Exploring crypto, blockchain, and smart contracts together

As these innovative tools continue to shape the future of transactions and investments, our focus is on providing thoughtful education, guidance, and resources to help clients navigate this new frontier with confidence.

We understand that the world of digital assets can feel complex and ever-changing. That’s why we’re committed to offering approachable and practical insights, tailored to your unique needs. Whether you’re curious about cryptocurrencies, interested in blockchain’s potential applications, or exploring how smart contracts might streamline your transactions, we are here to support you every step of the way.

Our services include:

• Education and training on cryptocurrency and blockchain fundamentals.

• Guidance on smart contract implementation for secure, efficient transactions.

• Exploring opportunities in tokenized assets and NFTs.

• Insights into the evolving regulatory environment for digital assets.

As we deepen our expertise in this space, we are committed to empowering our clients with the knowledge and tools needed to make informed decisions. Let’s explore this exciting future together!

The intersection of Section 1031 like-kind exchanges, cryptocurrencies, smart contracts, and the Securities and Exchange Commission’s (SEC) stance on digital assets is a complex and evolving area of law. Below is an overview of the current positions and rulings:

Section 1031 Like-Kind Exchanges and Cryptocurrencies

IRS Position:

• Pre-2018 Transactions: Prior to the Tax Cuts and Jobs Act (TCJA) of 2017, Section 1031 allowed for the deferral of capital gains taxes on exchanges of like-kind property, which included both real and personal property. However, the IRS has indicated that cryptocurrency exchanges did not qualify for like-kind exchange treatment even before the TCJA. In public forums, IRS officials have stated that cryptocurrency transactions would not qualify as like-kind exchanges under Section 1031 treatment, even in the case of pre-2018 transactions.

• Post-2018 Transactions: The TCJA, effective January 1, 2018, amended Section 1031 to restrict like-kind exchanges exclusively to real property. Foreign exchanges now dominate the market.

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Tax Court Rulings:

• As of now, there are no specific U.S. Tax Court cases that have directly addressed 1031 in cryptocurrency allowing for intent and interpretation to control.

SEC’s Position on Cryptocurrencies and NFTs

Cryptocurrencies:

• The SEC has been actively involved in regulating the cryptocurrency market to protect investors and maintain fair market practices. Over the past decade, the SEC’s Enforcement Division has conducted numerous investigations and brought over 100 crypto-related actions, focusing on fraudulent activities and unregistered securities offerings.

Non-Fungible Tokens (NFTs):

• The SEC has recently taken enforcement actions concerning NFTs, indicating that certain NFT offerings may be considered unregistered securities. In August 2023, the SEC charged Impact Theory, LLC with conducting an unregistered offering of crypto asset securities through the sale of NFTs called “Founder’s Keys.” This marked the first instance of the SEC applying the Howey test to NFTs to determine their status as securities.

• Additionally, the SEC has issued a Wells Notice to OpenSea, a major NFT marketplace, indicating potential enforcement actions for alleged securities law violations related to NFT sales.

Legal Challenges:

• There have been legal challenges to the SEC’s classification of NFTs as securities. For instance, artists Jonathan Mann and law professor Brian Frye have sued the SEC, seeking regulatory clarity for digital artists using blockchain and NFTs, arguing that NFTs should be considered art rather than securities.

Conclusion

The regulatory landscape for cryptocurrencies and NFTs is rapidly evolving. The SEC is increasingly scrutinizing digital assets, including NFTs, to determine their status under federal securities laws, leading to ongoing legal debates. Individuals and entities involved in these areas should stay informed about the latest regulatory developments and consider legal and tax advice to ensure compliance.

There are the 10 platforms that allow tokenized real estate to be bought and sold worldwide, with hyperlinks to their official websites or related resources:

1. RealT

• Offers fractional ownership of U.S. single-family rental properties, enabling investors to earn rental income through tokenized assets.

2. Propy

• Facilitates real estate transactions using blockchain technology, enabling tokenization and seamless property transfers.

3. Brickblock

• Provides a platform for real estate tokenization, connecting investors with property owners to enable fractional ownership.

4. RedSwan

• Specializes in tokenizing commercial real estate, giving investors access to high-quality properties through digital tokens.

5. Blockimmo

• A decentralized platform for real estate tokenization and investment, allowing fractional property ownership.

6. Slice

• Focuses on tokenizing real estate assets, providing investors with access to institutional-grade properties.

7. SolidBlock

• Offers a platform for tokenizing real estate assets, enabling fractional ownership and increased liquidity.

8. Reido

• Provides tokenization services for real estate, enabling fractional property ownership and investment.

9. Harbor

• Specializes in tokenizing private securities, including real estate, to enhance liquidity and streamline compliance.

10. Polymath

• A platform for issuing and managing security tokens, including those backed by real estate assets.

These platforms are leading the way in real estate tokenization, providing innovative solutions for property owners and global investors alike.