Two developments taking place in Washington this spring should see corporate finance and tax departments refresh their blockchain. First, Gary Gensler was confirmed as chairman of the Securities and Exchange Commission (SEC). Then the Biden administration announced a new tax enforcement plan that would double the number of Internal Revenue Service employees over the next 10 years and require detailed reporting on cryptocurrency holdings.

Put them together and you have the recipe for the world’s most crypto-conscious regulatory infrastructure that is sure to break new ground in terms of both the types of assets being tracked and the methods used.

The importance of Gensler’s appointment wasn’t as obvious as the tax enforcement plan, but the move signals a much more proactive role for the SEC in handling digital assets.

Gensler was formerly the chairman of the Commodity Futures Trading Commission (CFTC), where he revised the derivatives markets after the financial crisis. He joins SEC Commissioner Hester Peirce, who has already earned the nickname “crypto mother” for her vocal support for digital assets.

Digital assets will be in the crosshairs of regulators for the foreseeable future.

On the tax side, the new tax enforcement plan would require banks, exchanges, and payment services – or any other company that receives more than $ 10,000 in cryptocurrency – to report the transaction to tax authorities. This naturally aligns digital assets with existing anti-money laundering standards designed to monitor large cash transactions.

What does all of this mean for corporate finance and tax departments? At the grassroots level, the news should be a warning to the growing number of companies accepting cryptocurrency payments and keeping crypto on their balance sheets: digital assets will be in the crosshairs of regulators for the foreseeable future. Companies need to get their crypto exposures under control and provide the necessary audit trail when the Feds knock on the door.

But for those looking to the potential longer-term ramifications of this major crypto awakening under American regulators, now would be a good time to get serious about blockchain.

This is because blockchain technology is likely to be at the heart of regulators’ efforts to monitor digital assets and collect data from companies about their transactions and inventories. Gensler’s own comments at MIT technology assessment Conference signal this possibility.

“Blockchain technology has real potential to change the financial world. It could lower costs and risks as well as economical rents; but for widespread acceptance, the public policy technology must evolve, ”said Gensler.

The comment reflected an opinion set out in a. was discussed 2018 paper that Gensler is a co-author: “There are social and economic benefits to promoting sensible innovations in blockchain technology that are consistent with established public policy goals. Properly implemented, the technology can lower the “cost of trust” that manifests itself in a variety of ways in the financial system and the economy. “

Between the lines of Gensler’s comments, it’s not difficult to see his vision of blockchain as a key component in the future of financial infrastructure and one that will help regulators maintain confidence in that system.

This line of thought is very logical. How I wrote on this page back in 2017, Blockchain is a digital platform for recording and verifying transactions in its simplest form. Since it is decentralized and theoretically lives digitally forever, the blockchain data set offers standardized accounting for all touchpoints in every transaction. That means contracts, financial transactions, bills of lading, title titles and tax returns can be seamlessly digitized and recorded forever in an open, distributed ledger.

For these reasons, several blockchain pilot projects have already been launched in the areas Land register, Identity resolution for tax and official registrations and global supply chain tracking and management. Any company that needs to identify parties to a transaction and track them over time is a candidate for a blockchain strategy.

That doesn’t mean we’ll be filing corporate income tax forms via blockchain later this year or streaming real-time transactional data directly to regulators via a distributed ledger. In fact, despite all the blockchain hype, there was an equally loud one Chorus of critics who warn that blockchain might not meet expectations. Despite some skepticism, there are still more than half of senior executives interviewed by Deloitte last year said blockchain was one of their top five strategic priorities.

This corporate focus, combined with the U.S. government’s clear intention to take a more active leadership role in crypto, should give corporate leaders a clear picture of the need for a blockchain strategy sooner rather than later. If you haven’t already, now is the time to see what that strategy will look like.

Brian Peccarelli is Co-Chief Operating Officer of Thomson Reuters.

Audit, blockchain, contributor, cryptocurrency, digital assets, regulation, tax enforcement