confirmed head of the agency.One position on the five-seat CFTC panel has been empty since the departure of former chair Rostin Behnam in February. Under CFTC guidelines, commissioners can continue to serve beyond the end of their terms until a “successor is appointed and has qualified,” provided it is before the next session of Congress.Related: KuCoin’s settlement with CFTC in flux after Trump policy shiftCFTC shakeup amid proposals for crypto market structureJohnson’s notice suggested that the entire leadership of one of the most significant financial regulators in the US could be replaced by Trump’s picks as early as 2026. The president nominated Quintenz to serve as CFTC chair in February, but the Senate had not moved for a vote to confirm him in more than three months. Along with the Securities and Exchange Commission (SEC), the CFTC has handled specific regulatory and enforcement issues related to digital assets. However, the lack of “clear rules of the road,” according to some lawmakers and industry leaders, has led to calls for a law establishing a digital asset market regulatory structure, clarifying the roles each agency would have to play.Magazine: SEC’s U-turn on crypto leaves key questions unanswered

Jury convicts ex-SafeMoon CEO on all charges  
Jury convicts ex-SafeMoon CEO on all charges  

A New York jury found Braden John Karony, the former CEO of cryptocurrency company SafeMoon, guilty of three felony charges after less than a day of deliberation.According to May 21 reporting from the courtroom, in the US District Court for the Eastern District of New York, a jury convicted Karony of conspiracy to defraud the United States, money laundering, and wire fraud. Prosecutors and defense lawyers presented their cases over the roughly two-week trial that kicked off with jury selection on May 5.Former SafeMoon CEO claiming his innocence during his criminal trial. Source: John KaronyKarony, former chief technology officer, Thomas Smith, and the platform’s creator, Kyle Nagy, were charged in 2023 for having allegedly “diverted and misappropriated millions of dollars’ worth” of SafeMoon’s SFM token. Smith testified against Karony at trial, while Nagy reportedly fled to Russia and was at large as of May 21.The criminal trial involving a cryptocurrency company executive was seen by many as a bellwether for how Joseph Nocella, the interim US Attorney for the district, could handle cases involving digital assets and fraud. Nocella, a Donald Trump appointee, took office on May 5.Related: SEC charges Unicoin crypto platform over alleged $100 million fraudAt the time of publication, it was unclear when Karony would return to court for sentencing. He could face years in prison for his role in the fraud at SafeMoon. Smith, who reportedly entered a guilty plea as part of a deal with prosecutors, could receive a lighter sentence.Magazine: Danger signs for Bitcoin as retail abandons it to institutions: Sky WeeThis is a developing story, and further information will be added as it becomes available.

How to handle crypto trading gains and losses on your balance sheet  
How to handle crypto trading gains and losses on your balance sheet  

Key takeawaysProperly accounting for crypto assets on your balance sheet is essential for accurate tax reporting and financial transparency.Crypto trading activities should be recorded like stock trading, at fair market value on the day of purchase.In some countries, like the US, crypto losses can offset gains, so keeping track of gains and losses is important for reducing taxable income.Whether you’re an individual investor or a business, treating cryptocurrencies as assets and documenting them ensures compliance with tax laws and minimizes the risk of errors.Let’s be real, it’s easy to lose sight of what you’ve actually gained or lost, especially when it comes to crypto and its market volatility and frequent trading activities. And when it comes to accounting, especially in countries like the United States, it gets trickier because you must reflect those numbers properly on your balance sheet. If you are running a business that involves crypto or you are just a crypto investor, understanding how to account for your digital assets correctly is crucial. This guide breaks down the basics of balance sheets, handling crypto gains and losses, and what tax implications you need to account for.What is a balance sheet, and why is it needed?Think of a balance sheet as a report of your financial health. It shows what you own, owe and what’s left over at a specific point in time. It contains three main parts: Assets: What the company owns, such as cash, crypto, real estate, inventory, etc.Liabilities: What the company owes, such as loans, unpaid bills and taxesEquity: What’s left after subtracting liabilities from assets (net worth).For example, if you own $50,000 worth of crypto, and at the same time, you owe someone $20,000. In this case, your equity is $30,000. Balance sheets help you understand your financial position at a glance. They’re essential for filing taxes, attracting investors, applying for loans and complying with regulations. Balance sheets are essential in