TL;DR Breakdown
- Crypto fundraising platform The Giving Block has demanded for less paperwork for crypto donations.
- Advocating for regulatory changes in the crypto donation space.
Description
Crypto fundraising platform, “The Giving Block,” has taken a proactive step by sending a letter to Senators Ron Wyden and Mike Crapo, urging them to eliminate appraisal requirements on crypto donations. The company specializes in assisting nonprofits in accepting crypto donations and argues that the current regulations make such contributions excessively burdensome for donors. Presently, … Read more
Crypto fundraising platform, “The Giving Block,” has taken a proactive step by sending a letter to Senators Ron Wyden and Mike Crapo, urging them to eliminate appraisal requirements on crypto donations. The company specializes in assisting nonprofits in accepting crypto donations and argues that the current regulations make such contributions excessively burdensome for donors. Presently, donations exceeding $5,000 in value require donors to engage a qualified appraiser who provides written approval of the transaction for accounting purposes.
The Giving Block explains the complexity of the requirements
The Giving Block contends that these requirements often catch donors off guard and can be perplexing. Additionally, locating qualified appraisers well-versed in digital assets can be both challenging and expensive. Depending on the appraiser, fees for these services can range from 4% to a staggering 40% of the donation itself. Interestingly, even stablecoins such as Tether (USDT) and USD Coin (USDC), which are designed to be interchangeable with U.S. dollars on a 1:1 basis, are subject to these appraisal requirements.
The letter makes a compelling argument that appraising stablecoins, with their inherently stable values, adds no discernible value to the donor, charity, or the U.S. Treasury. The Giving Block’s General Counsel, David Johnson, emphasized the prevailing confusion and apprehension surrounding these requirements. He stated that after speaking with donors and charities daily, they hear confusion and concern about meeting these requirements.
He further noted that while they assist donors in obtaining appraisals to meet these requirements, there is no apparent public policy justification for these requirements in the first place. This appeal from The Giving Block comes in response to a request from the Senate Finance Committee in July. The committee sought insights from industry experts on how to address the uncertainties and tackle the “novel regulatory issues” associated with taxing crypto assets. The Giving Block’s recommendation aligns with that of the crypto policy think tank, Coin Center, which called for the elimination of appraisal requirements on crypto donations.
Advocating for regulatory changes in the crypto donation landscape
Coin Center argued that crypto assets are akin to “readily valued property” like cash and stocks, where exchange price data is readily available. Johnson highlighted that The Giving Block is in sync with Coin Center’s stance on this issue and anticipates substantial support for this change from the crypto and nonprofit sectors. He emphasized the unique characteristics of crypto transactions, which are global, peer-to-peer, and nearly impossible to reverse. These features make cryptocurrencies an ideal medium for supporting humanitarian and political causes, especially when traditional financial channels may be limited or inaccessible.
In a notable example from 2022, the crypto community came together to send hundreds of millions of dollars worth of crypto directly to Ukraine in response to a call from the nation’s Vice Prime Minister. Johnson pointed out the advantages of crypto in such scenarios, saying, “It’s fast, easy, verifiable.” Moreover, he highlighted the growing trend of young, tech-savvy potential donors holding a significant portion of their wealth in cryptocurrencies. This demographic shift, combined with the “great wealth transfer,” suggests that the crypto community is poised to shape the future of philanthropy.
The Giving Block’s advocacy for the elimination of appraisal requirements on crypto donations sheds light on the challenges and complexities facing donors and nonprofits in the evolving landscape of digital assets. The current regulations, which impose unnecessary burdens and costs, are being questioned by industry experts and organizations like The Giving Block. As the crypto space continues to evolve, there is a growing consensus that these regulations need to adapt to the unique characteristics of cryptocurrencies and the increasing role they play in philanthropy and fundraising for charitable causes.
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