Nathan Jones, senior vice president and general manager of Worldwide Public Sector Sales and Government Affairs for TaxBit, spoke with ExecutiveGov for the publication’s latest Executive Spotlight interview on his recent appointment and joining the company.
In addition, Jones also discussed the importance as tax policies influence the cryptocurrency market as well as his thoughts on the basic understanding of crypto, how to increase mainstream adoption and the impact of the recent Infrastructure Bill that is bringing big changes to crypto reporting in the federal sector.
“The faster mainstream adoption of this currency or asset class is going to grow, that’s what we feel our mission is really. To be that broker of information to be able to break down the gaps that exist and the questions that still exist in cryptocurrency. Once we have that understanding, the assets become more stable and then it’s just as mainstream as the money in your wallet.”
You can read the full Executive Spotlight interview with Nathan Jones below.
ExecutiveGov: Congrats on joining TaxBit and the new position! What interested you the most about the opportunity to join the company?
“I’m thrilled to join TaxBit. I’ve been searching for the next chapter of my career. I worked at Red Hat and helped establish the company. We drove open source software into the market over the last two decades. It’s actually a similar underlying tech journey with the cryptocurrency market, which has been built on blockchain technology.
My journey at Red Hat was about taking something that was confusing and uncertain and creating an ecosystem around the IT enterprise, support and standardization that comes with helping the federal government to consume the technology.
When you look at what TaxBit is doing, it taps into what the government is doing with cryptocurrency as they regulate the market and collect taxes. What will the reporting requirements be?
It’s actually an intersection of cryptocurrency with financial regulation and policy compliance. I believe this certainty will be critical to fueling the growth of the crypto market and digital assets to emerge as the standard. That will be at the heart of success for crypto and digital asset adoption.
If you read about our company’s history, Austin and Justin are our founders. They’re brothers and started the company in 2018 during a period when bitcoin had rallied to about $20,000, took a big hit and was perceived to be in decline. Our founders were dedicated visionaries who kept going through what’s been called the ‘Crypto Winter.’
At the time, it was a very small contingency of people, but they built out this technical connectivity to all the different exchanges. They worked on that since 2018 and it’s the reason why we have the compelling offering that TaxBit has today. It’s because of their foresight to persevere through the Crypto Winter to reach the funding and valuation that we have today. They saw the forest through the trees.”
And this is just the beginning. At TaxBit, we’re transforming the cumbersome experience of cryptocurrency tax reporting in a way that not only ensures compliance with tax law but also helps users actively tax optimize their investments and use of cryptocurrency. This is quite uncharted territory, and I’m excited to help champion our data and tax automation practices for the government.”
ExecutiveGov: Can you give us a brief explanation of cryptocurrency, how it works and its importance in the marketplace?
“Digitization is happening in every aspect of our lives. The more I thought about that, the more I realized that it’s only natural that the monetary system and the economy would also need to change and adapt. People are already using a lot of online services for financial transactions, but those transactions are still being executed using an underlying traditional money system.
As an organization in today’s modern age, why wouldn’t you execute a completely new digital asset infrastructure for those electronic transactions? A digital asset infrastructure that can enable instantaneous real-time, peer to peer transactions with no delay.
These transactions tend to occur in blockchain open source technology where everything is verifiable and unalterable so the historical data is always there. I come from an open source software background. That’s a significant allure to crypto technology and is critical for underlying the transparency to bring all these capabilities to fintech. It’s the next chapter.
Blockchain is the underlying technology for cryptocurrency. Actually, I’d say that crypto is the first real great example of the use of blockchain. As you think about blockchain expanding into other areas, healthcare is a big area of focus.
Smart contracts are another. Why continue to use paper contracts for everything when digital blockchain-based contracts are more verifiable, more automated and safer.
This goes into a much bigger conversation about open source and the nature of it. As we look at open source, Linux was the first one through the gate. The entire cloud computing infrastructure is based on open source and open source is becoming the method of collaborative research in healthcare and other areas.