countries like the United States, where businesses must report crypto holdings accurately for tax and compliance reasons. Similarly, in the UK, European countries and Canada, balance sheets are important for businesses and are often used by individuals, especially when dealing with crypto assets. It’s not just for taxes. A well-maintained balance sheet can help you get funding, plan your finances, or simply sleep better knowing where you stand at night.How do you treat crypto on a balance sheet?One of the most common questions when preparing a balance sheet is, “How to report crypto trading gains and losses on a balance sheet?” In most jurisdictions, the crypto reporting and taxation rules are still to be decided or clarified. This also applies to the International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP), which lack definitive guidance concerning cryptocurrency accounting.As cryptocurrencies are considered assets in many jurisdictions, the fundamental concepts of accounting for assets could apply when preparing a balance sheet involving crypto transactions. Below is an example of a simplified crypto balance sheet treatment and some helpful pointers that may assist you in accounting for crypto trading in 2025.Notes to the balance sheet:Cash ($15,000): Represents fiat currency (e.g., USD) held in bank accounts or wallets, including proceeds from selling crypto or other revenue.Cryptocurrency ($20,000): Recorded at cost basis (fair market value at acquisition, less any impairment). Includes 0.5 Bitcoin (BTC) purchased at $30,000 each ($15,000 total) and 10 Ether (ETH) purchased at $500 each ($5,000 total). No impairment has been recorded, assuming the fair market value (FMV) remains above cost.Mining equipment ($5,000): Capitalized cost of crypto mining hardware, net of depreciation. The original cost was $8,000, with $3,000 accumulated depreciation over two years.Accounts payable ($2,000): Unpaid bills (e.g., for electricity or supplier services related to crypto mining operations).Taxes payable ($1,500): Estimated tax liability for realized crypto gains (e.g., from selling 0.1 BTC at a $2,000 gain, taxed at 20% long-term capital gains rate for simplicity).Retained earnings ($36,500): Accumulated profits, including crypto-related income (e.g., mining revenue, realized gains) minus expenses and taxes. Reflects net income from prior and current periods.When buying cryptocurrency with fiat moneyWhen you buy cryptocurrency with fiat money, such as dollars or euros, you’re simply exchanging one type of asset, such as cash, for another, like crypto or stocks. On your balance sheet, cryptocurrency trading activities should be recorded similarly to those of stock trading activities. As with stocks, you should record cryptocurrency on your balance sheet at its fair market value on the day of purchase. While your cash account displays a credit for the same amount, the cryptocurrency is recorded as a debit to your assets account.When selling cryptocurrency for fiat moneySelling crypto for fiat creates a change in your balance sheet: Your crypto holdings will be reduced, meaning credited, and your cash will increase, which also means that the account will be credited.If you sell for more than you paid (the original price of a token), you have a gain; if you sell for less, you record a loss. Both crypto gains and crypto losses should be tracked carefully for tax and reporting purposes.How to record crypto lossesThe difference is recorded as a loss when you sell crypto at a lower price than you bought it for. In some countries, these losses can lower your taxable income, so it can prove useful to properly document them.  However, even if the asset regains its previous price levels, impairment losses cannot be undone in accordance with GAAP’s accounting rules for intangible assets.This contrasts with IFRS, where certain intangible assets can be revalued upward under IAS 38 if an active market exists. However, crypto markets are volatile, and IFRS guidance on crypto revaluation remains unclear, so most entities stick to cost-less impairment. Businesses should consult local accounting standards and auditors for precise treatment.How to record crypto profitsIf you receive cryptocurrency as payment for goods, services or other activities, it’s treated as income at the fair market value on the date you receive it. This value is recorded as revenue and added to your assets. Later, if you sell or swap the crypto, any difference in value will result in a capital gain or loss.How to record crypto mining When cryptocurrency mining income occurs, it should be reported at the currency’s fair market value. This revenue should be shown on your income statement since it increases your assets.Similar to other revenue-generating activities, companies engaged in cryptocurrency mining are required to report their crypto profits on their balance sheet. Their mining income account will be credited as a result. Subsequently, the newly generated digital asset has to be recorded in their accounts at its fair market value.Additionally, costs related to mining operations should be recorded. For example, the cash account