Helping early digital asset and blockchain adopters navigate tax complexities

Grant Thornton helps organizations navigate the tax treatment of digitized assets and the opportunities to implement blockchain for critical business and tax department processes. Our deep tax experience combined with knowledge of cryptocurrency markets and blockchain technology will manage risk, avoid surprises, and drive high value in a cost effective manner. The outcome is to position clients for future profitable growth.
No one knows exactly what the future will hold for digital assets and blockchain. But to be prepared for it, finance and tax professionals should start to ask the right questions:

• Is your investment in the digitized asset to enable your company access to a good or functionality or an investment opportunity?
• Have you considered the tax obligations, including those that were recently passed as part of the tax reform package?
• What level of guidance has your company acquired concerning which tokens might draw more or less scrutiny from governmental authorities?
• Has your company had a discussion/received guidance on its overall blockchain strategy?
• Is the blockchain technology solution for internal use (within the organizational chart) or external use (part of a consortium with vendors and customers)?

Companies that are making use of Blockchain Technology and trading in digitized assets are still considered “early adopters” but that title won’t be true for long. Much like the cloud computing wave that affected all industries, Blockchain and digitized assets will soon be part of our daily lives. Grant Thornton has committed the necessary professionals to assist early adopters to ensure compliance, manage risk and plan for the future.
Digitized assets are not just for startups. Established organizations are using digitized assets as a gateway to new trading and other value-creating opportunities. There are generally three types of digitized assets:

• Utility tokens which allows access to a product or functionality
• Security/Equity tokens which convey traditional stock, implies investment or an investment opportunity
• Cryptocurrency which is digitalized currency

Blockchain technology makes use of a global network of computers to record the transactions of these new types of digitalized assets in a secure public/semi-public/private format. In addition it can manage data, and when combined with other tools such as smart contracts, it can autonomously provide the user functionality to a wide range of applications.

Helping organizations deal with cryptocurrencies and blockchain today While digitized assets and especially blockchain technology hold much promise for the future, executives need to deal with the tax consequences today. That is why we take a tax-focused approach when serving our clients, backing up our knowledge of emerging cryptocurrencies and technologies, with a deep bench of federal, international and state tax experts.

We help organizations in four areas:

• Tax treatment/accounting of digitized assets
• Legal entity structuring for managing digitized assets
• Transfer pricing assistance to ensure proper valuation of digitized assets
• Leveraging blockchain technology in enterprise solutions to optimize tax compliance and drive quality

Call us if your organization is struggling with any of these issues. We are committed to being a trusted advisor in regards to the concerns and demands of implementing this innovative technology.

Tax professional standards statement

This document supports Grant Thornton LLP’s marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. If you are interested in the subject of this document, we encourage you to contact us or an independent tax adviser to discuss the potential application to your particular situation. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent this document may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this document is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.