In her monthly Expert Take column, Selva Ozelli, an international tax lawyer and CPA, introduced the intersection between emerging technologies and sustainability, and provided information on taxation, AML/CFT regulations, and laws affecting encryption and blockchain The latest development of the problem.
The United Nations General Assembly (UNGA) will hold its 76th annual meeting from September 14th to 30th to convene nations at a critical moment to take collective action to address the global environmental crisis, which has exacerbated the ongoing COVID-19 pandemic.
Before the General Assembly meeting, the latest report Released The Intergovernmental Panel on Climate Change pointed out that ambitious climate actions are now Publication Nationally determined contributions under the Paris Agreement.The Secretariat’s Comprehensive Report”, in which show The world is not on the track of realizing nationally determined contributions (National Data Center) Responding to climate change in accordance with the Paris Agreement.
In addition, 200 world-leading health journals Released A joint statement pleading with global leaders to reduce greenhouse gas emissions to mitigate climate change, which they believe is the greatest threat to public health (Sustainable Development Goals) 3 with 13).
Plans for a sustainable green recovery from the pandemic need to understand the links between climate change, health, and inequality; and implement ambitious climate change policies in line with the Paris Agreement. The 17 Sustainable Development Goals of the United Nations (Sustainable Development Goals) Call on all countries and people to take action to promote prosperity while protecting the planet. More important than ever, these goals provide a key framework for a green recovery from COVID-19.
Blockchain technology and Irreplaceable tokensOr NFT, played an important role in funding these goals in 2021— Announce Known by the UN General Assembly as the “International Year of Creative Economy for Sustainable Development”-during the worst wildfire season ever, the highly infectious variant of COVID-19 spread rapidly.
COVID-19: Art Charity and Blockchain
The COVID-19 pandemic has caused a public health crisis and an economic crisis.The pandemic disrupted lives, pushed the hospital system to the edge, and caused a global economic slowdown result The loss of the American arts and culture sector alone exceeded $1.7 billion.
According to data from X4Impact, a data insight, research, and consulting service company for social innovation in the United States, there are more than 457,000 non-profit organizations in the United States that merge funds About 2.9 trillion US dollars, their service demand continues to increase, but their income has dropped significantly.The extent of the impact of the coronavirus on the U.S. philanthropy sector remains unknown.
Bundeep Rangar, CEO of PremFina, the UK’s first venture capital-backed alternative insurance premium finance company, pointed out that charities and artists and COVID-19 victims (SDG 3) urgently need funding. He explained to me: “Last June, Art & Co held the first charity art auction assisted by blockchain technology. LuxTag Blockchain/NEM tracks the auction bidding sales process, tracks sales proceeds, and distributes proceeds to charities.”
Since holding my first digital art exhibition in June 2020 Inspired by climate change and COVID-19 (Sustainable Development Goals 3 and 13), NFT and blockchain technology have steadily penetrated into the field of art and charity, enabling artists and museums to monetize their works and continue to receive payments after their works are sold.
COVID-19: Museums and Blockchain
The most Affected Those affected by the pandemic are museums, which play an important role in raising awareness of climate change (SDG 13) and providing reliable information (Sustainable Development Goal 4).Basically all American museums are closed, these institutions saw Huge economic losses, while having to bear the cost of digitalization in order to survive and continue to benefit the public during the blockade.
Diane Drubay, the founder of We Are Museums and the caster of NFT on the Hic Et Nunc platform, was exhibited at DoinGud’s first “Origin Exhibition”-telling me: “I think a clean block like Tezos The chain is an excellent opportunity for museums. Low-carbon footprint currencies and markets provide blockchain and NFT with a simple, fair and ethical way to remove the industry from the high energy consumption, exclusivity and money-making space described by the media Transfer it out.” She continued:
“When museums need to understand blockchain to fully understand its potential, we are still in the education stage.”
She further explained: “But once they do, they will find an excellent way to reach new young and creative audiences who are ready to participate in purposeful projects, through innovation, interaction and immersive In the process, share their collections and new models of themselves.-Feed yourself.”
In fact, NFT provides new income opportunities for digital artists and museums, enabling them to survive the lockdown of the COVID-19 pandemic, thus changing the rules of their game.
In August, the NFT sales of OpenSea, the largest non-fungible token market, surged to 4 billion U.S. dollars. Bearish correction followed During September. But there is a race between artists and museums to compete for the NFT market to monetize their works.
Earlier this month, the Russian Hermitage Museum, the world’s largest art collection, NFT sold several masterpieces Working with Binance’s NFT market to make up for budget shortfalls caused by the ongoing COVID-19 crisis, the auction included the sale of a piece by Da Vinci for $440,000. The Metropolitan Museum of Art in New York is the largest art museum in the United States. expected According to Artnet News, the sale of 219 prints and photos helped make up for the $150 million in lost revenue.