needs to be credited if cash is spent to cover mining costs. The purchase of mining equipment, which requires capitalization and amortization, will subsequently be deducted from the associated asset account or otherwise documented as a cost for items like utilities and supplies.Using cryptocurrency to pay suppliersPaying suppliers or vendors with cryptocurrency is like selling the asset since you have to recognize any gain or loss in relation to its original value. Therefore, the difference between the asset’s book value and its expense will be recorded as a capital gain.How to record transaction fees and exchange rates It’s critical to keep track of transaction costs and exchange rate fluctuations when trading or exchanging cryptocurrencies. Fees should be shown as an expense on the balance sheet since they lower your net gain or increase your loss. Changes in exchange rates may also have an impact on the value recorded when converting cryptocurrency into fiat, which could have an effect on your taxes and capital gains.Did you know? Cryptocurrency held for more than a year can be categorized as a long-term asset on your balance sheet in some jurisdictions, which may result in better tax treatment than short-term holdings.How are cryptocurrencies taxed?Taxation of cryptocurrencies varies by country, but your balance sheet plays a crucial role in tracking taxable events. Under current GAAP, crypto is recorded at cost and tested for impairment. IFRS allows revaluation in rare cases, but most entities use the cost model. For traders holding crypto as inventory, GAAP (ASC 330) or IFRS (IAS 2) may apply, with FMV adjustments. The lack of definitive guidance means businesses must apply judgment and document assumptions clearly. In the US, crypto is treated as property, with taxes applied to capital gains when selling or trading. The Internal Revenue Service requires reporting on your balance sheet; losses can offset gains. Also, the US introduced Form 1099-DA in 2025 for crypto brokers to report transactions, increasing compliance requirements. In the UK, cryptocurrencies are taxed under capital gains for individuals, while income tax may apply if trading is frequent or when crypto is received as income, such as through mining, staking or as payment for services.Canada follows a similar approach, taxing crypto as capital gains (50% inclusion rate) or business income for active traders. Mining income is taxable as income.In Germany, long-term holders (over a year) pay no tax on capital gains, but short-term trades over 600 euros are taxed. Notably, the EU’s Markets in Crypto-Assets (MiCA) regulation (effective 2024) standardizes crypto reporting, impacting balance sheet documentation in member states.Accounting for Ethereum transactionsEthereum, the backbone of decentralized finance (DeFi) and smart contracts, has unique accounting needs. Here’s how to handle common Ethereum transactions on your balance sheet:Staking rewards: Staking ETH on Ethereum’s proof-of-stake network generates rewards, treated as income at FMV when received. For example, receiving 0.1 ETH as a staking reward debits your “Cryptocurrency” asset account and credits “Revenue” on your income statement. Selling staked ETH later triggers a capital gain or loss.Gas fees: Ethereum transactions incur gas fees, which are expenses. Record these as a debit to “Transaction Fees” (an expense account) and a credit to “Cash” or “Cryptocurrency” if paid in ETH. For example, a $50 gas fee paid in ETH reduces your ETH holdings and is expensed.DeFi transactions: Yield farming or liquidity provision (e.g., on Uniswap) generates rewards, treated as income at FMV when received. For example, earning 100 UNI (UNI) tokens ($1,000) debits “Cryptocurrency” and credits “Revenue.” Track gas fees and token swaps as expenses or taxable events.ERC-20 tokens: Ethereum-based tokens (e.g., USDC, LINK) are separate assets. Record each at its FMV at acquisition, like ETH, and track them individually to avoid confusion.Accurate tracking of Ethereum transactions ensures compliance, especially with increased IRS scrutiny on staking and DeFi in 2025.Tools and best practices for crypto accountingManaging crypto transactions can be daunting, but these tools and tips simplify the process:Accounting software: Use platforms like CoinTracker, Koinly or CryptoTaxCalculator to track Ethereum transactions, calculate gains/losses, and generate tax reports. These tools integrate with wallets and exchanges, ensuring accurate FMV records.Regular reconciliation: Match your balance sheet’s crypto holdings to wallet/exchange records monthly to catch errors, especially for gas fees or staking rewards.Work with professionals: Crypto tax rules, especially for Ethereum’s DeFi and staking, are complex. Consult a crypto-savvy accountant to ensure compliance with IRS, His Majesty’s Revenue & Customs or other regulations.Document everything: Keep records of every Ethereum transaction, including FMV, gas fees and staking rewards, to prepare for audits or Form 1099-DA reporting in 2025.By staying organized, you’ll minimize errors and stress when filing taxes or preparing financial statements.