WEBVTT 00:00.000 --> 00:03.871 Narrator: Tanya, a tax manager, has a dependent son that wants to 00:03.871 --> 00:07.601 purchase cryptocurrency. He is very excited about a particular 00:07.601 --> 00:12.051 cryptocurrency and wants to make the purchase right away. Tanya 00:12.051 --> 00:15.734 knows that there are independence rules related to cryptocurrencies 00:15.734 --> 00:19.774 and is unsure how to proceed. She weighs her options. She can tell 00:19.774 --> 00:23.630 her son that he can’t make the purchase until she has a chance to confirm 00:23.630 --> 00:27.895 whether it is permissible, or she can let him go ahead and buy it, just 00:27.895 --> 00:32.100 this once. In the interest of avoiding an independence violation, she 00:32.100 --> 00:35.652 decides to reach out to Risk Management - Independence for assistance 00:35.652 --> 00:38.930 in determining whether the cryptocurrency purchase is permissible. 00:38.930 --> 00:41.245 Let’s listen to the conversation. 00:41.245 --> 00:45.539 Tanya: My son would like to purchase a cryptocurrency. I know there are 00:45.539 --> 00:49.164 independence rules on cryptocurrencies, but I’m not sure where to start. 00:49.164 --> 00:52.479 Independence: It’s good that you called. First off, there are several 00:52.479 --> 00:56.052 cryptocurrencies and digital assets that have already been identified as 00:56.052 --> 01:00.158 “safe” for independence purposes. The list can be found on the KPMG 01:00.158 --> 01:04.876 Independence Safe List on the Independence portal - Bitcoin, Litecoin, 01:04.876 --> 01:08.885 Ethereum and Verge are some examples. You can purchase these digital 01:08.885 --> 01:12.893 assets on the Safe List through a digital wallet custodian, like Coinbase, 01:12.893 --> 01:15.316 and they don’t need to be reported in your KICS account. 01:15.316 --> 01:19.547 Tanya: That’s good to know, but he’s interested in a different one. 01:19.547 --> 01:22.605 Independence: Got it. If it’s not one of the cryptocurrencies included 01:22.605 --> 01:26.000 in the Safe List, then you would need to check the restriction status of the 01:26.000 --> 01:30.304 cryptocurrency or digital asset in KICS before he makes the purchase. 01:30.304 --> 01:34.121 Your dependent son would not be permitted to purchase any cryptocurrency 01:34.121 --> 01:38.555 or other digital asset that is restricted. Any permitted cryptocurrency or 01:38.555 --> 01:42.990 digital asset that you hold - other than those on the KPMG Independence 01:42.990 --> 01:46.208 Safe List - will now need to be reported in your KICS account. 01:46.208 --> 01:50.722 Tanya: So I would need to check KICS before he purchases the 01:50.722 --> 01:54.546 cryptocurrency, just like I would before making an investment? 01:54.546 --> 01:57.566 Independence: That’s right. Before purchasing a cryptocurrency 01:57.566 --> 02:01.152 or other digital asset, you should always check KICS to determine its 02:01.152 --> 02:04.794 restriction status. There’s a large number of cryptocurrencies listed in 02:04.794 --> 02:08.398 KICS, and as long as it’s not a restricted option, you can purchase it. 02:08.398 --> 02:13.337 Tanya: Ok, but what if I can’t find the cryptocurrency in KICS? 02:13.337 --> 02:15.790 Does that mean it’s not restricted? 02:15.790 --> 02:19.773 Independence: No, that just means additional research is needed. If you can’t 02:19.773 --> 02:23.814 find it in KICS, reach out to Risk Management - Independence via the 02:23.814 --> 02:27.832 Independence Inquiry Submission Form found on the Independence portal, 02:27.832 --> 02:31.458 so that we may research and confirm the restriction status. And make 02:31.458 --> 02:34.454 sure your son holds off on making the purchase until you receive 02:34.454 --> 02:39.160 a response and have conclusive evidence that it’s not restricted – otherwise, 02:39.160 --> 02:43.604 you may end up with an independence violation if it turns out to be restricted. 02:43.604 --> 02:48.640 Tanya: Okay, I think I’ve got it. Is there anything else I should be thinking about? 02:48.640 --> 02:51.413 Independence: Well, yes. You’ll need to consider where your son 02:51.413 --> 02:55.897 is planning to hold the cryptocurrency. Using a digital wallet custodian or 02:55.897 --> 02:59.649 exchange could impact your independence, since the balances may be 02:59.649 --> 03:03.463 subject to the independence rules that apply to brokerage account balances. 03:03.463 --> 03:08.920 If the custodian or exchange is an SEC restricted entity and you are 03:08.920 --> 03:12.536 a Covered Person, you can’t hold accounts with that entity if the digital 03:12.536 --> 03:17.540 asset custodian or exchange doesn’t provide insurance coverage under SIPC. 03:17.540 --> 03:22.577 Tanya: Ok, it sounds like we have a lot of options. I’ll be sure to do 03:22.577 --> 03:26.580 my research before we make any purchases and will monitor Risk 03:26.580 --> 03:28.386 Management – Independence communications for 03:28.386 --> 03:30.496 updates on this evolving topic. 03:30.496 --> 03:34.050 Narrator: The conversation with Risk Management - Independence 03:34.050 --> 03:37.949 helped Tanya recognize and evaluate the independence considerations 03:37.949 --> 03:41.418 before allowing her son to make the purchase. They informed her of the 03:41.418 --> 03:45.060 steps and research that must be undertaken before purchasing 03:45.060 --> 03:49.504 cryptocurrency or other digital assets. By discussing the matter with 03:49.504 --> 03:53.672 Risk Management -Independence first, Tanya acted in an ethical manner 03:53.672 --> 03:56.870 and was able to decide on the best course of action to avoid an 03:56.870 --> 03:58.870 independence violation. 03:58.870 --> 04:02.538