<\/p>\n
Friend.tech, the decentralized social media platform that surged over the weekend, could lead to some significant tax headaches this spring, accountants say.\u00a0<\/p>\n
At launch, the platform allows users to buy and sell \u201cshares\u201d of personal accounts on X, formerly Twitter. Friend.tech rebranded what users could buy to \u201ckeys\u201d on Monday. Either way, under this economic model, users can generate revenue in a number of ways \u2014 and create taxable events, according to accountants who spoke to Blockworks.\u00a0<\/p>\n
Profit may be earned by trading keys \u2014\u00a0plus, influencers take a 5% commission on trades of their own keys \u2014 and some key holders can earn \u201cdividends\u201d when influencers opt to share these earnings.\u00a0<\/p>\n
\u201cFriend.tech does likely have KYC<\/a> [know-your-customer] collection and reporting requirements under the Infrastructure Investments and Jobs Act of 2021,\u201d said Gabriel Brin, vice president of tax and accounting product at Ledgible. \u201cHowever, regardless of the protocol\/app ability to fulfill those requirements, the investors have the same tax implications of buying and selling these social media digital assets that they would on trading any other digital assets on any other platform.\u201d\u00a0<\/p>\n Anyone trading on the app should expect to report their activities and profits at the end of the tax year, Brin added.\u00a0<\/p>\n \u201cA user\u2019s trade activity is not free of requirements for regular record keeping, tax return documentation and tax liability,\u201d Brin said.\u00a0<\/p>\n Read more:<\/strong> Friend.tech will likely draw the SEC\u2019s attention, legal experts say<\/a><\/p>\n According to Amy Hatch, tax SME manager at TaxBit, most Friend.tech transactions would fall under capital gains or ordinary income for the purpose of tax obligations. She says users should maintain records and use an aggregator that can organize financial data from different sources.\u00a0<\/p>\n \u201cBecome acquainted with the tax laws relevant to cryptocurrency transactions and earnings from digital platforms in your area,\u201d Hatch said. \u201cThese rules can differ greatly by jurisdiction, so it\u2019s essential to understand the local requirements you may be subject to.\u201d\u00a0<\/p>\n The platform links users wallets with their X handles, which is then visible to the public.\u00a0<\/p>\n \u201cIt is feasible that blockchain analysis tools could be used by tax authorities (or any interested party) to identify patterns of transactions and link them to specific users,\u201d Hatch said. \u201cHowever, while on-chain data can assist in tracking transactions, determining the intent and related taxability behind these transactions often requires additional context and investigation.\u201d<\/p>\n Friend.tech<\/a> does not yet have a privacy policy, but there are some terms of use. \u200b\u200bAt sign-up, users allow Friend.tech to view all posts and accounts that the user can see, including protected accounts.\u00a0<\/p>\n Users also grant permission for Friend.tech to post posts and reposts from the users\u2019 account. Users can disable these permissions following registration.<\/p>\n Get the day\u2019s top crypto news and insights delivered to your email every evening.\u00a0Subscribe to Blockworks\u2019 free newsletter<\/a>\u00a0now.<\/strong><\/p>\n Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can\u2019t-miss tweets and more from\u00a0Blockworks Research\u2019s Daily Debrief<\/a>.<\/strong><\/p>\n Can\u2019t wait? Get our news the fastest way possible.\u00a0Join us on Telegram<\/a>\u00a0and follow us on\u00a0Google News<\/a>.<\/strong><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":" Friend.tech, the decentralized social media platform that surged over the weekend, could lead to some significant tax headaches this spring, accountants say.\u00a0 At launch, the platform allows users to buy and sell \u201cshares\u201d of personal accounts on X, formerly Twitter. Friend.tech rebranded what users could buy to \u201ckeys\u201d on Monday. Either way, under this economic […]<\/p>\n","protected":false},"author":2,"featured_media":141589,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[230,225,221,227,226,228,229,60,223,224,222],"class_list":["post-141588","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrency","tag-brave","tag-coinbase","tag-crypto","tag-decentralised","tag-decentralized","tag-decentralized-exchange","tag-erc-20","tag-featured","tag-meme-coin","tag-robinhood","tag-solana"],"_links":{"self":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/141588","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/comments?post=141588"}],"version-history":[{"count":2,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/141588\/revisions"}],"predecessor-version":[{"id":146908,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/141588\/revisions\/146908"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media\/141589"}],"wp:attachment":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media?parent=141588"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/categories?post=141588"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/tags?post=141588"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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