Drubay stated that she will work with other NFT artists to launch a new sustainable blockchain platform called alterHEN on September 30. She said that this is an active art market emerging model laboratory with a new Creation and collection methods, sales and display of artworks.
Charity and sustainable NFT of the United Nations’ 17 Sustainable Development Goals
Twitter CEO Jack Dorsey Sold his first tweet as an NFT Donate the proceeds to Bitcoin at a price of 2.9 million USD (Bitcoin) To GiveDirectly, a charitable organization that provides funds to African families affected by the COVID-19 pandemic (Sustainable Development Goal 3).Bids are processed on a sustainable platform called Valuables let us People made offers for tweets “autographed by their original creators.”
Other sustainable and irreplaceable token platforms on which artists can create NFTs and display and sell their works to stimulate greater awareness in the context of the UN’s 17 Sustainable Development Goals, including DigitalArt4Climate, Enjin NFT Platform and DoinGud, where I will launch my first NFT, “Recovery Roses,” at the first Origins exhibition ever-I donated NFT sales proceeds to SDG-focused charitable organizations around the world .
DoinGud co-founder Manu Alzuru told me: “DoinGud’s blockchain-based social media and market is designed to promote charitable donations to censored social impact organizations selected by creators through NFT sales. It will bring more and more Opportunities to support valuable charities, which are the same as the United Nations’ 17 Sustainable Development Goals, such as eradicating world hunger and addressing climate change.”
William Quigley — cryptocurrency investor, co-founder of NFT blockchain platform Worldwide Asset eXchange (WAX) and co-founder of Tether, the first stablecoin backed by fiat currency (USDT)-Tell me about WAX’s new charity plan, which aims to address SDGs 13 and 14. The company that provides eco-friendly blockchains for NFTs, video games and collectibles has released a new “carbon offset vIRL” NFT series. As Quigley said: “In WAX’s sustainability-oriented series, for every $1 in’compost’, the National Forest Foundation will plant a sapling, and each sapling will offset an average of one ton during its life cycle. Carbon dioxide. WAX officially sets a higher standard for the responsibility of the entire blockchain. We have been working tirelessly to ensure that our blockchain is both energy-efficient and inspires our communities to take the environment into consideration when they act. With With carbon offset vIRL® NFT, we believe that together we can make huge and positive changes.”
On the other hand, Cryptograph is the first luxury and celebrity NFT auction platform that uses blockchain technology to introduce new ways of charity, making charity fundraising easier, immediately globalized and permanent in the digital age. Blockchain pioneer and co-founder of Cryptograph Tommy Alastra explained to me: “For charitable organizations that want to ride the wind and waves to improve donations, cryptography is a major breakthrough. These donations are borderless and can be accessed from all over the world. With the new post-COVID world and fewer face-to-face large charity evenings, Cryptograph will allow charitable foundations to continue to successfully raise funds and continue to obtain a percentage of each NFT auction item, even in the resale market.”
Cryptograph sells NFTs manufactured by the following companies Vitalik Butrin, Emin Guncell, Eric Wallis, Evan Van Ness-the author of “Ethereum News Weekly” and the former director of ConsenSys-and others, the funds are used to organize efforts for SDG 1, 2, 4, and 14. Creators can also choose to fund their own charitable organizations focusing on SDGs. For example, the Autism Science Foundation, dedicated to supporting and funding innovative autism research (SDG 3), announced that it is accepting cryptocurrency and NFT donations through Every.org.
U.S. tax treatment of NFT donations
Since NFT is Considered For US tax purposes, the property will be valued at its fair market value at the time of donation.NFT donors (non-cash donations) worth more than US$500 will be required to submit to comply with the IRS assessment requirements Form 8283. Donations from individual donors are tax-exempt, as follows:
- If the donor holds the NFT as a capital asset for more than one year, the donor will be able to deduct the fair market value of the gift, up to 30% of its adjusted total income.
- If the donor holds the NFT as a short-term (less than one year) capital asset or as an ordinary income property, the donor will be able to deduct the lower of the cost basis or fair market value, up to 50% of its adjusted total Income
- If the donor receives NFT as payment for services provided, the donor can claim a deduction of the fair market value on the date of receipt.
As the taxpayer’s adjusted total income limit is exceeded, the non-deductible charitable donations that year can be carried forward for five years.
NFT donors are urged to conduct due diligence on the platform that launched the NFT to determine whether they are entitled to U.S. tax relief.
The views, thoughts and opinions expressed here are only those of the author, and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Selva Ozeli, Esq., CPA, is an international tax lawyer and certified public accountant. He often writes articles on tax, legal and accounting issues for tax notes, Bloomberg BNA, other publications and the OECD.