The whole fundamental concept of open source data and research is going to be based around blockchain. It will be the underpinnings of a lot of breakthrough innovations. Cryptocurrency is just the first proof of that point. I love that it’s the most prolific place for innovation to occur and the financial market is ripe for innovation.”
ExecutiveGov: Cryptocurrency is at an inflection point, can you please discuss steps to increase mainstream adoption?
“It’s become an old adage at this point that ‘crypto is taking off faster than the internet.’ There are a lot of individual investors in crypto and even conservative investors that have bought their crypto as a beachhead.
They are not executing a ton of transactions, but they bought crypto to hold some of the whole of their funds in digital assets. The exponential growth in crypto will come for mainstream institutional investments and that will happen as the government provides certainty and guardrails.
I just listened to Senator Cynthia Lummis yesterday as she talked about the U.S. having a golden opportunity to lead in this area. If we don’t, then other nations will and it could be our biggest adversaries who will drive these innovations, investors and reform an entire digital fintech ecosystem without us.
The U.S. government can enable that by making regulations consumable and common sense. In addition, regulation will absolutely bring more institutional investment and use of these digital assets and currencies.”
ExecutiveGov: The latest Infrastructure Bill has some new requirements regarding crypto reporting. Can you please discuss what this means for the government and consumers?
“The Infrastructure bill will have an impact at a basic level. The stock market firms are required to send a 1099 to the IRS on behalf of their customers. Those 1099 forms have shown the tax obligations for decades.
Now, crypto exchanges will have to do this for their customers as the basic and biggest requirement of the infrastructure bill. There are still some unanswered questions about the details but I do think the bigger and mainstream crypto transactions that are happening will be included.
After that, the question is how to accurately report this to the federal government. Some exchanges will have to collect verified customer information. However, this will be the responsibility of the exchange or the broker, not the taxpayer directly.
This is not a new model for securities, equities and commodities. It isn’t even a new model for large cash transfers, but it will be a new requirement for crypto. That’s what some of these exchanges will have to implement.
I think as we look at what consumers need to be aware of, or what government officials needs the most of these exchanges can make it easy for a taxpayer to define what their overall taxable events are by the end of the year. I think in terms of the regulatory environment and what people want, I believe that investors and citizens want certainty.
They want enablement of this new class on digital assets that isn’t political. It helps the unbanked, but it also helps the free market economy. It’s a technology and a modern financial ecosystem that everybody can get behind. It will be important to define how a digital asset is treated, but I think the goal should be certainty and some reasonable regulatory protection for the average user of these digital assets.”
ExecutiveGov: With the cryptocurrency market undergoing such dramatic shifts and changes, what do you hope to accomplish with TaxBit in the year to come and beyond?
“For 2022 at a basic level, we’re looking to help all end users of cryptocurrency whether they’re in the federal government or commercial. Through our efforts with the exchanges, we’ll be able to accurately report their taxes and build a better understanding of cryptocurrency at the mainstream level. TaxBit will illustrate how their financial assets are being used, both from an accounting standpoint and from a tax calculation compliance standpoint.
From the government perspective, we want to help the government understand how end users are able to capture this data as well as what they’re able to report and how they’re able to report it. After that, we want to help the government consume that information and ultimately make it easier to implement regulations.
The faster mainstream adoption of this currency or asset class is going to grow, that’s what we feel our mission is really. To be that broker of information to be able to break down the gaps that exist and the questions that still exist in cryptocurrency. Once we have that understanding, the assets become more stable and then it’s just as mainstream as the money in your wallet.
As we look a couple years into the future, I would be willing to say that individual investors and the understanding of the federal government’s tax collection agencies will understand a lot of how these assets work.
We’d want all the stakeholders to be educated on what’s possible from a tooling perspective and a process perspective to make digital asset adoption and compliance easier across the board. We’re still in the information age and beginning stages. It’s only a matter of time.”